Coke CEO on China and India

Posted by: Bruce Einhorn on June 23, 2009

I’m in Nanchang, capital of Jiangxi province in central China, where Coca-Cola has just opened a bottling plant. Muhtar Kent, Coke’s chairman and CEO, flew in for the opening and gave me an interview. More from that interview, including Kent’s thoughts about how Coke should respond to Beijing’s veto in March of the company’s proposed $2.4 billion acquisition of a Chinese juice company, soon on BusinessWeek’s Asia Channel.

For now, though, here’s something interesting from Kent on the other giant Asian market, India. First, some context: Kent is pushing a $2 billion, three-year investment plan for Coke in China, a plan that would more than double the amount the company has invested in China since returning to the Chinese market in 1979. Kent is so upbeat about China because of the government’s efforts to upgrade China’s infrastructure, which not only makes it easier for Coke to make and distribute its products but also helps build the Chinese middle class. “Infrastructure is an absolute must for economic development,” he said. “You cannot have poor infrastructure and exciting economic momentum.”

What to make, then, of India, a country with notoriously bad infrastructure but a fast-growing economy? Kent gave credit to Prime Minister Singh’s government and its promises to focus more on infrastructure following its recent election victory. Still, he said, India right now isn’t as important a market for Coke as China, largely because of poor infrastructure. “You just simply can’t get to the market in the summertime,” when the monsoon rains hit and create flooding and other problems. “You lose a lot of volume.” Looking out ten years, Kent sees both China and India contributing “a substantial percent” of the world’s 800 million to 1 billion new middle-class consumers. “We need to keep investing in India for future growth,” he said. For now, though, the action is in China.

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Reader Comments

Sona

June 24, 2009 12:08 PM

we have more health drinks in Indian, which is why Coke cannot thrive.

Koala

June 25, 2009 07:35 PM

gau jal will be the best seller soft drink in 2 years!

Paul

June 26, 2009 02:16 PM

India's have started bottling cow piss (real story) and merchandising it to the rich in India, they don't need Coke.

http://www.timesonline.co.uk/tol/life_and_style/food_and_drink/article5707554.ece

Chinese coke

July 1, 2009 12:07 AM

Monkey Brain juice is widely available in Guangzhou as an alternative along with Tiger Penis.
Coke plans to rip off the Chinese more, because there is a huge backlash against Coke worldwide and especially in India where its widely condemned for being unhealthy. However the Chinese think it goes well with Cat meat.
http://www.chinadaily.com.cn/china/2006-06/18/content_619571.htm

huyu

July 8, 2009 12:04 AM

It seems that actually everybody got it wrong, especially the friends from India. You see, in China, we absolutely drink nothing; nothing at all, not water, not wine, not whiskey, we just eat. The Coke we purchase is totally used for ancestor worshiping; you see we serve them in this giant "gung", as we call them, in front of the tombs of our ancestors. It is sort of tradition, you know, even if we cannot afford it. It drives many families into bankruptcy. That is perhaps why Coke is making money here. Well, just want to set the record straight.

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BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.

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