Coca-Cola Faces Market Share Challenge in India Despite Strong Volume Growth

In a surprising turn of events, Coca-Cola has experienced a decline in its market share by value in India during the first quarter of the year, even while enjoying notable double-digit volume growth. The beverage titan attributed this growth to the rising demand for smaller and more affordable packaging.

Global Performance Highlights

In a recent earnings report, Coca-Cola indicated that its volume growth was predominantly driven by markets in India, China, and Brazil. The company stated that while it gained some ground in the Philippines and Japan, these increases were negated by losses in Indonesia and India.

• Decline in Market Share: The company’s share of the total revenue from non-alcoholic ready-to-drink beverages in India has diminished.
• Revenue Insights: For the Asia-Pacific region, Coca-Cola’s net operating revenue fell by 4%, totaling $1.42 billion for the quarter.

Competitive Landscape and Strategic Moves

As competition intensifies, Coca-Cola has implemented price reductions on certain products in India and launched more cost-effective options.

• Price Adjustments: In November, the company reduced the price of its 400 ml PET bottle by ₹5, bringing it down to ₹20 in response to Campa Cola’s pricing strategy.
• New Introductions: This year, Coca-Cola unveiled ₹10 packs for its diet and light variants of Coke, Thums Up, and Sprite. PepsiCo has followed suit with similar offerings.

These affordable packaging options help mitigate the need for price cuts on larger formats, allowing Coca-Cola to remain competitive in the market.

Insights from Leadership

During an analyst call following the quarterly results, James Quincey, Coca-Cola’s chairman and CEO, highlighted the robust volume growth across both global and local brands in India. He noted:

• Outlet Expansion: The company expanded its reach by adding 350,000 outlets in India within the quarter.
• Digital Growth: Approximately 100,000 new customers were attracted to Coca-Cola’s digital platform.

The volume growth in India was particularly driven by flagship brands such as Coca-Cola and Thums Up, with significant sales reported during the Maha Kumbh Mela from January 13 to February 26, amounting to around 180 million servings.

India’s Importance to Coca-Cola

Notably, India ranks as the fifth largest market for Coca-Cola, boasting three billion-dollar brands: Maaza, Thums Up, and Sprite.

On a global scale, Coca-Cola reported solid revenue and profit growth, while also reaffirming its full-year forecasts for organic revenue and comparable profits. The company appears to be insulated from ongoing tariff fluctuations, primarily because most of its production for the US is conducted domestically, contrasting with PepsiCo, which imports concentrates from Ireland now affected by a 10% reciprocal tariff.

In conclusion, while Coca-Cola navigates challenges in maintaining its market share in India, its overall global performance remains strong, bolstered by strategic pricing and product innovations.