Coke unveils fridge packs to boost sales

Gearing up for the searing summer ahead, cola major Coca-Cola India has introduced mid-sized bottles of 1.25 lt to raise consumption and boost profits.

Experts believe that reducing pack sizes is not just a way of increasing consumption but also helps convey a lower price perception to consumers and get better realisations.

Venkatesh Kini, vice-president (marketing), Coca-Cola India, said on the sidelines of announcing the Olympic Torchbearers campaign of the company, "This new fridge pack of 1.25 lt is a way to solve the leftover problem that consumers face when they open a bigger bottle. For smaller consumption, a 1.25 lt bottle offers a better solution. We have already launched the bottle in the western region and soon it will be spread to the rest of the country."

This makes Coca-Cola the first among the two majors (PepsiCo) to have filled the gap between the 500 ml bottle and 1.50 lt bottle. This bottle size would be implemented for nearly all the brands of the company. The earlier 1 lt bottle by both the companies has been withdrawn from retail outlets for sometime now.

Naimish Dave, director, OC&C Strategy Consultants, explains, "The price per litre for the 1.25 lt bottle priced at Rs 35 comes to Rs 28, and for the 1.50 lt bottle of Rs 45 at Rs 30. Hence, the consumer sees a price difference of Rs 10 between the two bottles, but the company profits in the process as it has successfully attracted new consumers for price realisation which is not significantly lower for the company. This strategy of smart pricing can also help the companies add more value share."

Coca-Cola's Thums Up brand is the country's largest selling cola brand. However, in terms of value share, say anlaysts, Coca-Cola's flagship brand may have fallen behind PepsiCo's cola brand. Yet, Coca-Cola is still ahead of PepsiCo in overall value market share.

Unlike the rest of the fast moving consumer goods (FMCG) sector, the cola companies do not face a severe raw material pricing pressure. But in order to maintain brand loyalty among the consumers, the cola makers tend to spend excessively on marketing and distribution.

For cola companies, raw materials form just 15 per cent of total costs, which is 50 per cent for other FMCG companies.

The growth in cola market has slowed down in India but still higher than the rest of the world. This would ensure continued expenditure by companies behind their brands in India.