Global beverage major, Coca-Cola has witnessed 4% downfall in the volumes in March quarter this year and its bottling operations also declined in the quarter ending June. According to the company, the major policy changes such as demonetization and the Goods and Services Tax (GST) roll out are the main reason behind the hit in the beverage sales of the country.
However, James Quincey, Chief Executive officer of the Coca-Cola supported these policy changes and said, “While we believe India has taken the right steps by modernising its monetary and tax systems, new policies have resulted in near-term uncertainties for retailers and consumers that impacted the beverages industry in the first half of the year”. He added the company’s operation in developed markets such as the US was up to the mark, but certain regions around the world saw political instability and challenging economic conditions.
The government demonetized the old ₹500 and ₹1,000 notes which nearly brought the retail market to a halt. Due to which major consumer goods companies in the country bore the brunt of the note ban as they lost sales.
The roll out of GST from July 1, has led to destocking of the old inventory in June. While most of the distributors postponed purchases from manufacturers, as they were not clear about the new tax regime and its impact.
The ₹22,000-crore beverage market in the country has been under stress as the Coca-Cola and PepsiCo have witnessed a decline in the sale for several quarters in the past two years. In fact, Coca-Cola’s volume sales declined in six quarters out of the last ten. The company believes that the increased awareness about negative health effects of sugary drinks is also the another reason for the declination.
To change the stats, the company will build strategies in order to increase focus on smaller packs and zero-sugar drinks in its key market.