Coke, Pepsi Summer Sales Up 40%

Soft drink giants Pepsi and Coca-Cola together logged a sales growth of nearly 40 per cent in April-June this year, even as the domestic industry grappled with a slowdown.

The two companies together sold about 140 million cases this year and are projected to sell 100 million cases more before the end of the year.

Pepsi recorded a 46 per cent growth in sales during the period. Its sales in January-March grew 27 per cent.

The overall sales growth in the first half of 1998 was 42 per cent against the 20 per cent registered for the whole of 1997.

 

Coke registered a growth of 36 per cent in April-June this year, compared with 31 per cent in January-June and 5 per cent in the whole of 1997.

The projected sales growth for the whole of 1998 is 20 per cent, rising from 108.6 million cases to 128 million cases.

"It was a good summer for the soft drinks industry. Rising temperature did add to sales, but the industry had put in infrastructure in advance to meet its objective. The availability is still falling short of the demand," industry observers said. The penetration of the two players in `B' and `C' cities is much deeper now. Sales in places like Kanpur and Jalandhar have gone up by over 70 per cent.

Even in metropolitan cities, where growth was stagnant last year, sales have registered a rise of nearly 20 per cent.

Pepsi executives cited easier availability as a factor responsible for the sales growth. "Earlier, Pepsi was not widely available in Rajasthan, Madhya Pradesh, Bihar, Karnataka and Goa due to inadequate bottling infrastructure. These were Thums Up-dominated areas," Pepsi executives said. This year, the number of outlets covered by Pepsi has gone up from 300,000 to 500,000, Pepsi executives said.

The company is working towards a target of 1 million outlets.

Coke has increased its penetration in suburban and rural markets, especially Punjab and Andhra Pradesh. The highest selling and fastest growing segment in Coke's stable has been the 300 ml returnable glass bottles.

Coke executives said the number of retailers in the company's distribution network has increased from 400,000 to 600,000. The target is to cover 1 million outlets by year 2000.

Pepsi executives attribute the growth to launch of the new 7-Up and Mirinda Lemon. "Rise in sales of the new 7-Up certainly added to the sales, while Mirinda Lemon could not make as much of a contribution since it was launched towards the end of May," Pepsi executives said.

PET bottles have made a significant contribution to the sales spurt, especially in `B' and `C' cities, since they are economical. The share of PET bottles in sales volumes has gone up to 7-8 per cent from 2 per cent last year.

Another reason is that prices of most brands have remained stable or gone down.

However, an industry observer said this year's growth may be artificial. The truckers' strike in April-May last year had brought the movement of goods to a standstill. This has resulted in a low base for calculating this year's growth.