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Coca-Cola realigns bottling operations in North India

Hindustan Coca-Cola Beverages Pvt. Ltd (HCCB), the company-owned bottler of beverage company Coca-Cola on Wednesday said it is divesting bottling operations in four territories in north of India to its existing bottlers in line with the beverage maker’s plans to optimise resources and widen its distribution reach here as it adds more beverages to its portfolio.

To be sure, Coca-Cola works with 14 bottlers in India, including HCCB or its company owned bottling operations.

“Coca-Cola today announced the internal realignment of its bottling operations in North India, as Hindustan Coca-Cola Beverages Pvt. Ltd (HCCB) – the company-owned bottler for the majority of India will transfer its business operations in four territories in North India to existing bottlers,” the company said in a press statement Wednesday evening. “The change involves four non-contiguous territories in which HCCB currently operates in,” the company statement added.

The move is aimed at creating regional scale, stimulate investments and growth in the northern part of the country, as the company hopes to sell more beverages to Indian consumers. HCCB will continue to operate in East, West and South of India. No further immediate realignment is envisaged currently, it added.

The company, however, declined to share which states it has divested its business in.

However, HCCB has bottling operations in the northern states of Rajasthan, and Uttar Pradesh, while the bulk of its manufacturing plants in the north are owned by franchise bottlers, and co-packers of HCCB, according to information available on the company’s website. For the year ended March 2019, HCCB reported a net profit of Rs321.6 crore, while revenue from operations stood at Rs9427.45 crore, according to data sourced from business intelligence platform Tofler.

In all, HCCB has 18 bottling plants in India, according to a news report by The Economic Times newspaper. However, among its external bottling partners, and its owned bottling operations, Coca-Cola that sells popular beverage brands such as Minute Maid, Thums-Up, and Sprite, has over 55 manufacturing plants in India.

Coca-Cola has been working on expanding its reach and distribution in the market where it has rolled out a wide portfolio of non-carbonated beverages in the last few years. In 2018, India’s largest beverage maker launched over 18 new products, including new variants across its Minute Maid, Maaza and Thums-Up brands. Moreover, Coca-Cola has been pushing more fruit-based beverages in the market to chase a shift in consumer preferences.

In its global earnings for the third-quarter ended September 27, 2019, the company said that unit case volume in the Asia-pacific region grew 4% “due to broad-based growth across the majority of key markets, partially offset by a decline in Japan. Volume growth was led by Southeast Asia, China and India.”

The company however, does not share India-specific numbers.

Coca-Cola’s push to expand the reach and sell more on-the-go beverage packs of its brands also helped it draw volume growth in the Indian market, the company’s top management told investors then.

“In India, for example, immediate consumption transactions have grown double-digits year-to-date, fuelled by adding more than 650,000 new customer outlets during the year and placing more than 25,000 additional coolers in the market,” James Quincey, chairman, and CEO of The Coca-Cola Company, told investors during the company’s earnings call. Immediate consumption packs are on-the-go packs which are consumed instantly and different from in-home, large pack sizes.

Source: Livemint