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INDIA
BUSINESS WORLD -
FEBRUARY 2006
THE MONTH THAT WAS COKE PUTS CAP ON BOTTLERS FOR A COOL SUMMER
At the behest of the parent in Atlanta, the company has got its 24 bottlers (including its own) to sign what it calls a ‘transhipment protocol'. The agreement, signed for the first time in India, prohibits bottlers from infiltrating each other's territory. The idea is to stop the increasing instances of price undercutting and sales loss for the affected franchisee bottler and the company's bottling operations.
Market sources believe that the bottlers would be too willing to fall in line as Atlanta is pushing for profitability and not just volume which was earlier the cornerstone of the company's strategy in India. The race for volume earlier, say insiders, had led one bottler to dump stocks in another bottler's territory at a discounted price. At times, stocks from as far as Nagpur would land in Delhi, said a source. A big challenge, say industry watchers, would be to ensure that such an agreement is adhered to, by all in the distribution chain. While the signatory to the protocol are the bottlers only, it is however not clear how the company plans to reign in wholesalers and distributors.
“The bottlers have signed the protocol, not the wholesalers. What stops them from infiltrating?'' asks an industry source. The Coca-Cola India spokesperson, while insisting that the protocol is a local initiative, says the company has put in place a mechanism to ensure compliance. Insiders say, the company has introduced a penalty clause for the erring bottlers. For instance, if a bottler is caught dumping a crate worth Rs 150 at a discounted price of Rs 100, he would have to pick up the same consignment at double its value. The spokesperson adds, the new protocol would help bottlers make the most of their investments.
“This is a first move by any FMCG company to discipline its franchisees and distributors. It would also result in improved logistics, reduced expenses on the retrieval of glass bottles and better monitoring and tracking of their products,” he said.
Analysts call it a fundamental shift in Atlanta's bid to move to a profitable operations in India. They claim much of all this is a fallout of stern stance of the parent due to India's poor showing during the last calendar year. India along with Philippines actually brought down the overall growth in the Asia-Pacific region. “The company now wants to bring the Indian operations out of a financial mess this summer,” said a company executive . |
