BackWe won’t go to a community where there is no water: Atul Singh
Coca-Cola’s Singh on capacity addition in an expanding economy and the firm’s growth across its portfolio
Premium(Ramesh Pathania/Mint)
New Delhi: Environmentalists are protesting against Coca-Cola India Pvt. Ltd’s plans to set up a bottling plant near Dehradun in Uttarakhand. Atul Singh, president and chief executive officer (CEO) of Coca-Cola India and South-West Asia, spoke in an interview about the controversy and the company’s performance. Edited excerpts:
Concerns have been raised about the environmental effects of a plant Coca-Cola is setting up near Dehradun.
There is no bottling plant. There’s only an MoU (memorandum of understanding). Whenever we announce an investment in the country, several (state) governments approach us or we approach them to invest in their territories. People have to realize that India is a growing economy. For growth to happen, all industries need to grow. If we grow, we need to add more capacity either at the existing locations or in new locations. You should know that our multiplier effect is more than 1:10 or 1:13. So for every one person I employ, there are 10-15 people employed in the industry—from, say, a truck driver to a sugar cane farmer. The whole value chain improves.
We may have signed the MoU, but there is no plant there. Before we put up any plant, we do a site survey and an environmental survey. We have full due diligence done to ensure that we don’t deplete the resources.
In fact, in India we add more water to the ground through check dams, rainwater harvesting than we take out of the ground.
While I appreciate that there are some people who don’t want industry in their neighbourhood because it depletes the environment, our position is that we will only go to neighbourhoods where we can enhance the facilities. We won’t go to a community where there is no water or lack of facilities.
Has the site survey taken place? News reports suggest that you have been allocated land for the 600 crore plant.
No. There is no land. We have not looked at land.
The reports say you have been allotted land 25km from Dehradun.
We have been asked this question, that the region does not allow any water industry, so how are we going there? The state government invited us to sign an MoU. We did not know it was a public event. Our bottler went there. He signed an MoU that we will explore setting up a plant. It is like saying we will expand in India... where in India, how and when is not known.
We may not be in Dehradun, we could be anywhere else. We have not looked at land or identified anything. People just jump to conclusions. We are clear. We do full environmental reviews and audits before we buy any land. We take all the permissions and clearances before we even dig a hole.
There are concerns that if you take water from the river, it may affect the hydroelectric project in the area.
It’s simple logic. We won’t go to a place to harm it. We are in the water business and we replenish what we use. So the net amount of water we use is negligible. We could stop production totally and the water problem in the country won’t be solved.
Coca-Cola India has been consistently reporting growth. Where is this growth coming from?
We are getting growth across our portfolio—sparkling and still beverages, juices, water products, tea and coffee. It’s coming from both urban and rural India. When you look at India’s demography, there is a lot of opportunity in the long term. It’s a lot of population to be addressed. There are 6-7 million kirana stores and outlets in the country and we service only 2.5 million. So there is huge potential.
India delivered 8% growth in the first quarter 2013, making this the 27th consecutive quarter of growth (for Coca-Cola). Brand Coca-Cola volume was up by 30%.
Globally, sparkling beverages grew barely 3% in 2012. Will such saturation happen in India as well?
I don’t see saturation in India till my lifetime. What happens after 30 years, I don’t know. Our per capita consumption (bottles of aerated beverages consumed per year per person in India) is 14, Mexico’s per capita is 745, Pakistan is 21, China is 39. Even our neighbours are consuming a lot more on per capita basis. We will see our consumption increase over the years because as countries progress, people use more packaged food and beverages. What you cook, eat and drink, all that changes. It has evolved like this across the world and India is no different.
Has Thums Up’s lead over Coke narrowed? (Thums Up is also owned by Coca-Cola.)
Coca-Cola is among the fastest growing, if not the fastest growing, brand. And Thums Up is growing too and so is Sprite.
Is India the only country where Coke is not the lead brand for the company?
In China, Sprite is bigger. Sprite is very big in India too, bigger than Coke in India, even bigger than Pepsi in India.
The Indian Premier League (IPL) has done fairly well this season. In retrospect, do you feel you should have bid for the title sponsorship (which went to PepsiCo India)?
We chose not to bid on a couple of accounts. When it comes to sports, we believe in supporting grass-roots sports. We have grass-roots programmes like the Coca-Cola Under-16 Cricket and Coca-Cola Under-16 Football initiatives. The other thing is we wanted to activate our programmes and products through the year as opposed to focusing very heavily on a period of time. We’ve got different properties that we activate and we chose to pass this (IPL) up.
How much do you invest in advertising and are the budgets growing?
We continue to advertise as is appropriate. We announced a $5 billion investment over the next several years and that is going to be investment behind bottling lines, cold equipment, advertising, marketing and distribution.
Does Unilever’s move to increase its stake in its Indian unit say something about how multinationals regard India?
I think when MNCs (multinational companies) and parent companies are wanting to invest and are willing to put their money in India, it’s a positive sign and shows they are willing to take a bigger stake in the future and invest in that future. I would be worried if money was fleeing India. But money is coming in. Of course, there are concerns about GDP (gross domestic product) slowing down, but in the long run it is positive.
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