Early rains knock off fizz for Pepsi, Coke & other ‘thandas’

05 Jul,2013

By Ratna Bhushan


Early and heavy rains flooding almost the entire country have hit soft drink sales in June, the most critical month for the Rs 14,000-crore industry.


“June has been a bad month with sales down across the country because of early rains,” a leading bottler said. “Typically, if the month of June does robust sales, it sets the momentum for the rest of the year. But this year, that’s not been the case,” the person added.


With growth slowing to single digits, soft drink giants Coca-Cola and PepsiCo are stepping up consumer promotions and trade discounts to push sales. “The firms are discounting heavily to trade and buying volume,” said an executive at a retail chain.


The April-June quarter marks the highest spurt in soft drink sales in a year, contributing close to 40% of annual sales. A spokesman of PepsiCo India, which makes Pepsi Cola, 7Up lime drink and Aquafina water, however, said August could make up for the slowdown in June.


For the beverages industry, the five-month period from April-August should be considered as the critical season instead of looking at just one month, he said in response to a query.


“If monsoon arrives early in some years (say in June), the industry usually witnesses better than average August sales, as monsoon also recedes early in those years,” he said.


To counter the impact of early monsoon, PepsiCo is focusing on providing better value to consumers through pricing in traditional trade and driving distribution, especially in rural areas. “We also have ongoing consumer promotions in modern trade to drive planned purchases of multi-serve packs for in-home consumption,” the PepsiCo spokesman said.


A Coca-Cola India spokesperson maintained that the seasonality curve for beverages industry was ‘tapering off’ and that the firm was continuing to offer products in different packs at varying price points.


Besides trade incentives, Coca-Cola has been pushing 200-ml glass bottles of brand Coke priced at Rs 8 in smaller markets at the cost of profitability, hoping to make up in volumes. In bigger markets, the firm is selling multi-serve packs such as 300-ml, 400-ml and 500-ml bottles.


The world’s biggest soft drinks firm, which makes Coke, Sprite and Fanta aerated drinks, had posted a robust volume growth of 20% in India, the highest among BRIC countries in the April-June 2012 quarter.


An industry veteran said the growth would not touch the levels of last year in the June quarter. “Market conditions are very different now and consumption is down. The unseasonal rains have added to the tough times,” the person said.


During January-March, Coca-Cola had posted 8% volume growth in India. PepsiCo does not declare volume sales of its India division.


According to India meteorological department, the country received its heaviest rainfall in 12 years in the month of June, and the monsoon season is expected to last through September. The department also said that the south-west monsoon has advanced the fastest this year over a period of 50 years, a month earlier than expected.


Last month, rains and flash floods wreaked havoc in Uttarakhand, a sizeable tourism market for beverages, especially in peak season.


Source:The Economic Times

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