Hyderabad: Cola makers PepsiCo and Coca Cola India are putting the pesticide controversy behind them and aggressively putting into place expansion plans.
The two are planning to increase sales volumes at least two to three times in the coming year over 2003. While the aggressive pricing strategy employed by the two for the 200ml and 300ml bottles is likely to continue, the two have extended the price war to pet bottles as well.
Thus in an effort to tap the home segment, which they feel has not recovered after the pesticides controversy, the cola companies have again slashed prices of the 1.5-litre and 2-litre pet bottles. Prices for the two packs have been slashed to an all-time low of Rs 30 and Rs 35, respectively.
Last year, prices of the 1.5-litre pet bottles stood at Rs 43 while the 2-litre packs were at Rs 50. In March this year, at the onset of the peak season, the two companies reduced prices of the 1.5-litre pet bottles to Rs 38 while 2-litre bottles were brought down to Rs 40.
With the cut, the price difference between a 1.5-litre and a 2-litre pack of Coke comes to Rs 5, while a 500-ml pack of the beverages comes for Rs 15, which in effect translates into a 150-per cent discount. The smaller 200-ml, 300-ml and 500-ml packs are available at the earlier prices of Rs 5, Rs 8 and Rs 15.
Sources in the bottling units say the two companies are putting in place expansion plans for their bottling units. For instance, PepsiCo is adding new lines to existing bottling units and may also set up green-field facilities while Coca-Cola has lined up major investments in increasing line-capacity this year. There are also plans to penetrate more into C towns and rural areas.
The rural foray is expected to be led by the 200-ml packs. It has also become important to increase the volumes sales of the small packs as they are low margins products. In the next two-to-three years, these are expected to replace the 300-ml packs almost completely.
Till two years ago the two companies were having a tough time penetrating the smaller towns as the beverages were priced high due to a high excise component. The excise reductions this year enabled the two to come out with the popularly priced 200-ml bottles for Rs 5.
Annual soft drinks sales took a significant beating this year after the Centre for Science and Environment (CSE), a non-government organisation, revealed that samples of the products of the two companies tested at independent labs were found to have pesticide levels much higher than European Union-prescribed norms.
Now the two are not taking any chances and have taking groundwater samples extensively at all existing bottling plants, green-field facilities being set up, and sending them for tests in overseas laboratories while at the same time upgrading the filtration processes, such as adding extra levels at the reverse osmosis treatment and activated carbon filtration units.