That's the case with Coca-Cola India whose growth in the critical April-June quarter came crashing down from 20% a year ago. It was the worst performance of the Indian unit of the world's largest beverage maker in five years.
Arch rival PepsiCo has fared better than Coke but not better than its own performance in the previous year's corresponding period. Its volumes grew 11% in March-May but it compares badly with the strong double-digit growth of a year ago. And to think that the numbers for the most crucial month of the year — June — aren't yet out.
A top official closely involved with PepsiCo operations said the company's growth in June has been soft as well, which may spoil the growth numbers for the next quarter.
New Game Plan
The India units of Coca-Cola and PepsiCo are critical bastions of growth for their American parents, but are now confronted with the threat of a slowdown in volumes. Executives of both companies have been forced to recast their strategy through a combination of price cuts, differential pricing (exactly the same product being sold at different prices in different cities), trade discounts, restructuring of distribution networks and stepping up capacities at bottling plants.
Starting this month, all Coca-Cola's beverages in 200 ml bottles will be sold at a flat Rs 10, down from Rs 11-12, a top trade official told ET Magazine. "It's heavy discounting and at the cost of profitability. The company is pushing volumes almost as if in panic," he says. Coca-Cola will support the move with aggressive advertising. It is not hard to see why. Early and prolonged rains have softened demand. Add to that inflation and the cola story in the recent past has gone haywire, putting pressure on executives to deliver and fast.
Faced with slowdown threat, Coca-Cola & Pepsico experiment with strategies to push volumes growth A veteran bottler said this quarter, which contributes 40% of the industry's annual sales, sets growth momentum for the rest of the year. "The industry hasn't seen such a bad June in years — this is the biggest month for the Rs 14,000-crore aerated drinks industry," he says.
Gautham Mukkavilli, CEO at PepsiCo India (beverages), says a distribution step-up, especially for its newer products — Pepsi Atom, Tropicana Coconut blends and Nimbooz Masala Soda — is a key focus area. "We have had strong volume growth in March-May on the back of our IPL activation. While the early monsoon has resulted in softening of demand, we remain focused on developing the category by concentrating on increasing distribution of our products," he says.
PepsiCo is also experimenting with different pack sizes in general grocery stores and consumer promotions (price-offs or bundling of products at discounts) in modern trade to drive consumption. "There's an urgency to drive volumes... Both firms are pushing different prices in different markets," said a trade insider.
Though the big impact came from rains, Atul Singh, deputy president at Coca-Cola's Pacific group, said in an interview last week that the slowing consumer sentiment is as much a concern for his company."I can't control the GDP. But I can control the availability of products, equipment, training people, retailers," he said.
Raining Discounts
For the summer, Coca-Cola has been banking on pushing sales by selling at a discount to large retailers and slashing prices of brand Coke in 200-ml bottles to Rs 8. The company will also sell in different sizes. Currently, Coca-Cola is testing tetrapacks of 100 ml for juices at entry-level prices of Rs 6.
Arch rival PepsiCo has fared better than Coke but not better than its own performance in the previous year's corresponding period. Its volumes grew 11% in March-May but it compares badly with the strong double-digit growth of a year ago. And to think that the numbers for the most crucial month of the year — June — aren't yet out.A top official closely involved with PepsiCo operations said the company's growth in June has been soft as well, which may spoil the growth numbers for the next quarter.
New Game Plan
The India units of Coca-Cola and PepsiCo are critical bastions of growth for their American parents, but are now confronted with the threat of a slowdown in volumes. Executives of both companies have been forced to recast their strategy through a combination of price cuts, differential pricing (exactly the same product being sold at different prices in different cities), trade discounts, restructuring of distribution networks and stepping up capacities at bottling plants.
Starting this month, all Coca-Cola's beverages in 200 ml bottles will be sold at a flat Rs 10, down from Rs 11-12, a top trade official told ET Magazine. "It's heavy discounting and at the cost of profitability. The company is pushing volumes almost as if in panic," he says. Coca-Cola will support the move with aggressive advertising. It is not hard to see why. Early and prolonged rains have softened demand. Add to that inflation and the cola story in the recent past has gone haywire, putting pressure on executives to deliver and fast.
Faced with slowdown threat, Coca-Cola & Pepsico experiment with strategies to push volumes growth A veteran bottler said this quarter, which contributes 40% of the industry's annual sales, sets growth momentum for the rest of the year. "The industry hasn't seen such a bad June in years — this is the biggest month for the Rs 14,000-crore aerated drinks industry," he says.
Gautham Mukkavilli, CEO at PepsiCo India (beverages), says a distribution step-up, especially for its newer products — Pepsi Atom, Tropicana Coconut blends and Nimbooz Masala Soda — is a key focus area. "We have had strong volume growth in March-May on the back of our IPL activation. While the early monsoon has resulted in softening of demand, we remain focused on developing the category by concentrating on increasing distribution of our products," he says.
PepsiCo is also experimenting with different pack sizes in general grocery stores and consumer promotions (price-offs or bundling of products at discounts) in modern trade to drive consumption. "There's an urgency to drive volumes... Both firms are pushing different prices in different markets," said a trade insider.
Though the big impact came from rains, Atul Singh, deputy president at Coca-Cola's Pacific group, said in an interview last week that the slowing consumer sentiment is as much a concern for his company."I can't control the GDP. But I can control the availability of products, equipment, training people, retailers," he said.
Raining Discounts
For the summer, Coca-Cola has been banking on pushing sales by selling at a discount to large retailers and slashing prices of brand Coke in 200-ml bottles to Rs 8. The company will also sell in different sizes. Currently, Coca-Cola is testing tetrapacks of 100 ml for juices at entry-level prices of Rs 6.
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