Coca-Cola Plans to Sell Bottling plant

Coca-Cola India seeks sale of country bottling units valued at USD 1 billion.

India: Coca-Cola India that owns brands Coke, Sprite, Minute Maid juices and Kinley water is looking to sell its capital intensive bottling operations in country valued at USD1 billion. Hindustan Coca-Cola Beverages (HCCB) is in charge of bottling and distribution of beverages in India has 24 plants and along with 13 franchisee bottlers who together have another 24 firms. Coca-Cola India supplies concentrate to all bottlers and is responsible for marketing, strategy and research & development.

Coca-Cola plans to sell the bottling unit in 12-18 months giving itself enough time to focus on core strengths. This can also be seen as reversal of Coca-Cola’s strategy after its re-entry in India in year 1993. The company had acquired Parle beverages business which had brands like Thumbs Up, Limca and Gold Spot. That acquisition gave the company 60% market share along with access to bottling, distribution infrastructure and also inherited 55 Parle bottlers at that time.

According to TechSci Research, the company is aiming to focus on brands, marketing and strategy which is in line with global policy. Besides, being a capital intensive operation, getting bottling plants sold would help company to strengthen its liquidity position and would improve profitability. This re-franchising strategy can also result in enhanced competition among bottling units and company can further benefit from this.