With govt support, rural India could rebound faster: Coca Cola's Krishnakumar3 min read . Updated: 22 Jun 2020, 09:54 AM IST
- Among upper urban consumer there is a strong movement towards newer platforms for purchase like e-commerce and an increased interaction with newer products, while for people in the bottom of the pyramid, affordable solutions are being sought
NEW DELHI: Having lost peak summer sales owing to the countrywide lockdown, Coca Cola India, which owns brands like Coca Cola, Sprite and Minute Maid, among others is looking to drive growth through “in-home" consumption of its products. In an interview, T. Krishnakumar, president, Coca Cola India and Southwest Asia, said it could be a while before the company’s out-of-home consumption (like cinema halls, restaurants, hotels, and offices) that drives over 50% of sales for the category, recovers. Edited excerpts:
How does Coca-Cola see demand recovering in both urban and rural now that the country is “unlocking"?
With the reverse migration to rural (~30% not expected to return soon), better agricultural income, and government support—rural can potentially bounce back faster. Amongst the upper urban consumer there is a strong movement towards newer platforms for purchase like e-commerce and an increased interaction with newer products and product categories.
How has covid altered consumer behaviour and what does it mean for consumers of the beverages category?
The Indian consumer is going through a mixed bag of emotions—elated with the time he/she is getting to spend with family, but equally anxious and uncertain about his/her job and health. With consumers very positive about the time spent with family, ‘at home consumption’ continues to be the key occasion for beverages. Drinking occasions of ‘while watching TV’ and ‘accompaniment with a meal’ are strong for the sparkling category.
Away from home is already showing signs of revival and trending back over the weeks.
Amongst the upper urban consumer there is a strong movement towards newer platforms for purchase like e-commerce and an increased interaction with newer products, while for people in the bottom of the pyramid, affordable solutions are being sought.
Hence, innovative ways to reach the consumer along with affordability will be important to drive the demand.
There is also a changing channel choice witnessed in consumer behaviour. Grocers, who have been the lifeline during the lockdown are likely to continue to be a stronger channel, along with the newly emerging chemists who are unaffected by the lockdown.
To what extent have operations at HCCB (the company’s owned bottling business) and Coca-Cola's bottling partners recovered since the lockdown?
Almost all our factories have resumed production under very stringent safety protocols prescribed by governments and are in conformity to our global standards.
What was the impact of the country's lockdown on Coca Cola's volumes in India?
While we are not at liberty to share country specific numbers, covid-19 has obviously impacted the businesses significantly. We are, however, witnessing improvement in both consumer sentiment and consumption.
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.
As the coronavirus pandemic continues to evolve, there is uncertainty around its ultimate impact, and hence, an immediate outlook may not be justified or even conclusive. Our strategic investment of building long term presence in India is intact. We will get there sooner than later and we are positive about that.
Has the company undertaken any cost cutting to tide over the crisis?
Our strategic investment of building long-term presence in India is intact. As the situation evolves, we will flex our business models to adapt to the new normal to deliver long term shared value in India
Any areas that will see disproportionate investments from Coca Cola India as you adjust to the new normal?
With consumption patterns and behaviours changing, we are evolving our business models to the changing trends and finding more innovative ways to communicate with and reach consumers keeping in mind affordability as a key factor.
Has the company postponed any summer launches?
We remain committed to our strategic pillars—growing the core (portfolio), providing local and hyper-local beverages to our consumers, developing our Indian brands to go global and create a platform that interacts with socio-economic engines of India. The fact that we have introduced a ‘Vio Spiced Buttermilk’—and this has found increased demand in 2020, is a case in point. Our launch of 'Minute Maid Nutriforce' is another example. As mentioned earlier, we have always focused on building a business for the long term and we remain committed to our strategic pillars, one of them continues to be providing hyper-local beverages.