India biz affected by unseasonal rains in June quarter, says Coke global chief Quincey 2023

India biz affected by unseasonal rains in June quarter, says Coke global chief Quincey 2023

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

Even while Coca-Cola, the largest beverage corporation in the world, was optimistic about the future in its fifth-largest market by volume, it claimed that the India business was negatively impacted by unseasonal rains in the June quarter.

Despite the fact that Coke recorded a 2% increase in unit case volume in Asia-Pacific for 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 has a January-December fiscal year.

Due to the summer season, which contributes 50% of total sales, the months of April to June are crucial for the majority of beverage firms in India. Unseasonal rains kept temperatures low in the June quarter this year, reducing demand, especially in the north, which, according to industry analysts, accounts for between 30 and 35% of sales for beverage businesses.

On Wednesday, Coca-Cola increased its global sales and profit projections for 2023 as net revenue increased 6% in the June quarter due to better pricing. Quincey, however, stated that the Asia-Pacific (APAC) region’s strategy will be volume-led as opposed to price-led. India is a country in the APAC area.

“There are several emerging markets with rapid growth in the Asia-Pacific area. However, as compared to Japan, where price points are higher, pricing power is not as powerful in countries like China and India. Regarding the future approach for the two markets, he stated, “The focus here (in India and China) is on fostering volume growth. For context, China is the third-largest market worldwide for Coca-Cola.

 

In India, the corporation has also been developing what it calls a “de-seasonalization” strategy with the goal of maximising the value of its core product range throughout the year.

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

Maaza is on its way to becoming a billion-dollar brand, according to top officials at the company, whereas fizzy drinks Thums Up and Sprite are billion-dollar brands for Coca-Cola India in terms of retail sales.

Additionally, the business is promoting both in-home and out-of-home consumption in India by combining reasonable pricing points, a variety of pack sizes, and several channels of availability.

With the advent of unpredictable weather patterns and their increasing impact on global supply chains, businesses worldwide are having to cope with unprecedented challenges. One such instance is India’s business sector, which was substantially hit by unseasonal rains in the June 2023 quarter. In a recent statement, the Global Chief of Coca-Cola, James Quincey, shed light on the extent of the consequences and their implications for the business landscape.

Unseasonal rains in India, which usually experiences a hot and dry climate during the summer months, have had an adverse impact on various sectors, especially agriculture, construction, and FMCG (Fast-Moving Consumer Goods), including beverage giants like Coca-Cola. These unexpected weather conditions have disrupted production, distribution, and sales dynamics, making them a major concern for businesses operating in and out of the country.

Agriculture is the backbone of the Indian economy, employing more than half of the country’s workforce. Unseasonal rainfall, particularly in the summer months, can create substantial challenges. While some rainfall can be beneficial for certain crops, excessive and untimely rain can lead to crop damage and diseases, which severely impact yields.

The damage from these unseasonal rains is twofold: it directly impacts farmers and indirectly affects industries reliant on agricultural produce, including food processing companies and beverage manufacturers. In the case of Coca-Cola, disruptions in the supply of raw materials such as sugar, fruits, and other essential ingredients for their products add to the production costs and may even lead to scarcity.

The construction industry, another significant contributor to India’s GDP, is likewise disrupted by unexpected rain. Unfavourable weather conditions can delay construction timelines and increase costs, as work often needs to be halted due to rain, leading to longer project durations and labour inefficiencies.

The FMCG sector, including companies like Coca-Cola, has also been hard hit by the unseasonal rains. The industry relies heavily on the summer months for sales, especially for products like cold beverages, ice creams, etc. However, with the unseasonal rains cooling the climate, there is a natural dip in the demand for such products.

As stated by James Quincey, the unexpected rain has led to lower-than-expected sales for Coca-Cola in India during this period. The decrease in demand combined with the disruption in supply chains has caused significant revenue losses for the company.

As one of the largest markets for many global companies, any disruption in India has a ripple effect on the global business landscape. For instance, the unseasonal rains have not only impacted Coca-Cola’s domestic earnings in India but have also affected its overall global revenue.

To mitigate such weather-related disruptions, companies will need to strengthen their supply chains, develop flexible business models, and invest in innovative technology for weather prediction and efficient resource management.

The unseasonal rains during the June quarter of 2023 have indeed posed a significant challenge to businesses in India. As voiced by Coke’s global chief James Quincey, the impacts are far-reaching, stretching from local industries to global markets. It calls for a reevaluation of business strategies and a reinforced emphasis on sustainability and resilience for future success in an increasingly unpredictable global climate.