Asia will be the biggest driver of Coca-Cola’s growth over the next 10 years, the head of the world’s biggest beverage company said, adding that the company had lost out by not investing enough in the region in the past.
“Asia is at the core,” Neville Isdell, the chairman and chief executive of the Atlanta, Georgia-based Coca-Cola Co., said.
“Because we haven’t been making sufficient investments, we have underperformed the opportunities that are present in Asia,” he added.
Isdell’s comments come on the heels of Coca-Cola’s upbeat financial results for the first quarter of 2007, when its profits jumped 14%.
The company said its worldwide unit-case volume sales grew 6%—the highest rate since 2002.
Isdell said Coca-Cola has invested more than $1 billion (Rs4,100 crore) over the last 12 months in Asia, particularly in the Philippines, China, India and Indonesia.
“There is no question that the biggest driver of our growth over this century, and over the next 10 years, is Asia. It’s a very simple equation. It’s where people are, and it’s where the economic growth is, and it’s clearly where we are focused,” Isdell said. “If you are not a major player in Asia you will not be a successful global company,” he added.
The company’s market share in Asia’s non-alcoholic, ready-to-drink beverage market is currently “in the teens” and will become much higher in the next five years, Isdell said, without elaborating.
“We believe we will be the engine of growth for the industry,” he said.
Isdell also talked about the acquisition strategy of Coca-Cola, which purchased Vitaminwater maker Glaceau earlier this month for $4.1 billion. He said Vitaminwater would be available in Asia in the next few years.
He refused to say if Coca-Cola is thinking of buying Scottish mineral water maker Highland Spring, which some analysts have valued at $1 billion. “We know Highland Spring is certainly not worth a billion, and certainly not worth half a billion,” said Isdell.
But “we look at everything that is out there,” he said, adding that acquisition will be a core strategy of Coca-Cola’s expansion.
“We believe if we want to get to a critical mass in a hurry, we will go the acquisition route. The way we phrase it is, ‘build-buy equation all the time’.”
Isdell acknowledged that the soft drinks industry in India has been set back by five years due to recent allegations that water used in soft drinks was contaminated with pesticide.
“But today we believe we have recovered,” Isdell said.
Isdell also spoke about Coca-Cola’s corporate social responsibility, saying it is making efforts to ensure conservation of water, the basic ingredient of their product.
Coca-Cola has 275 rain-harvesting projects in India, and another 25 will be started this year, he said.