09-05-2014, 03:04 PM
SOFT DRINK INDUSTRY IN INDIA
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The 50-bn-rupee soft drink industry is growing now at 6 to 7% annually. In India, Coke and Pepsi have a combined market share of around 95% directly or through franchisees. Campa Cola has a 1% share, and the rest is divided among local players. Industry watchers say, fake products also account for a good share of the balance. There are about 110 soft drink producing units (60% being owned by Indian bottlers) in the country, employing about 125,000 people. There are two distinct segments of the market, cola and non-cola drinks. The cola segment claims a share of 62%, while the non-cola segment includes soda, clear lime, cloudy lime and drinks with orange and mango flavours.
The per capita consumption of soft drinks in India is around 5 to 6 bottles (same as Nepal's) compared to Pakistan's 17 bottles, Sri Lanka's 21, Thailand's 73, the Philippines 173 and Mexico 605. The industry contributes over Rs 12 bn to the exchequer and exports goods worth Rs 2 bn. It also supports growth of industries like glass, refrigeration, transportation, paper and sugar. The Department of Food Processing Industries had stipulated that 'contains-no-fruit-juice' labels be pasted on returnable glass bottles. About 85% of the soft drinks are currently sold in returnable bottles. There was a floating stock of about 1000 mn bottles valued at Rs 6 bn. If the industry were to abide by the new guidelines, it would have to invest in new bottles, resulting in a cost outgo of Rs 5 bn. Neither Coke nor Pepsi is in a position to invest such a large amount.
Around 400,000 tonnes of raw material would be required to replace the existing stock of bottles. Instead, the soft drink industry suggested that a seven-year moratorium be extended to the industry so that it can incorporate the change in a phased manner. There is no such mandatory requirement anywhere in the world to specifically label the glass surface of returnable bottles. The government has decided to extend the date for replacing the bottles to end-march 2006. In the meantime, the producers have shifted substantially to the use of PET bottles.
Soft and aerated drinks were considered products for the middle class and the affluent. That segregation is no more valid. Soft and aerated drinks are consumed by all except those who cannot afford to buy any drink. An NCAER study says that 91% soft drink sales are made to the lower, middle and upper middle classes. The soft drink industry has been urging the government to categorise aerated waters (soft drinks) equitably with other consumer products of mass consumption and remove special excise duty.
The industry estimates that the beverage market should grow at twice the rate of GDP growth. The Indian market should have, therefore, grown by atleast 12%. However, it has been growing at a rate of about 6%. In contrast, the Chinese market grew by 16% a year, while the Russian market expanded at almost four times the rate of growth of the Indian market.
A Modern Supply Chain for a Classic Beverage
When it comes to the world’s most powerful brands, Coca-Cola is still number one. The iconic beverage maker, which has dominated the global soft drink market for more than a century, continued its 12-year reign at the top in 2011, according to Interbrand’s latest global rankings.
For Coca-Cola, achievements like this are byproducts of a vision and an operating framework that is built on excellence. At Coca-Cola Enterprises (CCE), the exclusive Coca-Cola bottler for its territories in Western Europe, the company’s goal is to be the number 1 or strong number 2 choice in every category it competes in.
But on the road to long-term, sustainable growth, CCE faces similar challenges to many other manufacturing and logistics businesses. A top priority is replacing dated systems with a modernized platform across markets to create a cohesive view of metrics and streamlined processes.
Bottling iconic brands in Europe
CCE is one of the world’s largest marketers, producers and distributors of Coca-Cola products. CCE buys concentrate from The Coca-Cola Company and combines it with other ingredients to create some of the most popular beverages in Belgium, Great Britain, France, Luxembourg, the Netherlands, Norway and Sweden.
In 2010, CCE completed a significant transaction with The Coca-Cola Company, selling its North American operations, while retaining its European territories and acquired new bottling rights for Sweden and Norway.
CCE’s executives recognized that establishing a uniform IT program across all of its business units would be critical for expanding CCE’s footprint in Europe.
“It is very important for us to have a set of consistent standards and processes, so that when we acquire and integrate new territories into our business we can easily put those practices in place in a short time,” says Kemal Cetin, vice president of European deployment at CCE.