28 February 2024

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Coca-Cola

Coca-Cola: India’s business was negatively impacted by unseasonal rains in the June quarter

For instance, according to Coca-Cola, it increased its market share for non-alcoholic ready-to-drink beverages, which includes juices and juice drinks, in South Korea, India, Australia, and Thailand during the June quarter.

Even while Coca-Cola, the world’s largest beverage manufacturer, was hopeful about the future in its fifth-largest market by volume, it stated that unseasonal rains in the June quarter hurt the Indian business.

Despite the fact that Coke’s unit case volume in Asia-Pacific increased by 2% in the June quarter, with India, China, Thailand, and Vietnam leading the way, the company’s chairman and CEO, James Quincey, acknowledged during a conference call on Wednesday that “bad weather” had a negative impact on operations in India during the time period. Coca-Cola’s fiscal year runs from January to December.

Because the summer season accounts for 50% of overall sales, the months of April to June are critical for the bulk of beverage companies in India. Unseasonal rains kept temperatures low in the June quarter this year, decreasing demand, particularly in the north, which accounts for between 30 and 35% of beverage sales, according to industry analysts.

Company’s Global Sale & Profit

Coca-Cola raised its global sales and profit predictions for 2023 on Wednesday, citing a 6% rise in net revenue in the June quarter owing to higher pricing. Quincey, on the other hand, emphasized that the Asia-Pacific (APAC) region’s strategy will be volume-led rather than price-led. India is a country in the Asia-Pacific region.

“In the Asia-Pacific region, there are several emerging markets experiencing rapid growth.” However, in comparison to Japan, where prices are higher, pricing power is not as strong in nations such as China and India. In terms of the two markets’ future strategy, he noted, “The focus here (in India and China) is on fostering volume growth.” For context, China is Coca-Cola’s third-largest market worldwide.

In India, the firm has also been working on a “de-seasonalization” plan to maximize the value of its core product range throughout the year.

Coca-Cola, for example, said that in the June quarter, it increased its market share for non-alcoholic ready-to-drink beverages, which includes juices and juice drinks, in South Korea, India, Australia, and Thailand.

Coca-Cola

According to top corporate officials, Maaza is on its approach to becoming a billion-dollar brand, whereas fizzy drinks Thums Up and Pink Sprite are billion-dollar brands for Coca-Cola India in terms of retail sales.

Furthermore, the company promotes both in-home and out-of-home consumption in India by combining cheap price, a range of pack sizes, and many channels of distribution.

Businesses throughout the world are facing unprecedented problems as a result of unpredictable weather patterns and their growing impact on global supply chains. One example is India’s business sector, which was severely impacted by unseasonal rainfall in the June 2023 quarter. In a recent statement, James Quincey, Global Chief of Coca-Cola, provided light on the scope of the effects and their ramifications for the business landscape.

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Coca-Cola Summer Sales in India

Unseasonal rains in India, which typically has a hot and dry climate throughout the summer months, have harmed a variety of industries, particularly agriculture, construction, and FMCG (Fast-Moving Consumer Goods), including beverage behemoths like Coca-Cola. These unanticipated weather events have impacted production, distribution, and sales dynamics, making them a serious issue for enterprises operating both within and outside of the country.

Agriculture employs more than half of the Indian workforce and is the backbone of the Indian economy. Unseasonal rainfall, particularly in the summer, can provide significant issues. While some rainfall is good to many crops, excessive and untimely rain can cause crop damage and illnesses, reducing yields significantly.

These unseasonal rains cause two types of damage: they directly hurt farmers and indirectly affect enterprises that rely on agricultural produce, such as food processing companies and beverage producers. Disruptions in the availability of raw materials such as sugar, fruits, and other important ingredients for Coca-Cola’s products increase production costs and may even lead to scarcity.

Coca-Cola

Unexpected rain has also hampered the construction industry, which contributes significantly to India’s GDP. Unfavorable weather conditions can cause construction timetables to be delayed and expenses to rise, as work is frequently paused due to rain, resulting in longer project durations and labor inefficiencies.

The unseasonal rains have also had a significant impact on the FMCG sector, which includes corporations such as Coca-Cola. Summer months are crucial for the sector, especially for products like cool beverages, ice cream, and so on. However, because of the unseasonal rains that have cooled the temperature, there has been a natural drop in demand for such products.

According to James Quincey, the unexpected rain has resulted in lower-than-expected Coca-Cola sales in India during this period. The company has suffered considerable revenue losses as a result of the fall in demand and interruption in supply networks.

As one of the world’s major markets, any disturbance in India has repercussions throughout the global commercial landscape. For example, unseasonal rains have damaged not only Coca-Cola’s domestic profitability in India, but also its whole global sales.

Companies will need to enhance their supply chains, establish flexible business models, and invest in new technology for weather prediction and effective resource management to avoid such weather-related disruptions.

Unseasonal rains in the June quarter of 2023 have created a huge challenge to Indian enterprises. As Coke’s worldwide chief James Quincey stated, the implications are far-reaching, extending from local sectors to global marketplaces. It asks for a rethinking of business strategy, as well as a greater emphasis on sustainability and resilience for future success in an increasingly volatile global climate.

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