Unseasonal rains cast a shadow on Coca-Cola, PepsiCo sales

Unseasonal rains have hit beverage makers Coca-Cola and PepsiCo, which have curtailed output for the first time in the peak summer quarter, potentially hampering recovery of consumption this year.

The quarter is the biggest for the companies, contributing about 40 per cent to annual soft drink sales. Production lines are running 2-3 days a week, leading bottling partners of both companies said.

“This is the first time that production lines are running under capacity in the month of April. If there’s no recovery over the next one week, sales in our most critical quarter will be impacted,” atop official at a bottling company said. The soft drink industry is estimated at Rs 14,000 crore and though they have made efforts to overcome seasonal variations for the business, both companies are heavily dependent on the peak months of April, May and June to set the pace of growth for the rest of the year.

Markets in the north, including Delhi-NCR, Punjab, Haryana, Uttar Pradesh and Himachal Pradesh, contribute close to half of national soft drinks sales. Two leading retailers in Delhi-NCR said soft drink stocks in the north are moving at half the pace compared to a year earlier. In the same quarter last year, Coca-Cola had reported doubledigit volume growth after five consecutive quarters of sales increasing in the region of 5-8 per cent. PepsiCo, too, had reported similar sales.

Both companies have invested heavily in marketing and distribution for the April-June quarter. While PepsiCo is the title sponsor of the ongoing Indian Premier League T20 cricket tournament, Coca-Cola has released new advertisements for most of brands, including the flagship Coca-Cola.

“PepsiCo has been working at growing consumption and at getting an early start to the year,” a spokesperson said. He said the company is tapping the more non-seasonal markets, such those in the south, and is leveraging its portfolio with bundled food and beverage promotions. Coca-Cola did not respond to e-mail queries on the matter.

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