Slowdown 'A Blip'; Coca-Cola Is Bullish On India Story

Mumbai, Jan 29 (PTI) Coca-Cola will keep its strategy unchanged in India despite elevated inflation level and slowing economic growth, which it expects to be temporary, its global President and Chief Financial Officer John Murphy said on Wednesday.

"Economies go up and down, and if you are overtly dependent on where the economy is going, then I think you are in trouble. We have seen it as a tailwind. Over the next ten years, it will continue to be, given the way the government has demonstrated its ability to support economic growth," Murphy said at a round table here.

"So, what we are seeing at the moment is, I think, more of a blip than it is, a sort of a long-term trend in that regard," said Murphy.

When asked whether Coca-Cola is revising its short to mid-term outlook for the Indian market, he said: "Not so much".

Coca-Cola is having a series of kickoff sessions with its bottling partners across India, starting this week, to improve marketing.

"I do not need the economy to be great to improve the quality of our marketing. I do not need it to be great to expand our availability in the rural channels..," he said.

Murphy also noted the relative strength of the rural areas in India and the flow witnessed by the FMCG companies provide a "massive opportunity" for companies like Coca-Cola.

From the last three quarters, rural has outpaced urban growth, reversing the trend during the pandemic, when villages saw slow demand.

Historically, rural demand has been rising twice the rate of urban areas but on a lower base, driven by over 800 million people whose purchase behaviour is mostly linked to farm output.  

Murphy also pointed out the changing retail channel dynamics in India, where the growth of quick-commerce and modern channels like supermarkets and hypermarkets are growing at a much faster rate.

"So, they are interesting dynamics for us to stay on top and adapt to as we go forward. We are also in on the retail front. We also have some opportunities in the vending space...," he added.

Coca-Cola, which has recently sold a 40 per cent stake in its India bottling business Hindustan Coca-Cola Beverages Pvt Ltd (HCCBL) to Jubilant Bhartia group as per its global strategy, said: "We are huge believers in the power of the franchise model. It has been a centre of value creation for a long time".

Now, the strategy to invest with partners is very consistent.

"We have owned some franchises, but for the last few years, our stated goal has been to re-franchise those territories that the company owns. India is one of those markets," Murphy said, adding that bottlers' know-how of the local market is much more than the company.

He also said Coca-Cola globally and in India has an ambition to tap the premium segment and hinted at entering more categories here.