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 said it has acquired the Georgia tea and coffee business from Coca-Cola India Pvt. Ltd, a subsidiary of the American parent.
Effective October, the manufacturing and distribution of Georgia products will be handled by HCCBPL across the country, the company said in a statement on Wednesday.
Financial terms of the deal were not disclosed.
Georgia offers a range of premium hot and cold beverages, including fresh brewed coffee, hot pre-mix flavoured tea, coffee, iced tea and cold coffee, through its vending machines.
In India, it has already deployed about 5,000 machines in the past decade. Fast-food restaurant chain McDonald’s is one of Georgia’s largest customers in the country.
Georgia, which was first introduced in 1975 by Coca-Cola in Japan, was brought to India in 2002. Coca-Cola kept the Georgia tea and coffee restricted to institutional sales, primarily restaurants and offices.
T. Krishnakumar, chief executive officer of HCCBPL and regional director (bottling investment group), said: “At Hindustan Coca-Cola, our collective objective is to expand Georgia’s reach by aggressively leveraging our strong distribution network. We are excited about the potential of this product offering and are confident that it will further accelerate the company’s growth in the years ahead."
S. Giri Sunder, vice-president (commercial beverages) at HCCBPL, will lead the Georgia business. He will seek to leverage HCCBPL’s core competency of sales and distribution reach to increase the market share of Georgia in the country.
Currently, the Georgia pre-mix is manufactured at the Bhopal facility of Hershey India, a subsidiary of Hershey Co. The Bhopal facility is jointly used by Hershey and HCCBPL.
HCCBPL operates 24 bottling plants and covers about 65% of bottling operations for Coca-Cola in the country. According to its latest filings with the Registrar of Companies, HCCBPL reported revenue from operations of ₹ 6,897.99 crore, with a net profit of ₹ 195.54 crore, for the fiscal year ended March 2014.
The tea and coffee retail market is estimated at ₹ 10,000 crore. It has been growing at upwards of 20% annually, according to a study by consulting firm Technova India. The market is projected to treble by 2016-17, the study added.
More than half of the coffee market is accounted for by instant coffee. The instant coffee market in India is dominated by Nestlé’s Nescafe.
This is not the first divestment by Coca-Cola in India. In 2009, HCCBPL acquired bottling and distribution rights for Coca-Cola’s packaged drinking water brand Kinley from franchisee bottlers in select states in India.
Coca-Cola’s rival American food and beverages company PepsiCo India Holdings Pvt. Ltd had, in 2014, divested four bottling units to its bottling partner Varun Beverages, a subsidiary of Delhi-based businessman Ravi Jaipuria-owned RJ Corp., as part of a franchise agreement.
With that deal, Varun Beverages became the largest independent bottler for PepsiCo in India. Varun Beverages also handles PepsiCo’s bottling operations in Nepal, Sri Lanka, Zambia, Morocco and Mozambique.