India lockdown dents Coca-Cola sales in June quarter2 min read . Updated: 21 Jul 2020, 10:20 PM IST
- Globally, unit case volume—the number of unit cases of beverages directly or indirectly sold by the company and its bottling partners—declined 16% during the quarter
- India’s lockdown that commenced end March caused severe disruptions in supply of packaged consumer goods to markets
New Delhi: Beverage major The Coca-Cola Company on Tuesday said that strict lockdowns in India dented out-of-home consumption of beverages that pulled down consolidated volumes at the company for the three months ended 26 June, 2020.
Globally, unit case volume—the number of unit cases of beverages directly or indirectly sold by the company and its bottling partners—declined 16% during the quarter.
The sharp decline was fueled by a slump in markets like India. “Sparkling soft drinks declined 12%, led by a decline in India, Western Europe and the fountain business in North America due to pressure in away-from-home channels. Trademark Coca-Cola declined 7%," the company said in an earnings release.
India’s lockdown that commenced end March caused severe disruptions in supply of packaged consumer goods to markets.
Moreover, it crippled out-of-home sales channels such as restaurants, cinema halls, bars, pubs and street vendors that contribute significantly to sale of beverages in a market like India.
As a result, most beverage companies saw record slump in business during peak summer months.
In the Asia Pacific region, unit case volume declined 18%, primarily due to strict lockdowns in India to help prevent the spread of the coronavirus, the seller of Sprite, Minute Maid and Fanta beverages said. However, unit case volume decline in the region was partially offset by positive performance in China during the quarter.
Unit case volume at the company’s bottling investments—that are the company’s owned bottling plants—declined 36% driven by India and South Africa due to the impact of the coronavirus.
In an interview with Mint last month, T. Krishnakumar, president, Coca Cola India and Southwest Asia said that covid-19 has obviously impacted businesses significantly.
“While away-from-home consumption in channels like travel, restaurants, entertainment, and hospitality may take a little longer to come back to normal; at-home consumption is robust and growing," he said. At home consumption, he said, had become a key occasion drive for the beverage company.
In all, net revenues during the quarter declined 28% to $7.2 billion for The Coca-Cola Company.
The company said that improvement in away-from-home trends during the quarter closely correlated with the easing of lockdowns, and its expects this correlation to continue in the second half of 2020.
It, however, remained uncertain about the impact of the pandemic on its full year results.
"While the company believes the second quarter will be the most severely impacted quarter of the year, given the ongoing uncertainty surrounding the coronavirus pandemic and levels of lockdown, the ultimate impact on full year 2020 results is unknown," the company said as part of its earnings update.