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Pesticide is past, Coke to pump in $70 M

17-February-2004
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Pesticide is past, Coke to pump in $70 M

Trying to dust off its pesticide-worn image, Coca-Cola India (CCI) is going ahead full steam with its growth plans for 2004 by injecting fresh investment of $70 million in its operations this year.

“We are absolutely aggressive in our plans for 2004. Between us and our bottlers, we will invest about $70 million in our operations this year,” Coca-Cola India’s president and CEO Sanjiv Gupta told FE.

So if ‘Doing Paanch at Coca-Cola’ aka ‘driving affordability’ was the mantra in 2003, the soft drink major’s thrust in 2004 will be all about perfecting its high volume, low-cost model by getting focussed on executing its FAST strategy: which is all about Fiscal efficiencies, Availability, Stakeholder relationships and Topline growth.

According to Mr Gupta, while operationalising market potential, capability development, continuing affordability and driving home consumption will be the triggers to drive topline growth, the bottomline focus will be pursued through an aggressive cost reduction exercise.

While its affordability strategy, Mr Gupta claimed, worked in 2003, the company, he added, had realised only 47 per cent market potential so far. Realising that there’s scope for more, the company has prioritised its markets and identified power states like Maharashtra, Uttar Pradesh, Delhi, Punjab, Andhra Pradesh and Tamil Nadu to operationalise full market potential in 2004.

In the current year, the company further plans to enhance its distribution by expanding the number of outlets by over 23 per cent and distributor network by over 40 per cent. Further, it also plans to invest on low-cost automation to increase service frequency and increase chilled availability. “We will be increasing our distribution by over 40 per cent by March 2004, and all new automation will close by Q1 2004,” Mr Gupta said.

In 2003, CCI made an incremental investment of $100 million in improving its distribution and operations. Mr Gupta refuted allegations that the huge investments had hit the company’s bottomline. “We continue to improve on our bottomline. The 200-ml strategy is a lower margin per case model but we are viable,” he said while answering a query whether the 200-ml at Rs 5 was a profitable strategy for Coke or not.

“We were clear from the very beginning that to make it sustainable in the long run, it has to be used as a strategy and not just as a price point or a price drop,” he added.

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