We want to be more relevant as a total beverage player: Coca-Cola India president

T Krishnakumar has been a part of the Coke system for 14 years
Image: Madhu Kapparath
 

It was a rather unusual coincidence. In May 2017, when James Quincey took over as chief executive officer (CEO) at The Coca-Cola Company at its global headquarters in Atlanta, in India, T Krishnakumar, 57, took over the reins of the country’s largest beverage maker from its then India head Venkatesh Kini, amid flat sales and slowing profitability.

“For me, it’s business as usual. There has not been much of a difference; it’s a continuation of a long journey within the Coke system,” says the newly appointed president of Coca-Cola India and Southwest Asia. Prior to the top job at Coca-Cola, Krishnakumar, known as KK to friends and colleagues, served as the CEO of the privately-held Hindustan Coca-Cola Beverages, the company-owned bottling operations in India.

His role now will be to accelerate the plans formulated in the company over the past few years, besides expanding the business footprint in India as well as Bangladesh, Bhutan, Maldives, Nepal and Sri Lanka.

“The idea is to evolve from a one-category beverage player to a two-category one to becoming a total beverages company in the space of ready-to-drink, non-alcoholic drinks,” he tells Forbes India in an interview. Edited excerpts:

Q. You have been with the organisation for over a decade. How has the journey been so far? What are your plans now that you are at the helm of affairs?
My journey in Coke has been pretty seamless. I have been in the Coke system for 14 years. I actually started with the company [in 2003] and then moved to the bottling side. In 2005, there was a clear division of responsibility for the company and the company-owned bottler and that is when I moved to Hindustan Coca-Cola Beverages. In that, I was initially in charge of eastern India and then central India before running the operations for the company [as CEO from 2009]. And now, I am here. So from that perspective, I don’t see a huge discontinuity. I was anyway a part of the business that contributes to about 65-70 percent of our sales volumes.

Going forward, I will accelerate all the plans that have been made over the past few years. Besides, I will also expand our business footprint in India and the countries in Southwest Asia. When I say expand the footprint, it means developing a strategy that we have already adopted—to evolve from a one-category beverage player to a two-category to a multiple category beverage player, in the space of ready-to-drink, non-alcoholic drinks. For me, that’s the only change.

At a global level, there is a new strategic direction given by our global CEO James Quincey. That is to make ourselves more relevant as a total beverage player. There are multiple drinking moments that everyone has in a day, in a week, in a month and in a year. We want to really get a very good share of those drinking moments. That’s going to be my big role now, in working with the team to ensure that we move the company quickly in all the spheres.

Q. So what are the key areas of growth? Could you throw some light on your investment plans?
At the moment, we are present in three categories in a fairly involved manner. One is sparkling beverages, the second is juices and juice-based drinks, and the third is water. We are planning to focus on fruits and fruit-based products because we believe we should create something for the community we operate in. India is a country where more than 50 percent of the population is engaged in agriculture. And not many people know that India is the second largest producer of fruits in the world. Last year, the horticulture output in the country was around 93 million tonnes, and, I am told, only 2-3 percent of this is typically processed. The balance is sold, based on demand, and a lot of the stuff also gets wasted.

We already have a sustainability programme called Project Mango Unnati that promotes good science and technology like ultra high density plantation and micro irrigation system for enhanced produce, [which helps supply to the company] for Maaza, which is the country’s largest mango beverage. Going forward, we want to focus on other fruits as well.

We at Coke are working on a transitional journey focussed on creating a virtuous circular economy of sustainable agriculture [horticulture] by using a variety of Indian fruits in our beverages under the juice and aerated drinks categories. Through this initiative, we will be able to contribute over $1.7 billion in the agri ecosystem of the country over the next five years, spanning the entire supply chain from grove to glass.

In June, we launched Minute Maid Pulpy Mosambi, a project we were working on for the last six to seven years. We started processing Indian oranges and started adding orange juice in Fanta, which is our global brand. We are going to accelerate this process. And this, we believe, will accelerate the evolution of the fruit-based business. We propose to use fruit products in four ways. One is to develop juices in a category, which is straightforward. The second is that we will be looking at adding this to our sparkling products. And the third is to introduce newer products in the beverage space. Lastly, we would like to increase the share of our exports to the global Coca-Cola systems that stands at $240 million currently. We are working on all four fronts, which will be a huge 360-degree approach.

I would say our approach is in sync with the prime minister’s philosophy of keeping on improving the farmers’ revenues. Besides, we also want to focus on what we call ‘ethnic drinks’. We have also made a foray into dairy. We keep studying the market and introduce products to keep ourselves relevant.

Q. Unlike Pepsi, Coca-Cola has been slow in moving towards healthy beverages. Do you think you have lost out somewhere?
I must first state that none of our beverages is really unhealthy. What we provide is choices for different occasions. Some of our products are meant for indulgence, some for nutrition, while some provide functional benefits. And I think this concept of health is pretty much relative. We offer a wide range of products that are absolutely good and safe. I have always believed in focusing on what consumers really want. Yes, you need to be conscious of the products that the competition offers but that’s only to ensure you don’t miss out on anything. So if somebody launches ahead of us, so be it. We will come back and launch something that actually provides value addition. I don’t think anything is lost till you give your offering.

Q. Coca-Cola has seen a year of flat sales and slowing profitability. There were reports that it shut down its Pune analytics centre. Will there be further cost cutting?
Currently, India is ranked sixth in terms of volume sales for Coke. Ten years ago, it was ranked 19th. Over the years, we have expanded our product portfolio to 25 from nine brands a decade ago. We have enhanced the reach and distribution of our products, which are now available in more than 2.6 million outlets and even then, we have only touched the surface of the packaged beverage market in India. The slight slowdown we witnessed last year is, I would say, a part of a journey for any company. We have to keep reinventing ourselves and make ourselves relevant in the market. The lab closure in Pune was part of a restructuring plan announced in February 2017. The company has undertaken a comprehensive review to reshape and restructure businesses and consolidate lab facilities across the world.

 I would say, from time to time, we as companies need to do some rationalisation on what is required. The company will fulfil the work the lab in Pune was doing by using labs at the bottling operations and by leveraging third party accredited analytical labs in India. From the time Coke has been operational in India [since 1993], we have invested more than $2.5 billion in the country. By 2020, the plan is to invest a total of over $7 billion.

Q. Carbonated drinks are heavily taxed in India. How do you plan to deal with that?
Taxation is something you can’t do much about. Am I disappointed? Yes. The non-alcoholic ready-to-drink category has the potential to become a huge economic multiplier. It’s a pretty useful category for the economy and something that everyone enjoys.  We have our own ways of managing these situations. We call it the OPPBC—Occasion Brand Pack Price and Channel. We always have to ensure that the consumer gets the right value. We can’t straightaway jump into a price hike. We have to ensure the consumer sees a much lower impact.

In terms of the Goods and Services Tax (GST), we are prepared. It’s a great thing and it improves agility while ensuring that we can go to any place in India. It’s now a unified large market. But, having said that, we would have perhaps been better off if the tax was slightly lower.

Q. Earlier this year, there was a backlash in Tamil Nadu and traders threatened to ban the sale of Pepsi and Coke to protect their local products. What is your strategy to combat the situation?
The fact is some of these things hit you without any notice. But we will try our best to dispel the perceptions that people have. In fact, it’s our responsibility to communicate our thoughts to the consumer. So far, we have been able to get people to understand. These kind of situations can crop up anytime. We have to give them a patient hearing. The main concern is when one thing crops up, it gets linked to thousand other things as well. There is no strategy as such. We believe we should be transparent.

Q. What are the key challenges in the Indian market?
Well, the Indian consumer is very discerning and I would say that’s the biggest challenge and it has always existed. The Indian consumers are very sophisticated and very value-driven, so much so that it’s often a challenge to deal with them. In India, people want the best, they want variety and they want value. They are always in touch with the global trend as well. And that’s often a challenge. How do you satisfy everyone? In India, people always want to buy a luxury car at the price of a value car. But, having said that, a situation like this is also a company’s delight as one needs to keep discovering new ways to stay abreast. We keep devising new ways [to stay ahead]. While it’s not easy to be the first in everything, one must ensure one is not a distant second.