Coca-Cola India sales increase 18%, point to turnaround

The Indian arm of the world’s largest soft drinks company, Coca-Cola India Inc., said it registered a 14% growth in volume sales in 2007 after a tumultuous period of almost three years, starting 2003, when a pesticides controversy erupted.

The December quarter saw an 18% growth in volumes over year-ago quarter. Coca-Cola Co.’s global sales volume rose 5% in the December quarter, and 6% in the entire year.

“Growth in India was fuelled by high-volume sales in both the sparkling and still beverages,” said a spokesperson. The sparkling segment includes Coca-Cola, Fanta, Sprite and Thums Up, while the still beverage category includes juice brand Minute Maid, juice drink Maaza and bottled water brand Kinley.

This makes 2007 a turnaround year for Coca-Cola in India. The company’s sales plummeted after a Delhi-based activist group, the Centre for Science and Environment, alleged that soft drinks sold in India contained certain pesticides. The market remained challenging over the next few years.

“The turnaround came in 2006 when the company increased its prices by around 14% across brands,” said an executive from a media buying agency who did not wish to be named. The first quarter of 2007 saw revenues go up by 4% over the same quarter the previous year. Coca-Cola also launched new products, such as Minute Maid, and some variants of its existing brands, and supplemented these with aggressive marketing and advertising spending last year. This helped the company register a 12% increase in sales in the second quarter ended June.

According to estimates from media buying agencies, Coca Cola spent around Rs120 crore on its advertising in 2007, as against Rs80 crore in 2006. The company launched its first ever corporate campaign in India that showcased all its brands under a common tagline, Little Drops of Joy.

“Continued investment in building organizational capabilities and marketing communication, and focus on improved execution by consolidating bottling operations helped us attain a solid growth,” said a senior executive from Coca-Cola who did not want to be named.

The parent’s net income rose 79% to $1.21 billion from $678 million in 2006 when the company wrote down the value of North American operations, on 24% increase in revenue, up to $7.33 billion, driven by gains in China, India, Turkey and in established markets including Latin America and Africa.

Duane D. Stanford of Bloomberg contributed to this story.