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Coca-Cola looks to exit bottling activity in India

Date: 24-06-2019
Subject: Coca-Cola looks to exit bottling activity in India
New Delhi: Coca-Cola India has begun exploring the process of divesting its asset-heavy bottling partner Hindustan Coca-Cola Beverages’ plants in line with its global strategy to refranchise bottling across markets. 

The beverage maker has initiated talks with its existing independent franchise bottlers for the divestment, two officials with direct knowledge of the development said. 

The sell-off transactions, as and when they materialise, are expected to happen in phases to existing independent bottling partners individually, and over the long term, they said. 

“The objective is to move away from the capital intensive, low margin business of bottling over a period of time, (and) to accelerate focus on its concentrate business,” one of the officials told ET. 

The company-owned HCCB has 18 plants and accounts for two-thirds of Coca-Cola India’s volumes. 

The beverages maker has 13 independent franchise bottlers. A Coca-Cola spokesperson said the company does not comment on speculative news. “Our existing bottling system is working well and has provided us with sustained growth in India. There is no development on that front and we have nothing to report on the said query,” the person said in an email revert. 

Last month, Coca-Cola had announced that it has dropped plans to refranchise bottling in Africa, instead opting to retain majority stake in the operations for the time being. 

HCCB, which reported revenues of Rs 9,082 crore in FY18 according to Registrar of Companies filings, is the US beverage maker’s single largest bottling partner in the country. 

It had announced earlier that it aims to generate revenues of $2.5 billion by 2020, which would involve manufacturing and selling a wider range of beverages and modifying its operating structure. 

At that time, it said it plans to add one million new outlets, up from two million outlets across 25 states, operate under seven zones instead of five at present, and amplify focus on sales and supply chain. 

Source: economictimes.indiatimes.com

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