Wait for many more local innovations in India: Coca-Cola CEO James Quincey

We're set for an extended period of growth in India, says Quincey

In 2018, Coca-Cola, the largest beverage company in the world, made some bold bets in India, acquiring Costa Coffee and bidding for Horlicks and Complan. James Quincey, the 54-year-old president and CEO of The Coca-Cola Company, told Viveat Susan Pinto & Niraj Bhatt that his firm can reconcile fizzy drinks with good-for-you drinks to cater to changing consumer preferences. Edited excerpts:

Do you see a consumption uptick with elections falling in summer this year? Will beverage sales get a boost?

Summer is the biggest factor for beverage consumption. Elections do inject activity into the economy. So, it does matter. 

At a broader level, elections also determine the direction of the economy in terms of who comes to power and the slant they will take vis-à-vis the industry. So, like most other businesses, the beverage market will also be affected.

Coca-Cola committed Rs 11,000 crore to develop what it called a “fruit circular economy” in India between 2017 and 2023. How much of this corpus has been invested so far?

We have been making steady progress in this area. We have already invested Rs 2,200 crore towards setting up infrastructure to process fruits, along with our partner Jain Irrigation and bottlers. We have also bought raw material worth Rs 1,350 crore. If all this is put together, till the end of 2018, we had spent Rs 3,550 crore from the total amount committed. The rest will follow. 

Globally, Coca-Cola has set a target recently of taking the India business into its top three markets. But, the previous target of making India the fifth market has not been achieved yet. Aren’t you being too ambitious? 

I am bullish about the prospects for India. There is a strong underlying economic performance here, which is good for the business. 

The Coca-Cola system has also stabilised, following disruptions (the roll out of the goods and services tax in 2017).  The bottlers are investing in execution capacity. There is focus on innovation as far as categories and brands are concerned. I believe we are set for an extended period of growth. And, the team here is working to get India into the fifth position from sixth by the end of 2019. As far as moving India into the top three markets is concerned, that will take time.

How is personalisation as a theme playing out in India?

One of the ways that personalisation is coming to light in India is via local fruits and flavours that are going into beverages. Our Minute Maid portfolio, for instance, has seen a lot of attention, whether it is getting local flavours such as mosambi or launching a grape-flavoured drink called Colour in Tamil Nadu last month. 

There will be more such local innovations that we will bring to our global brands as we try and become relevant to consumers in this market.

Are you disappointed on not getting either Horlicks or Complan despite bidding hard for them? At a broader level, how do you justify having healthy drinks and fizzy drinks in your portfolio?

We are always on the lookout for iconic brands and Horlicks is one of them. But, iconic brands also have to fit into our system at the right price. Horlicks wasn’t available at the price that would work for us. So, we walked out of it.

As far as reconciling our portfolio is concerned, there is nothing wrong with adapting to the changing needs of the consumers. 

Coca-Cola has been successful for over 100 years because it stayed relevant to the consumer all the time. I see nothing wrong if we are looking at healthy drinks. At the same time, there are a few more trends playing out in beverages such as the growth of hydration — people want more water-based beverage options. 

Second, indulgent drinks are also growing. As a leading player, our job would be to look at every end of the market.

What is your strategy as far as bottling operations in India? Will you exit it in the future?

The long-term direction for us would be to be less in bottling and more into brand strategy and marketing. However, we are not going to rush into it and do something that will make our bottling system weak. We do need a strong bottling system to support the business and we are in no hurry to make changes to it yet.