Coca-Cola adds a new bottling plant amidst falling sales

Hindustan Coca-Cola Beverages will spend Rs750 crore to build the new bottling plant in Hoshangabad, Madhya Pradesh


The announcement comes at a time when Coca-Cola has been struggling to grow in India. Photo: Bloomberg
The announcement comes at a time when Coca-Cola has been struggling to grow in India. Photo: Bloomberg

New Delhi: Hindustan Coca-Cola Beverages Pvt. Ltd (HCCBPL), the largest bottling partner of US-based beverages maker Coca-Cola Co. in India, on Wednesday laid the foundation stone for a bottling plant at Hoshangabad in Madhya Pradesh.

HCCBPL, which operates 24 bottling plants and covers about 65% of bottling operations for Coca-Cola in India, will spend Rs750 crore to build the new factory spread over 110 acres in a phased manner, the company said in a statement. It will have bottling lines for carbonated beverages such as Coca-Cola, Sprite, Fanta, Thums Up, Limca, juices and juice-based drinks such as Minute Maid and Maaza, packaged water and Kinley soda.

The announcement comes at a time when the US beverages company has been struggling to grow in India. In the July-September 2016 quarter, Coca-Cola reported a 4% year-on-year decline in unit case volume growth as the estimated Rs14,000-crore soft drinks industry was impacted due to slowing discretionary spends in rural areas and stiff competition from healthier and functional beverages in urban areas. In the April-June 2016 quarter—the best season for soft drinks—Coca-Cola reported a 3% growth in volume sales.

“Our investment trajectory is very much in line with India’s long-term growth strategy of building sustainable, long-term businesses contributing to national and local economy,” HCCBPL chairman and CEO T. Krishnakumar said in a statement.

In March 2016, two other bottling partners of Coca-Cola—Kandhari Beverages Pvt. Ltd and Enrich Agro Food Products Pvt. Ltd had announced investments of worth Rs510 crore in Haryana to expand manufacturing capacity for production of juice, energy and sparkling drinks by 2018.

Coca-Cola, which in 2012 decided to invest $5 billion in India by 2020, has run into objections from local communities over the use of groundwater. Last year, HCCBPL had to temporarily halt production at a few of its plants due to similar protests. In 2015, it had to scrap plans for a new bottling plant at Perundura in Tamil Nadu as local people protested, and in 2014, it had to scrap a fully-built bottling unit in Mehdiganj in Uttar Pradesh as authorities denied permission because local protests.

Coca-Cola’s rival PepsiCo Inc. had also announced in 2013 that the American food and beverages company would invest Rs33,000 crore ($5.5 billion) by 2020 for infrastructure development and doubling production capacity in India.

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