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Indian summer boosts US cola cos profits

But for the scorching summers in India and China, it could have been a cold June for America’s cola giants—Coca Cola and PepsiCo. Strong sales volumes growth in the two emerging Asian giants have helped offset weaker consumer demand in North America helping the two companies post healthy growth during the second quarter ending June 30, 2009, reports Gaurav Choudhury.

business Updated: Jul 27, 2009 01:13 IST
Gaurav Choudhury

But for the scorching summers in India and China, it could have been a cold June for America’s cola giants—Coca Cola and PepsiCo.

Strong sales volumes growth in the two emerging Asian giants have helped offset weaker consumer demand in North America helping the two companies post healthy growth during the second quarter ending June 30, 2009.

For Coca-Cola, the sales volume grew 33 per cent in India and 14 per cent in China compared to an overall growth of 4 per cent.

The trend was similar for PepsiCo-- beverage sales grew by 8 per cent in Asia, Middle East and Africa, when the overall growth was a flat 1 per cent during the quarter.

PepsiCo, headed by an Indian-born Indra Nooyi, said volumes growth was particularly strong in India. The company did not give country-specific figures.

The companies together account for almost the entire Rs 7,000 crore-beverage market in India.

They together sold about 417 million unit cases (2.4 billion litres) of beverages in 2008 in the country.

Both the companies refused to give details of market share, but sounded bullish about growth in India.

“There’s a lot of latent potential in the India beverage market and as an industry we have just about started to unlock the potential,” a Coca Cola India spokesman said.

For Coca-Cola which re-entered India in 1993, four years after its rival, sales volumes have grown for more than three years.

Last year, it had announced plans to invest $250 million spread over three years with plans to introduce specific products for the Indian market including Aam Panna.

PepsiCo India has also mapped out similar plans with new investments proposed for manufacturing capacity, infrastructure, supply chain, and research and development.

Growing thirst

n During the second quarter ending June 30, Coca-Cola’s sales volume grew 33 per cent in India and 14 per cent in China compared to an overall growth of 4 per cent.

n PepsiCo’s sales grew by 8 per cent in Asia, Middle East and Africa, when the overall growth was a flat 1 per cent during the quarter