Here’s Why Coca Cola Is Launching “Kinley Flavors” In India

by Trefis Team
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As customers move away from aerated soft drinks towards healthy beverages, The Coca-Cola Company (NYSE:KO) is banking on developing nations such as India for future growth. While consumption of carbonated soft drinks is slowing down in India too, as higher disposable incomes drive users towards healthy beverages, Coca-Cola is now looking to compete with local soda brands which are usually consumed by the lower income population. Consumption of carbonated beverages is much lower in the rural areas of India compared to the urban areas. However, the rural and semi urban population holds strong growth potential if the beverages are priced lower and adapted to local tastes. To penetrate into this  market, Coca-Cola is launching “Kinley Flavors” a range of aerated drinks which is likely to be nearly 35-40% cheaper than its existing range of Coke, Sprite, and Fanta brands. Further this range is likely to be available in local flavors such as lemon and jeera. This is an attempt to break into the segment which is dominated by local brands which now command nearly 12% of India’s packaged aerated beverages market. The more than $2 billion aerated drinks market in India is growing at a rate of 30% per year. We believe introduction of a cheaper range of products can help Coca-Cola capture a higher market share in the Indian market.

Capturing the Growth Segment In India

The urban population in India is moving towards healthier beverages and the Indian government is pushing beverage giants to include fruit juices in their drinks to boost agriculture in the region. This has prompted Coca-Cola and Pepsi to introduce new fruit based flavors in the country and augment their portfolio of healthy beverages to meet the requirements of these consumers. This segment of customers in India is akin to the U.S. population where healthy beverages are likely to drive growth. However, in  the semi-urban and rural areas of India, demand for carbonated beverages is met by local brands which are cheaper and provide local flavors. With Kinley Flavors, Coca Cola is looking to tap into this growth opportunity and capture market share from local players.  This initiative, if successful, can drive revenues for the company in India.

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