Softdrink majors PepsiCo and Coca-Cola are targeting 2-3 times more volume sales next year, brushing aside the pesticides controversy which dented September quarter sales by around 15 per cent.
Franchise bottlers of the two companies said that the cola majors have lined up major expansion plan for 2004, and that they have already asked bottlers to gear up for the crucial season ahead.
Both companies are either adding new lines to their existing bottling units or setting up greenfields facilities.
For instance, Ravi Jaipuria, PepsiCo's main franchise bottler in the country, is setting up a greenfield unit in Bhiwadi in Haryana.
Coca-Cola has lined up major investments in increasing line capacity this year. Additionally, they are planning to penetrate deeper into rural markets.
According to the bottlers, the softdrink firms have plans to increase volumes by at least two-three times next year to make up for the small margins on smaller 200 ml bottles which are expected to almost completely replace the bigger 300 ml bottles in another two years.
The smaller, and cheaper, pack sizes are expected to help the companies expand their presence, especially in virgin rural markets, and generate higher repeat consumption.
The softdrinks firms have found it difficult to increase penetration owing to high price positioning of their products, which they attribute to levy of high taxes.
But after excise rates were reduced this year, and the companies were able to launch 200 ml bottles at Rs 5, the two firms had lined up major expansion plans.
However, these plans got postponed due to the pesticides controversy. The two companies had witnessed major gains -- around 25 per cent -- in volume sales in the first two quarters of 2003.
"They want to build up volumes to back their strategy of widening the consumer base for 200 ml, Rs 5 per glass bottle pack. And since Pepsi is also armed with 200 ml bottles this year, it is expected to up the ante to make up for any loss in marketshare to its rival in 2003," another bottler said.
Annual softdrinks sales took a significant beating this year after the Centre for Science and Environment, a non-government organisation, revealed that samples of the two companies products which were tested at independent labs, were found to have pesticide levels much higher than EU prescribed norms. Both companies maintained that there was nothing wrong with their products.
This time around, ground water samples have been collected from all existing bottling plants and at sites where greenfield facilities are being set up, and being put to rigorous tests in overseas laboratories.
Substantial investments are also being made into upgrading filtration processes, such as adding extra levels at the reverse osmosis treatment and activated carbon filtration units, the bottler said.
Both companies, however, played this down. A spokesperson for Pepsi said: "We continue to follow the same protocols. But may be because of the controversy being in people's minds, the routine tests are coming to notice."
Coca-Cola India vice-president Sunil Gupta said, "We follow worldwide principles of doing due diligence in terms of the environmental impact and compliance with the regulatory authorities before setting up a plant. In all the plants that we have set up in the country, we have followed this guiding principle in spirit and intent."
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