Coke
rejects closure rumours
By Duruthu Edirimuni
Sanjiv Gupta, President Coca Cola Asia Division, was in the country
recently on a short visit during which he met Trade and Consumer
Affairs Minister Jeyeraj Fernandopulle and lobbied for the reduction
of excise duty on soft drinks. Gupta rejected rumours that Coca
Cola was to close its operation in Sri Lanka. Coca-Cola distributes
close to 400 different brands of beverages worldwide and is the
fourth most-recognized brand in the world, according to an online
poll. Gupta spoke to The Sunday Times FT on the way forward, market
contingencies and the new developments Coca Cola plans to introduce
to the market.
How
have you fared in the Sri Lankan market?
The 2004 first quarter has been very good for us. We have
exceeded whatever plans we had and grown in strong double digits.
Our new ginger beer flavour has done extremely well. Overall I am
pretty excited about the Sri Lankan market because I think it is
ready for explosive action.
What
is you current market share in Sri Lanka?
The
current market share is 45 percent in the soft drink market. During
the last three years we have grown and you will see pretty aggressive
action from us in the balance part of the year.
What
are your future plans?
We
are looking at juices, mineral water and foraying into tea and coffee
in the medium term. I would say that we are looking at a whole range
of products in the drinks market in non-alcoholic form. Our short-term
plans will be to grow in the soft drinks market and to put in the
right price pack. In the Asian region we have introduced the affordability
strategy, which has been very aggressively marketed and we have
doubled our volume in a lot of countries. We intend to introduce
the same strategy in Sri Lanka.
Have
you managed to convince the government to bring down the taxes?
No, we haven't managed to convince the government but we are in
a dialogue with the government. There is an excise tax on the per
litre price of the end product. It is a production tax. We are showing
them examples from other countries. If the excise is brought down,
we are able to pass that on to the consumer. This will make the
market grow even further. This has happened in Nepal, Bangladesh,
India and South Africa. That is the proposal we are making to the
government and that is the dialogue we have with the government.
What
percentage reductions of the taxes are you are looking at?
I
really cannot put a number to it. However it has to reach a fine
balance. It is a two-way street, I am happy to lobby for zero and
the government would like to maintain a healthy balance. What we
have to ensure, as a socially responsible corporate citizen, is
to contribute to the government, to take on responsibility, grow
the market and grow employment. There are enough examples from other
countries about reducing taxation.
What
if the government refuses to reduce the taxes after the deliberations?
We are selling our stocks and we will continue to do so.
If the government refuses to reduce the taxes, would you at that
point decide on a closure of your business? Where does the talk
of a closure come in? That is completely untrue.
Isn't it easier for you to bring it down in bottle form from India?
No, it always makes sense to do local manufacture. We are
committed to do local manufacture in anything we will be introducing.
There is a study done in the UK where they have found that excessive
consumption fizzy drinks causes tooth decay among youngsters.
What
are your views on this?
All
those studies are absolutely false. There are tonnes and tonnes
of medical research data where they have negated this and tackled
these myths. Some other myths are fizzy drinks cause disease like
osteoporosis.
There are many research studies disproving these myths and they
say that there are no bad foods, only bad diets. You only need to
have a healthy active lifestyle.
What
have you achieved in Sri Lanka?
What we have achieved in Sri Lanka in the soft drinks
market is a full range of beverages, which has kept the market alive.
We
have got some pretty good local brands such as Portello, Lion ginger
beer, Lion Soda and Lion Tonic. I think we have understood the Sri
Lankan taste profiles. We have got a pretty good bottler coming
called Coca Cola SABCO (South African Bottling Company), which is
handling one of the foremost emerging markets.
So
you would see a lot of changes in the way we will go to the market.
We also have a good dialogue with the government. |
