Corporate News Blog – Coca-Cola Goes Desi with Localized and Cheaper Brand of Soft Drinks Aimed at the Indian Market

Research Desk Line-up: Crystal Rock Post Earnings Coverage

LONDON, UK / ACCESSWIRE / July 12, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for The Coca-Cola Co. (NYSE: KO), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=KO. The global soft drinks Major plans to launch a new range of aerated drinks under the Kinley Flavors brand to tackle the competition of local brands in India. The news was reported by the Economic Times on July 10, 2017. For immediate access to our complimentary reports, including today’s coverage, register for free now at:

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All about Kinley Flavors

The Kinley Flavors range will be a new range of aerated drink and will be launched in popular local flavors. This affordable range will be available in flavors like lemon, jeera, and orange and will be aimed at price-sensitive consumers. The range will be available in 250 ml PET packs and will be 35% to 40% cheaper than Coca-Cola’s existing aerated drinks like Coke, Sprite, and Fanta. The Kinley Flavors range will be made available at attractive price points and will be the cheapest drinks range across Coca-Cola’s wide range of various markets. This new range will be initially launched in select markets and later expanded to cover other regions.

In June 2017, Hindustan Coca-Cola Beverages (HCCB), the Indian arm of Coca-Cola had revealed its ambition to become a full beverage Company. The newly appointed CEO of HCCB, Christina Ruggiero, who took over as CEO in June 2017 stated:

“My focus going forward is to build HCCB into a ‘totalbeverage Company’ that has a play in all beverage categories of relevance. Hindustan Coca-Cola Beverages will become a total beverage Company that manufactures and sells beverages across every category that consumers want.”

Economics behind the decision

According to the Economic Times, there are more than 200 B brands across smaller geographies in India. As per an industry estimate, these B brands have cornered a market share of over 12% of the total INR 22,000-crore packaged aerated drinks market. These B brand drinks are quite popular and are available at price points which are around 50% cheaper than the MNC versions. The interesting fact about these local brands is that they spend very little in advertising and marketing their products. They have a direct access to the local delivery and distribution network and have a local captive customer base.

The rising popularity of the local brands has forced Coca-Cola to take notice of these brands and modify its business strategy accordingly. This had led to the launch of the new category – Kinley Flavors. The Company hopes that this range will easily be able to compete with the local brands and reach out to the price conscious customers in this demography.

Impact of the newly launched Goods and Services Tax or GST in India

As on July 01, 2017, India implemented the centralized taxation system GST. According to the new taxation system, aerated drinks are taxed at 40%. This would impact the prices of all aerated drinks and increase the overall prices of the drinks. The decision is sure to impact soft drinks manufacturers including Coca-Cola and PepsiCo. Coca-Cola has already indicated that the prices of its aerated drinks will increase whereas the price for packaged drinking water brand Kinley will drop. Despite Coca-Cola’s efforts to absorb a major portion of the tax increase, it will still have to increase the prices of its aerated drinks to some extent. A cheaper range will be able to balance out the impact of the price increase GST.

India is a major market for Coca-Cola and in recent times the Company has consciously made changes to its business strategy to reach out to a wider customer base by adding new variants suited to local tastes and sensibilities. It has shifted its focus from aerated drinks to flavored milk products, mineral fortified hydration products, fruit based products, and traditional Indian drinks like Jalzeera flavored Rimzhim etc. The Company even expanded its Minute Maid range of juice drinks to include new variants like Minute Maid Mosambi.

Last Close Stock Review

At the closing bell, on Tuesday, July 11, 2017, Coca-Cola’s stock was slightly down 0.11%, ending the trading session at $44.33. A total volume of 10.29 million shares has exchanged hands. The Company’s stock price advanced 3.84% in the last three months and 7.28% in the past six months. Moreover, the stock gained 6.92% since the start of the year. The stock is trading at a PE ratio of 31.02 and has a dividend yield of 3.34%. The stock currently has a market cap of $191.19 billion.

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