Coke on the prowl

Mumbai: Finally Coca-Cola India's plans to enter the hot beverages market have come to fruition. Recently the company launched its global hot beverage brand, Georgia, through a tie-up with McDonald's India.

According to Coke India, by December 2002, the Georgia brand of premium tea and coffee will be made available through the company's vending machines across India. While the retail brand, Georgia, will be priced around Rs 4 and Rs 3 for a cup of coffee and tea, respectively, the premium brand of Georgia Gold will be priced at Rs 17 and Rs 12, respectively, at McDonald's outlets across the country.

Georgia Gold premium coffee is a freshly brewed ready-to-drink product that uses the roast and ground technology. The coffee will be available in a range of flavours, such as Cappuccino, Cafe Mocha and Espresso, while the tea will be available in flavoured and regular varieties.

Though Coke provides cold beverages at McDonald's outlets worldwide, this is the first time the two have tied up to serve the hot beverages market anywhere in the world. Coke will be pitted against established players like the Tatas, Hindustan Lever and Nestle in the domestic tea and coffee market.

Of these, Nestle and Hindustan Lever have a well-established network of tea and coffee-vending machines across India. Georgia Gold premium coffee in India will take on established coffee brands like Nescafe of Nestle India and Hindustan Lever's Bru, while the tea brands Georgia premium tea would compete with include Tata Tea's Tetley and Hindustan Lever's Taj Mahal as all these are available through vending machines.

But if Coke's statements are to be closely followed it appears that roadside tea and coffee hawkers have more to fear from Coke than established tea and coffee companies. Coca-Cola India deputy president Sanjiv Gupta says the launch of the Georgia Gold brand is part of the company's effort to grow the ready-to-drink market for hot beverages.

He says in India, 84 per cent of all hot beverages are consumed at home. Out-of-home consumption in India is very low, which means there is a lot of potential for this market to grow. Coke, thus, intends to make all-out efforts to encourage out-of-home-consumption by offering good quality tea and coffee at affordable prices.

To increase this out-of-home-consumption of tea and coffee the company has a number of plans up its sleeve, which include 'customising' tea and making it acceptable to all regions alike.

Hence, for North Indians it will offer masala chai with lots of elaichi and milk, while Mumbaiites may be able to even get cutting chai (a product available in the city alone) comprising a small amount, about two sips, of tea. 'We will offer you even that," promises Gupta.

He goes on to add that if people in eastern India like flavoured tea, less milk and light tea leaves, Coke can customise it to match their tastes. Similarly, for cosmopolitan cities like Mumbai and New Delhi, Coke plans to install single tea-vending machines, which would offer varieties such as masala, elaichi, cardamom and so on, including cutting.

Coke's bottled water brand Kinley has been tremendously successful, having achieved a market-share of 31 per cent over the last three years. Industry insiders feel this is one of the reasons Coke has entered the ready-to-drink hot beverages market.

For, success in the bottled drinking water business is critically dependent on a strong distribution network, which Coke has undoubtedly put into place. Also Coke is no stranger to India and has been around long enough to understand the vagaries of the Indian market.

And with a good distribution network, an understanding of the pricing preferences of the Indian consumer, success should not be far. What remains to be seen, however, is how successful Coca-Cola India will be in replacing tea and coffee hawkers with their mobile tea and coffee vessels. That is where the true challenge lies.

Coca-Cola India also plans to launch the Georgia brand of hot beverages in the retail market, though the company has not finalised its retail plans. Georgia is one of the biggest brands of Coca-Cola Company and is a market leader in the coffee category in the Japanese market.

Coca-Cola is planning to launch milk in India. Says Gupta: "It's a long-term project and will take at least two-to-three years for us to enter this segment. A time-frame is required as we need to build infrastructure and groundwork for launching the product in the country."

Gupta rules out the possibility of entering the pasteurised milk segment, instead it is launching value-added milk products like flavoured and carbonated milk. The brands from which Coke would face competition include Milkman of Britannia and Parle-Agro's N-Joi.

"All over the world we have presence in tea and coffee markets and this was the right time to strike the ready-to-drink home segment in India," says Gupta. He adds that the global soft drink major will roll out the brand for mass-market consumption by September 2002 and the products will be priced at a very competitive level.