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.