For Coke, rural market grows faster than urban – Times of India

by The Technical Blogs

NEW DELHI: Even as some consumer goods companies continue to tackle a sluggish rural demand, for Coca-Cola India, rural markets have been growing at a faster pace than urban regions. Expansion of electrification coverage in rural India, better incomes and ramp-up in government spending have been the tailwinds of growth in the regions, helping the beverage major reach some 3.2 lakh of the estimated 6.6 lakh villages in the country.
Besides, adoption of UPI in rural regions have made it easier for consumers to make small-ticket payments. “The infrastructure support that the government has built in terms of electrification and UPI has helped drive rural growth. Also, digital penetration has added to consumer awareness and it is a big booster. Rural, for us, is definitely growing 3% faster than urban today,” Sundeep Bajoria, VP, India operations at Coca-Cola India told TOI. Rural electrification enables the company to install coolers in stores.

Inflation, which has rather been a bit erratic in the past few quarters is “real,” said Bajoria and has been a challenge for companies but devising the right pricing strategy has been the brand’s approach to tackling inflation. “We continue to make sure that our products are rightly priced for each of the consumption occasions. The magic price points of Rs 10, 20 and 50 have bigger importance in rural regions. We continue to build a consumer-centric portfolio,” said Bajoria, while adding that besides summers, which typically have been a big consumption driver for packaged beverages, Coca-Cola India has been able to market festivals as another significant occasion for beverage consumption. “With festivals, we are creating a second season,” said Bajoria.
Coca-Cola’s association with the ongoing ICC men’s cricket world cup as part of the global brand’s broader partnership with ICC (The International Cricket Council) has only helped “fortify the idea of the second season,” he said.
While broadening rural coverage will certainly be the key focus for the brand’s India play, it will also tap into urban markets to drive premiumisation. “Urban (markets) gives us the opportunity to build premium,” said Bajoria. And there is enough and more headroom to grow. For instance, currently the company whose local beverage portfolio includes brands like Thums Up, Limca and Fanta, apart from the flagship Coca-Cola, reaches only about 41% of urban households and 32% rural households. “Today, we have reached 4.5 million stores in India. The overall universe of outlets could be as big as 12 million. India is at the right juncture where per capita incomes have crossed the magic threshold of $2,000. As incomes go beyond the $2,000 mark, an inflexion point is seen enabling consumption where people start to leverage the convenience of packaged beverages.”

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