By Anuja Mardikar
TOMA is a marketing term which stands for ‘top of mind awareness’. It is a measure of how well a brand ranks in the minds of consumers. In case of the carbonated beverage industry in India, Coca-Cola’s TOMA is one of the highest.
India is the sixth largest market for the maker of Coke, Sprite and Minute Maid juices. Coca-Cola Indias current portfolio includes Maaza, Minute Maid juice drinks, Vio (flavoured milk), Kinley packaged drinking water, Schweppes tonics and mixers, Georgia tea and coffee, Fuze iced tea, and a range of sparkling beverages such as Coca-Cola, Fanta, Sprite (global brands), Thumbs Up, Limca (Local brands).
Recent market challenges
Like many other industries, India’s soft drink companies faced challenges from demonetisation. This resulted in declining sales which are now turning up in the companies’ financial statements. During 2015-16, Coca-Cola Indias sales remained flat at Rs 1,757 crore (Rs 17.57 billion) and profits declined 6% year-on-year.
Consumers were forced to use payment methods other than cash, which lead to an immediate decline in sales. Other factors that contributed to the decline were a slowdown in rural demand, increasing competition and urban dwellers switching to healthier beverage options. The parent company of Coca-Cola India also faced a sales disruption in the state of Tamil Nadu due to a ban on Coca-Cola products in the first quarter of 2017.
Double-digit growth ended in December
After facing tough operating conditions in India due to demonetisation and the introduction of the new GST, Coca-Cola India returned to growth in the third quarter of 2017. It witnessed high single-digit growth in the third quarter. The company said that it experienced growth of up to 6%, which was driven by solid performance across the portfolio. This growth continued into the fourth quarter, for which the company reported double-digit growth. Overall, Cocal-Cola revenue grew by 11% in 2017 compared to the previous year
One of the major reasons for this growth was a series of product launches in 2017. The introduction of fruit juices, driven by the Ras Ras Mein India campaign, beefed up the company’s beverage portfolio. The aim was to launch fruit juices that fit in with Indian culture. The company also launched the Minute Maid Santra and Maaza GoldIndias most loved mango juiceand also transformed the Thums Up brand to Thums Up Charged. The company’s Coca-Cola brand also now has three different versions and looksOriginal, Light taste and No sugar. Finally, the company also launched a new product for the packaged drinking water marketSmartwater. Coca-Cola India also brought about a few changes in their brand ambassador roles. It brought in a leading Bollywood actress for its ad campaign and also replaced the brand ambassador of Thums Up to increase its connection with youth.
Further investments
Coca-Cola India’s immediate goals for the current year include further widening its product portfolio. The company will soon be launching ‘whipped frozen fruit snacks’, which has already received a good response from customers during pilot testing. The move comes as part of the Coca-Colas global strategy to build a portfolio beyond carbonated drinks and to offer more healthy options for its consumers worldwide. Also, the company intends to launch fruit variants of their Sprite and Limca brands as well and three new variants of Fanta.
The incorporation of local flavours in aerated drinks is an attempt to break the lower-priced market, which is currently dominated by local brands. The company is also planning to launch Thums Up in neighbouring countries such as Bangladesh, Sri Lanka, Bhutan and Nepal by the end of March. Thums Up is the first carbonated beverage brand to be taken overseas. To address health concerns around high sugar levels, the company is repackaging its drinks in smaller packs and is looking at re-formulating some of its recipes.
Coca-Cola plans to invest around $5 billion in India up to the year 2020 and will increase its portfolio of non-aerated drinks to attract health-conscious customers. With increasing per capita income, the demand for packaged beverages is growing exponentially. The Coca-Cola company is looking to tap into this growth and the company is focusing on making India its third largest market, which would be up three places from its current sixth position.
The path to success
India is a fast-growing market and holds strong growth potential for Coca-Cola. After experiencing dwindling sales last year it appears that the company is again set on the path to growth in India. The company’s key goal appears to be expanding Coca-Colas portfolio of beveragesa strategy that may prove to be a winner. According to John Murphy, president of the Asia Pacific Group of the Coca-Cola Company The focus ahead would be in much more consumer-oriented business and catering to the needs of people around the world by delivering beverage solutions.
Innovation is the key in todays fast-changing business environment. Falling sales is an indicator of the need for innovation. By bringing in different flavours to its soft drink offerings and focusing on local tastes Coca-Cola India is making the best effort it can to win back its share of sales.