From coke to milk: Coca-Cola India plans to re-enter dairy products for a share of booming health drinks segment

Beverages major Coca-Cola, which posted a double-digit growth in revenues and volumes in the April-June quarter, is reportedly planning to stage a comeback in the dairy products segment, a media report said.

The American company, which posted double-digit growth in revenue for the fourth consecutive year, is mulling a re-launch of its dairy-based beverage brand Vio, The Hindu Business Line reported. The company had launched Vio in 2016 but had to take the flavoured milk products off the market following poor response from consumers.

“We want to have a presence in every category, including the dairy segment, with focus on nutrition,” T Krishnakumar, President, Coca-Cola India and South-West Asia was quoted as saying by the newspaper.

However, the company is losing its fizz to higher input costs (sugar) and taxation.  According to the Business Standard, higher taxation on sugary aerated drinks and the rise in sugar prices are adding to the company’s margin pressures. The report said that during the past one and a half years, taxation on aerated beverages has jumped to 40 percent from 24-26 percent.

 From coke to milk: Coca-Cola India plans to re-enter dairy products for a share of booming health drinks segment

Representational image. AP

On the global level, Coca-Cola Co topped Wall Street estimates for quarterly sales and profit on 26 July, as more consumers bought its healthier soda options such as Zero Sugar and new flavours of Diet Coke.

Coke and its smaller rival PepsiCo Inc have been focusing on healthier drinks to garner market share as health-conscious consumers shift away from sugary sodas. The company has launched new flavors of Diet Coke in a slimmer package and in the quarter introduced no-sugar beverages in smaller markets such as New Zealand, too.

Coca-Cola reaffirmed its 2018 profit outlook and said it expects full-year organic revenue to be at least 4 percent.

Talking about the company's planned dairy foray, Krishnakumar, in May this year, said that the firm has tested the waters. "We have a lot of learning from whatever we have done and we have absorbed the learning. Now we are reformulating and working on a range which will have a better connect with the consumer. So you would see [us] coming out with a range of dairy products."

In February, the company unveiled its plans which included expansion of its fruit-based beverage offerings, frozen fruit dessert, getting into dairy based value-added products and also exporting products developed in India.

The company's focus will be on 'fruit circular economy'-- enabling farmers to increase their yield, source pulp and launch fruit-based products, Krishnakumar said in February. The company was also planning to launch vegetables-based beverage like carrot juice.

He said the company would launch fruit juices based on the regional preferences. For instance, the company would launch mango juices based on mango varieties that are available and popular in a particular region so that there is also a local connect.

With inputs from agencies

Updated Date: Aug 02, 2018 15:23:55 IST