INDIA
BUSINESS WORLD -
OCTOBER 2006
THE MONTH THAT WAS...
COKE CLOCKS A FROTHY 4% RISE IN VOLUMES
COCA-Cola India has reported a 4% increase in unit case volume in the third quarter ended September 30, cycling a decline of 22% in the previous-year quarter, according to the quarterly results announced by The Coca-Cola Company in Atlanta last week. The soft-drink company bettered its performance in the quarter that saw the pesticide-in-cola controversy resurface, threatening to impact sales severely.
According to the parent company, “Continued investment in marketing initiatives around the quality and safety of our products and focus on execution in the consolidated bottling operations delivered solid results even with the renewed unfounded allegations in the quarter of unsafe pesticide levels in the company's products. The company will continue to aggressively address the allegations, but remain cautious on its outlook for the rest of the year.”
The pesticides controversy in colas resurfaced again in August when the Centre for Science and Environment (CSE) announced a new study that alleged the presence of pesticides in both Coca-Cola and Pepsi. Sales plummeted instantly and the industry feared that the impact would remain for the rest of the year, like in 2004 when the controversy first broke. Anyway, sources said proactive communication — ads featuring Pepsico chairman Rajeev Bakshi and film actor Aamir Khan assuring consumers about the quality of Pepsi and Coke — seemed to have worked.
Coke, however, continues to trail behind its internal target: 25% growth in 2006. Perhaps what's heartening for the company is the fact that it has shown positive volume growth after almost two years of negative quarterly growth. Sources say this year the company is focused on making the business profitable. It has decided that it will not drive volumes at the cost of profitability. Also, the company has plans to derisk itself by introducing health beverages such as juices and flavoured water.
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