Educational and Professional Background:
I have a Masters Degree in Business Management and over six years of experience in marketing, communication and public relations. I am currently managing Public Affairs and Communications for Coca Cola,Pakistan and Afghanistan territories, spearheading corporate communications, corporate social responsibility, public relations projects and stakeholder engagement for the organization.
History of the Company
The Coca Cola Company started its operations in Pakistanin 1953 with the first bottling and concentrate plant in Lahore. The organization then gave out franchises taking the number of bottling plants to six. Fifteen years ago, the company acquired back the bottling plants and today all of them are owned and operated by the company itself. This gives them the benefit of controlling the quality of product and also to bring about efficiency in overall operations and procedures of the company.
As far as the beverage industry in Pakistanis concerned, Coca Cola is the second largest player in the market. The local beverage market is primarily dominated by carbonated soft drinks with each company having its own strategy of acquiring the market share. Coca Cola currently holds 31 percent of the over all beverage market share and aims to increase this share further through increased investments.
In the last five years the organization has invested over 220 million dollars and has committed publicly to invest another 250 million dollars in the next three years.
Problems of the Beverage Industry during the Current Socio-Economic Situation
Primarily, this industry faces three issues. The first issue is the security concern which is hampering business all over the country. InKarachi, for instance the sales volumes have considerably decreased due to security issues. The last two years for the Coca Cola Company have been quite testing. If the situation does not improve, the foreseeable future business will further go down in these areas.
Secondly, the taxation structure on the beverage industry has also been a cause for great concern. When compared with other countries in the region such as India, Sri Lanka,Nepal and Bangladesh. Pakistan has the highest taxation rates on beverages. This in a way is discriminatory as other industries in Pakistan are not taxed at the same ratio. For the last eight years, the beverage industry has time and again raised this issue with the government. Reduction in taxes will give organizations more room to invest. Hence, with increased investment and resultant increased production volumes the government stands to earn more in taxes.
Third and the most vital issue is the presence of spurious and fake products in the market which make up almost 8 percent of the total market share. These inferior quality drinks are causing serious health concerns and also bring a loss of almost 650 million rupees annually to the government in tax revenue.
The beverage industry has raised voice against these concerns several times and expects the government to bring a law into place and levy punishments on spurious product producers. A strict check and balance and punishment procedure from the government towards spurious products producers is lacking which in the end is problematic not only for the beverage industry but for the consumers as well.
Products Range, Innovation and Diversification
Being the largest beverage name in the world, the core business line has always been beverage and the focus still remains. The Coca Cola Company is ranked high in terms of innovation. Globally, the organization is producing more than 3500 products with diverse ranges such as dairy drinks, coffees, sports and energy drinks.
Currently in Pakistan, there is a very interesting product range which comprises of carbonated soft drinks and juices. Minute Maid, which was launched two years back, has been extremely popular with the consumer. Owing to the positive response from the consumer, the organization is expanding its range and introducing new flavors for the product in the next year.
Imports and Related Problems
The major imports comprise of raw materials for the product concentrate as it is being produced locally. Fluctuating dollar rate and a persistent increase in raw material prices in the last five years has created problems for the industry. Coca Cola for the last five years has been taking the burden of inflation on itself. However, this year the product price had to be increased due to the increased import bill.
Production Capacity and Break Down in Terms of Sales
In the last ten years, Coca Cola has nearly doubled their sales. The organization is expanding with two new production plants being established, one in Karachi and the other in Multan. These production plants are expected to increase the growth in double figures in the next year. This gives the organization an edge as it will be better equipped to serve the consumer with increase production as well as more portfolios.
Coke and Sprite dominate overall sales of the organization. On the other hand Minute Maid, the juice brand, which is relatively new in the market, has also been extremely successful.
There are several platforms such as music and sports that Coca Cola is using to base its marketing strategies. When developing strategies, the focus is not only marketing on mainstream media but also doing something beneficial for the community as well. The message that is given through these campaigns is where the focus lies. The organization holds strongly for optimism and positivity which is evident in its marketing campaigns.
Coke Studio has been a phenomenal success worldwide. Using music as a platform to spread the message of unity this venture has done wonders for the country on an international level and has made the nation proud.
Recycling and Environment Friendly Bottling
In Pakistan there are no high-tech plants for recycling industrial wastes. There are some companies who work in the recycling business and Coca Cola is working with them in some capacity but even then most of the bottles are not recycled.
On the other hand, the organization is working towards bringing sustainability to its operations. In the pursuit of minimizing environmental impact, the organization has taken certain steps. One of the most vital step is the production of PET bottle (disposable plastic) with low grammage plastic which automatically reduces the environmental impact. The aim here is to significantly reduce ecological impact through operational efficiency.
The glass bottles for products are acquired from registered suppliers which are authorized by the company. These third party suppliers are audited on a regular basis for quality supervision following strict global standards.
Government Policies Affecting the Beverage Industry
Government policies largely affect the operational and investment structure of organizations. If business friendly policies are introduced by the government, organizations have no issues with paying taxes. However, it has to be insured that there is some sustainability as well as some profitability because if the company is investing it needs to have something in return as well.
One positive step by the government this year was reduction in taxes. Linked to that decision, Coca Cola committed to invest 250 million dollars for the next three years. The beverage industry is one of the biggest tax payers in the country, paying almost 19 billion rupees in taxes, which amounts to approximately 2 percent of Pakistan’s GDP.
Other than the taxation structure, the beverage industry also needs a proper law/ policy structure to check spurious products. The presence of spurious products in the market has been on the rise for the last few years. Proper checks and introduction of strict punitive measures from government authorities can help in dealing with this problem.
Prospect for New Entrants
There is a huge potential for this business to grow in Pakistan as more than 60 percent of our population is below 30 years of age. The initiation of this business depends on the level of investment that an investor can make. Establishing a production plant requires ample investment; however, other areas in the beverage industry such as distribution can be a great venture for investors who do not have the resources to make huge investments.
In the last couple of years, we have seen a number of local brands come into the market and have made a place for themselves on some level. However, what needs to be considered here is that it is not just about setting up a business only; it is about getting into this business keeping in mind international standards of product quality and production process.
Unexplored Geographical Areas
For Coca Cola, some parts of northern areas and some places located extremely in the south can be categorized as unexplored. However, with the new bottling plants being setup in Karachi and Multan, the increased product capacity will help the organization in reaching out to far flung areas.
On the other hand, there are always areas where there is less penetration for one company and more for the other. The competition is always there and the presence of local brands also adds to the picture.
The Beverage Industry: 5 years Down the Road
Pakistan at this point in time is facing dire socio-economic problems. However, in the face of natural calamities and social unrest the country is still moving forward, with an economic growth rate of 2.2 percent. This shows the potential that this country has and its capacity to deal with and move forward towards a positive direction in the worst circumstances.
In a similar way, Pakistan has one of the lowest per capita consumption of soft drinks which makes a huge potential for the beverage industry to grow, in fact grow manifolds in the next ten years.