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Business News/ Companies / People/  There’s a lot of upward mobility in rural India: Venkatesh Kini
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There’s a lot of upward mobility in rural India: Venkatesh Kini

Coca-Cola India's Venkatesh Kini talks about the importance of rural markets and the company's views on acquisitions

Venkatesh Kini says acquisitions cannot be an alternative to organic innovation.Premium
Venkatesh Kini says acquisitions cannot be an alternative to organic innovation.

New Delhi: Venkatesh Kini, the newly appointed president of Coca-Cola India and South West Asia, has been working for the global beverage maker for the past 15 years at different locations, including Atlanta. A strategist and a marketing wizard, Kini was responsible for the successful launch of Sprite in India in 1999.

In an interview, Kini spoke on the importance of rural markets, the potential in urban centres and the company’s open mind to acquisitions. Edited excerpts:

Although Coca-Cola India’s share in the beverage market is bigger than PepsiCo’s, brand Coca-Cola continues to trail brand Pepsi. Why?

I joined the company in 1998. My task was to launch Coke in some parts of the country which means Coke was still not national. I launched Coca-Cola in North-East, Bihar and Uttar Pradesh. Coca-Cola has been less than 15 years in the country. So we still don’t have a generation that has grown up with Coke. I don’t want to talk about rival brands, but Thums Up has been around for generations. Thums Up (a Coca-Cola India brand) outsells both Coke and Pepsi. It is the number one brand in the country.

Critics argue that Pepsi is seen as a younger brand and will have its own loyal customers in India for a longer time.

Let me just say that Coke appeals to the teens in India more than its competitors do. I don’t want to get into specifics... I don’t believe in disparaging others. However, unlike other brands, Coke is still universal in its appeal. In our Coke Studio (the company’s music property) review, we found that some of the concerts in colleges were a huge success. Yet, Coke Studio does not alienate adults. Our approach is to appeal to the youth by remaining universal and never alienating any segment of population.

How did India’s beverage market change while you were away on overseas assignments?

The basic market structure hasn’t changed dramatically. What has changed is the scale. It has become a much larger industry. Also, the beverage industry standards are now world-class. I can speak for ourselves both in terms of quality and sustainability—we are among the best on many parameters. Today, we replenish 130% of the groundwater we use in our beverages.

The other change is the dramatic growth in rural markets. Ever since I came back last year, I have spent a lot of time in the villages. My best experiences have been—sitting in the middle of a farm, eating makke ki roti and sarson ka saag with farmers. There is lot of upward mobility in rural India. There is more income being generated because of the government programmes. You can debate the macroeconomics but, at the micro level, demand is getting created in rural India. The rural consumers are getting more exposed to the world because of TV, mobile and Internet access. In urban markets, there is a lot more diversity of channels, thanks to the emergence of modern retail.

We have a global framework called RFR—recruitment, frequency and retention. We need more people to try and drink our beverages. Most of the total 800 billion litres of beverage which people consume in a year is water, tea, coffee and juice... If you look at how much of it is in packaged form, it is less than one per cent of the total share of throat. The goal is to convert consumer of unpackaged beverage to packaged drinks. We have access to 3,000 beverages from our international portfolio and variety is easier to offer in a modern retail.

So which new brands will you launch?

The first goal is to grow the core—bottled water, juices and sparkling categories. But we are constantly trying new beverages through our R&D. We have been piloting a project in Kolkata for a mango and milk drink for the last two years. It is not a milkshake. It is like Maaza which has creaminess. But given the heat in India, we found it had a very short shelf life. Once we can iron out all the glitches, this can be rolled out. It will be our first foray into dairy-based product.

Is there a timeline for this to go national?

No. I don’t want to give timelines. There are so many variables involved. It is quite possible that after three months we may say we can’t fix all the issues and we withdraw the product. The whole process of new product innovation is such that I cannot tell you today of what will be successful by 2020. Before 1999, when we launched Sprite, none of us knew that Sprite would be among the biggest brands in the country. Through a combination of great marketing and dedicated focus by the Coca-Cola system, Sprite has been a runaway success. It helped that Sprite was clear and the cola category was facing challenges over the allegation of pesticides in soft drinks.

Are you fast-tracking any launches as the consumer is ready to experiment?

We follow a measured pace because often there is lot more growth to be had from the core portfolio. Ten years ago, nobody spoke of Maaza. We even launched it in three flavours to expand the brand. But within two to three years, we realized that people still loved mango and we returned focus on mango Maaza.

There is a lot of experimentation happening. And we want to be part of it. But what we believe is that we have to balance between chasing the next new thing versus growing what we already have. There will be a few new blockbuster products from our portfolio five to 10 years from now. And we will keep experimenting till we hit upon the next success. For any company (in the FMCG sector) to have a blockbuster every five years, is a great success ratio.

Will you acquire companies in India to expand?

We are not closed to the idea. After all, our entry into India was through a famous acquisition of Parle brands and business. Also, we did many acquisitions around the world. We are always open to opportunities. But that cannot be an alternative to organic innovation. It is very hard to top the acquisition we made with Thums up and Limca.

Have you been affected by inflation and raw material prices going up?

Inflation has been a cause for concern but not just for companies. Look at the urban consumers today, the biggest pressure for middle class is food inflation. On the supply side, there is pressure on costs owing to the rising raw materials prices of imported goods as they are driven by currency depreciation. We have chosen to bring down prices of glass bottles for the consumer. So glass bottles now cost between 8 and 10. We also introduced the 400ml pet bottle at between 20 and 25 . Earlier we had only 600ml whose price increased to 30 plus. As long as we can, we would like to sustain these prices. But I can’t promise.

With the consumer getting health conscious, isn’t Pepsi better placed than Coca-Cola to meet the future challenge with its nutrition drinks and food portfolio?

My belief is (that) there is no healthy or unhealthy food, it is healthy or unhealthy lifestyle. I drink two Cokes a day, I am 47 and weigh 75kg. I have been like this for the last 20 years. I can do it because I choose a lifestyle that allows me to do it. Coca-Cola is a perfectly healthy drink.

We have reached a stage where people are looking for silver bullets or easy enemies to say this one thing is the cause of trouble. People’s lifestyles are sedentary because of cars, television and computers. Should we ban those things? You have to educate people on lifestyle balance.

But the noise around the health issues is getting bigger and can’t be ignored.

Today, consumers want companies, government and civil society to collectively play a role in solving the problem. Earlier, the consumer was expected to make an informed choice. What you are hearing today is a clamour from consumer and civil society expecting companies to help solve the problem. But the solution can’t be that you demonize one product against the other.

To be part of the solution, we are encouraging healthy active lifestyle and doing work around promoting sports in schools through under-16 football. We will scale that up next year. The reason we sponsor the Olympics and Fifa is because we believe that these kind of sporting events make people aspire to sports.

What’s the best and the worst about coming back to India?

The best of coming back is the people. Their extreme warmth and lots of energy and passion that I do not see in the West today. There is desire to grow and get better. Second, is this huge opportunity for growth. Third, is the opportunity for individuals to make a difference. India is not mature so people are not set in a system. You can actually create a system.

What’s not so great is that we cannot fix simple things. We, as a country, do not come together as a civil society, government and corporate, to resolve issues. What I learnt in my travel around 55 countries is that in most successful countries there is partnership between the three. See Atlanta today, where Coca-Cola partnered with Atlanta city government and CNN and Home Depot and transformed downtown Atlanta from an unsafe, extremely grungy area to a thriving, vibrant place with an aquarium and the world of Coca-Cola museums.

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Published: 10 Dec 2013, 10:21 PM IST
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