ray: ‘Coca-Cola not concerned about Rel Retail’s foray into carbonated soft drinks market’

Coca-Cola is not unduly concerned about industrialist Mukesh Ambani-led Reliance Retail’s foray in the carbonated soft drinks market with its acquisition of the Campa Cola, and the competition will help to grow the category, Coca-Cola India and Southwest Asia president Sanket Ray said at a media roundtable on Tuesday. “Ultimately, the brands have to perform and establish consumer connect; hence we are not worried. More players in the category means more investment and marketing in soft drinks which is an under-penetrated category in India,” Ray said. In September, Reliance Retail acquired local fizzy drinks brand Campa Cola from Delhi-based Pure Drinks for ₹22 crore.

According to industry estimates, penetration of packaged soft drinks in India stands at 32%, leaving much headroom for brands to convert consumers from unbranded to branded drinks.

Coca-Cola, which makes Coke, Thums Up and Sprite fizzy drinks and leads the ₹50,000-crore packaged carbonated soft drinks market in the country, is increasing its ad spends significantly as it moves to deseasonalise its business. “We will spend more than half of our marketing and advertising spends in the second half of the year,” Ray said. The summer months of March-June continue to account for a majority share of annual soft drinks sales, and companies have been pushing strategies to keep demand going in the off-season.

For the quarter ended September 2022, the Atlanta-headquartered Coca-Cola had reported 2.5 billion transactions for its India unit at affordable price points which it said was on account of returnable glass bottles and single-serve packs.

Ray said the beverage maker is pushing premiumisation with its Schweppes brand of mixers and tonics, a trend most packaged consumer goods are following, as the mass segment continues to be impacted by inflation and growth in urban packs outpacing that of popular or mass products.

While consumer sentiment has picked in the last quarter with pent-up demand and the festive season, inflation continues to put pressure on household budgets in rural India.

Ray said green shoots of revival are now visible in rural markets.

A recent report by ICICI Securities flagged that new launches by companies would be focused on premiumisation in the near term, adding that companies are likely to manage inflation-led disruption in mass price-points with bridge packs (or packs priced higher than entry-level ones).

Ray said Coca-Cola is following the dual strategy of expanding into multiple categories to focus on small packs to cater to consumers wanting smaller portion sizes, and premium products for occasion-based consumption. Last week, Coca-Cola said its lemon and lime-flavoured soft drink Sprite has become a billion-dollar brand in annual sales in India, the second brand in its portfolio to touch the milestone. Ray said he expected the company’s fruit drink brand Maaza to also notch billion dollars in annual sales next. “We hope that happens next year,” he said.