Economy pricing does the trick for Coca-Cola — Unit case volumes up 22 pc in India
Despite being dogged by one controversy after another, Coca-Cola India seems to have hit the right note with its single serve, economy pricing strategy.
The company's first quarter results announced on Wednesday state that in India "the recovery that commenced in the fourth quarter of last year continued in the first quarter with double digit volume growth and significant share gains resulting from our continued focus on single serve package sizes at affordable price points".
Coca-Cola India has launched several new pack sizes at aggressive price points for its products over the last one to two years.
"The affordability is driven not only by pricing but the right packaging as well. We rolled out the strategy towards the end of 2002 and consolidated it last year", a company spokesperson said.
The Indian subsidiary's unit case volumes grew by 22 per cent last year, though sales were negatively impacted in the short term by the pesticide controversy.
Coca-Cola India further said that it "generated strong profit growth in Asia during the quarter driven by healthy core brand performance in key markets such as Japan, Australia, Thailand, China and India, as well as currency benefits".
Most key currencies including the rupee, yen and euro have strengthened versus the US dollar in the period. As a result, "currencies positively impacted operating income in the quarter by approximately 12 per cent", the company said.
While Coca-Cola's total revenues increased by 13 per cent during the quarter to $5.1 billion in the quarter, its operating income for the quarter grew by 35 per cent to $1.5 billion led by strong results in key markets and positive currency trends. The company's unit case volume increased 9 per cent in the first quarter.
In addition to India, the company saw strong double-digit volume growth in neighbouring China with unit case volume increasing by 14 per cent. The unit case volume growth for the Asian region stood at 8 per cent.
In a statement released by the company internationally, Mr Doug Daft, Chairman and Chief Executive Officer, Coca-Cola said, "Our results reflect our success in driving the profitable volume growth of core brands in key markets. We continue to innovate by expanding our beverage portfolio and increasing productivity in cooperation with our bottling partners. Our goal now is to consistently improve the execution of our well established strategies.''
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