Coca-Cola India's spending on brands expected to be highest in H2: Official

Beverage major Coca-Cola is going to have its highest-ever spending on brands in the second half of 2023 in India, when the ICC Men's Cricket World Cup is coinciding with the festive season, which is expected to boost the consumption, a top company official said on Friday.

Though the company has not shared the quantum of spending but said it is a "big part of overall investment" that they are going to make during the ICC World Cup, which provides "a very big platform" for their business expansion, Coca-Cola India and South-West Asia Vice President, Marketing Arnab Roy, said.

Coca-Cola, which had a "challenging summer" this year due to unseasonal rains, expects people will spend money across categories during the festive season despite challenging macro conditions, and affordable packages would do well.

When asked if Coca-Cola can make up for a slower second quarter, Roy said: "Probably based on the trends we are seeing both in Q3 and the beginning of Q4, we feel very positive and encouraged, with the way we hopefully end this year."

Festival season has already begun in some parts of the country, where Coca-Cola has started off brand activation. Coca-Cola is also doing the same in neighbouring markets such as Nepal, Bangladesh and Sri Lanka during the ICC Cricket World Cup, he said.

"This is going to result in one of the largest investments we have ever done in Q3 and Q4 combined, in the history of our company in India," Roy said at a virtual media round table.

The investment would be from Coca-Cola and its bottling arm Hindustan Coca-Cola Beverages, he added.

When asked about the investments, Roy said: "Ad spends in the December quarter as a percentage of overall spending are 5-7 per cent higher compared to a year ago."

Coca-Cola India's Advertising promotional expenses were at Rs 737.97 crore in FY22, according to the financial data accessed by the business intelligence platform Tofler.

Coca-Cola, which is the exclusive non-alcoholic beverage partner of the ICC until 2023, has activated its brand Thums Up along with Limca Sportz, the hydration drink from Coca-Cola India's home-grown brand Limca, as the event is in India, he added.

It is also adding Sprite, a lime-flavoured beverage, the second brand in India to breach the USD 1 billion mark in annual sales.

"The ICC World Cup is in India, which is the largest sporting event in the country after almost 11-12 years. So it is very big for us... to activate our brands, our entire system and obviously ensure that we are able to leverage this big platform to continue the business momentum," Roy said.

According to Roy, this is not only for "classic brand marketing investments but also the investments on shopper marketing, trade marketing, working with our customers, working with retailers or distributors. So the whole ecosystem it was important for us to activate" taking over all DME (Direct Marketing Expense) higher.

It is a combined effort between two brands as "Thums Up is leading all the work in ICC World Cup and brand Coca-Cola... around the festivals" with a regional approach. Coca-Cola faced a "challenging summer" this year due to early rains but Roy said, "long-term metrics are looking very strong, therefore it was very important for us to continue investing in the business ...in our brands, so that we do not lose the momentum."

Regarding the benefits, Roy said typically in the second half of a year, you do not have business expansion.

But "with the ICC World Cup, especially as you go to small town and rural India, whether you can start increasing your numeric distribution from what you have had in the past, in this particular period."

On the demands, Coca-Cola sees it to be "very robust" across both urban and rural. The company is optimising its demand through affordable packs, giving a quantitative push. Coca-Cola is expanding its returnable glass bottle business across parts of India, which is important to hold and ensure the market at Rs 10 and 20 price points.

"We would have to optimise everything in our supply chain and work on pack mix so that your overall profitability is not going down. So Rs 10 and Rs 20 ...will continue to be important in the year 2024," he said.

Besides, Coca-Cola is also a lead sponsor of Disney Star which has exclusive broadcast and media rights for linear and digital platforms of ICC Men's Cricket World Cup. It has signed for both linear and digital streaming for OTT platform Disney+ Hotstar.