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John Murphy
New Delhi: Coca-Cola's global president and CFO, John Murphy, praised local brands like Campa for performing well in the Indian beverage market, noting that increased competition drives his company to stay relevant and refine its investment strategies.
He also highlighted that beverage consumption in India remains relatively low, with strong growth prospects driven by the country’s young population, rising consumption expenditure, and growing urbanisation, further supported by digitisation.
"The investments that the government has made over many years are now actually benefiting the people of the country. In turn, are creating opportunities for industries like ours. People need to drink beverages. Our job is to be their preferred choice," said Murphy in a media round-table here.
When asked about the competition faced from Reliance Industries' brand Campa, he said it invariably challenges us to be at our best.
"When we have no competition, we tend to get lazy, we tend to get complacent, and we do a good job, but we are not as good as we should be," he said.
Murphy also added "...in the case of India competitors, Campa is just one of many. There are a number of local, regional players who are doing a pretty damn good job too. We have our friends from Varun (Pepsi bottler Varun Beverages) who are doing a pretty good job, too, and it challenges us." However, he also added the portfolio of Coca-Cola in India, which includes local brands such as ThumsUp, Maaza, Limca etc, is as stronger than anywhere in the world.
"You have to stay on your toes, adapt and make sure that you are investing in the capabilities that you need to win. We are more excited about the prospects for our business in India right now than we have ever been," added Murphy.
Billionaire Mukesh Ambani-led Reliance Industries acquired the then-defunct Campa brand in 2022 and relaunched it a year later. It has disrupted the beverage market with its Rs 10 pack in PET bottles, forcing the rival beverage makers to reduce their prices to retain their market share and continue their growth.
Earlier this month, in its earnings statement Reliance had said Campa is projected to cross Rs 1,000-crore turnover in FY25.
India is the fifth largest market for Coca-Cola globally.
About the prevailing inflation, he said the Indian consumers are pretty elastic but the company will maintain its magic price points.
Coca-Cola will keep its strategy unchanged in India despite elevated inflation level and slowing economic growth, which it expects to be temporary, said Murphy.
"Economies go up and down, and if you are overtly dependent on where the economy is going, then I think you are in trouble. We have seen it as a tailwind. Over the next ten years, it will continue to be, given the way the government has demonstrated its ability to support economic growth," Murphy said at a round table here.
"So, what we are seeing at the moment is, I think, more of a blip than it is, a sort of a long-term trend in that regard," said Murphy.
Murphy also noted the relative strength of the rural areas in India and the flow witnessed by the FMCG companies provide a "massive opportunity" for companies like Coca-Cola.
From the last three quarters, rural has outpaced urban growth, reversing the trend during the pandemic, when villages saw slow demand.
Historically, rural demand has been rising twice the rate of urban areas but on a lower base, driven by over 800 million people whose purchase behaviour is mostly linked to farm output.
Murphy also pointed out the changing retail channel dynamics in India, where the growth of quick-commerce and modern channels like supermarkets and hypermarkets are growing at a much faster rate.
"So, they are interesting dynamics for us to stay on top and adapt to as we go forward. We are also in on the retail front. We also have some opportunities in the vending space...," he added.
Coca-Cola, which has recently sold a 40% stake in its India bottling business Hindustan Coca-Cola Beverages Pvt Ltd (HCCBL) to Jubilant Bhartia group as per its global strategy, said: "We are huge believers in the power of the franchise model. It has been a centre of value creation for a long time".
Now, the strategy to invest with partners is very consistent.
"We have owned some franchises, but for the last few years, our stated goal has been to re-franchise those territories that the company owns. India is one of those markets," Murphy said, adding that bottlers' know-how of the local market is much more than the company.
He also said Coca-Cola globally and in India has an ambition to tap the premium segment and hinted at entering more categories here.
"It is more of a game of leveraging the capabilities that you build by having multiple packages available at different price points to meet the needs of the consumer that you are catering to," he said.