The 54-year-old Englishman, one of the youngest global chief executives of Coca-Cola, flew to India to attend industrialist and good friend Mukesh Ambani’s son Akash’s wedding.
“People tend to spend a little more money in the run-up to the elections, which flows into the economy, but consumption tends to be ‘disruptive’ in the week of voting. We are going to keep investing, whatever the outcome,” he said.
India, the world’s largest democracy, is set to host general elections starting April 11. The Atlanta-based beverage maker expects India, its sixth largest market by volume, to break into the top five by 2019-end.
“We came off a number of years when the business was resettling itself and stabilising. We have been investing in innovation in sparkling and fruit drink categories. That’s starting to grow traction,” he said. Coca-Cola has invested Rs 2,200 crore across the supply chain, including manufacturing capacities, distribution and other supporting infrastructure in the past two years.
The maker of Coca-Cola, Thums Up and Sprite sparkling drinks, Minute Maid juice and Kinley water will step up reshaping its portfolio to make it resonate better with consumers. This, it will do by expanding the reach of sugar-free variants of its brands, smaller packs and advertising and merchandising the messaging to consumers, as low-sugar and non-sparkling drinks grow faster across world markets.
“Our focus is how to grow the business, but reduce calories. There’s nothing wrong with the product, the problem is the excess,” he said. He said Coke Zero Sugar has had its best year in 2018, and also grew the fastest last year. Quincey said it’s not as if colas are declining and everything else is growing. “The reality is that colas are growing and everything else is growing on top, as more people come into the middle class and start to have more disposable incomes.”
There's a section of society which has
cut the chord with a lot of television. So,
you have to innovate in marketing, says
James Quincey, Global chief executive, Coca-Cola.
He said the sparkling category continues to grow though not as fast as the total. “It’s the explosion of choice which is the predominant future of the growth of the industry,” Quincey said. Traditionally, a big spender on advertising and marketing, Coca-Cola has been facing a marketing challenge similar to most consumer-facing companies, as core audiences are moving away from traditional advertising platforms such as television. “There’s a section of society which has cut the chord with a lot of television.
So, you have to innovate in marketing. You have to give more importance to experience, different ways of advertising and connecting with streaming services. Many of them don’t yet make money, which they will have to at some point – whether it’s through advertising or subscription. We have to evolve to engage with consumers,” he said.
Last month, Coca-Cola’s stock plunged 9% over two days - a decade low — after it released its fourth-quarter earnings, when it downgraded its full-year organic revenue growth guidance for 2019 to 4%, down from 5% last year. Quincey, formerly with Bain & Co, said the company is cautious on the macros in terms of consumer demand.
“The US dollar got a lot stronger; it affects us because 75% of the Coca-Cola business is outside the US. So, the translation of the rest of the world to the US dollar makes a big difference to us.” He said while the company reported strong ongoing operational performance, conversion of that into Dollars took a hit coming out of 2019.
Taxed at effectively 40%, colas are among the highest taxed sectors in India. Other soft drinks and juices, however, have different tax slabs. “If we’re talking about the obesity problem, then clearly moderating consumption of sugar and other calories is important because if you over-consume, it’s not going to end well,” Quincey said.
This article was originally published in Economic Times