Imagine selling a beverage in a market where there is no power supply. The result could be disastrous for the marketer as sales would not pick up, no matter how advanced the consumer mindset is. Such is the case with India’s rural markets, where erratic power supply and low technological developments have hindered the growth of many such FMCG products that need cooling facilities. In order to overcome this dilemma, beverages giant Coca Cola has been rolling out initiatives and product innovations to increase the consumption of its products.
Product innovations and sustainability
According to the company’s spokesperson, “For a successful marketing strategy in rural markets, the product or brand needs to be backed by strong distribution network and sustainable technology.” Thus, the company, since June last year, has been trying to increase its footprint in the hinterlands by giving away solar coolers called Ekocool to retailers facing power crisis. “This helps our business in two ways. Firstly, now we are not restrained to serve customers only in areas where there is power supply and secondly, the whole exercise helps us grow horizontally and grow our consumer base.”
The company has also integrated the solar coolers with mobile chargers and solar lanterns that help retailers earn additional income. Plus, the solar lanterns will bring light to the shop during evening and night time thus helping retailer remain open for longer hours. “While a consumer waits for his mobile to get charged, he is tempted to try our chilled beverages, especially during peak summer seasons,” the spokesperson adds. Thus, the strategy is a win-win situation for both the brand and the retailer. Additionally, as part of Coca Cola’s ‘5 By 20’ programme, which is to empower five million women by 2020, the company focuses on supporting women-led retail shops in this initiative.
The company claims that the initiative has been well received both by consumers and retailers. For retailers it has been a cost effective way of minimising operating costs. Sharing an anecdote with Pitch, the spokesperson says, “There is this retailer approximately 20 kms outside Agra, who was not able to sell even a single beverage bottle due to absence of power for as long as nine hours. Post this initiative, she is now able to sell two cases of beverages (48 bottles) a day and that too, without any significant marketing activities!”
Coca Cola ran a pilot test of the solar coolers in smaller towns and areas around Agra and has expanded into five more such markets of West Bengal and Andhra Pradesh. Likewise in some areas of rural India, where electricity supply is intermittent, the company rolled out Eutectic coolers. These are coolers with brine solution that keep the product chilled even if there is no electricity supply for more than eight to 10 hours. At some of the other places the focus is on placing ice boxes along with tie-ups with ice manufacturers so that ice is available to our retailers even during peak summers.
Though the company does not disclose any numbers it is investing significantly in developing innovative technology to overcome challenges in the rural markets. It has already installed 20 solar coolers and plans to expand the deployment of up to a total 100 coolers by early next year. In addition, several countries in Africa have expressed interest in the units.
Marketing challenges and strategy
According to data issued by ASSOCHAM, aerated drinks account for about 30 per cent of the Rs 6,000 crore plus market of non-alcoholic beverages, pegging it at approximately Rs 1,800 crore. The industry is expected to grow to Rs 11,000 crore by 2015 at a CAGR of 20 per cent. This leaves a greater opportunity for beverage brands to expand their base in the untapped rural markets. But, the market is not bereft of challenges.
Thus, the spokesperson points out that today, rural markets in India, pose several challenges to beverage companies in terms of expanding their footprint, one of which is the availability of chilled products. The other challenge is of getting more number of people to consume beverages in a ready to drink packaged form, thereby making the purchase more cost effective too. In-addition, distribution of soft drink beverages including making them available in a chilled form is also a challenge. Hence Coca-Cola India has been continuously thinking about newer and innovative ways to reach out to rural consumers.
The company thus, follows an OBPPC (Occasion, brand, price, pack, and channel) strategy. The spokesperson explains, “This involves making available our soft drink brands in the right pack at the right price, sold through the right channel and driving consumption by linking it with right occasion. In the rural markets, our focus is on providing the consumers with value packs (200 and 300 ml glass bottle) since a large part of the consumption in rural India is on-the-go.”
For distribution of products, the company has also adopted a hub and spoke model in the rural markets. Also, given that the consumption is not too large in the rural markets, the company and its bottling partners have also adopted a model of smaller ‘drop’ sizes to retailer premises in rural areas.
Packaging and pricing it right
Since a smaller SKU has more potential for consumption in rural markets, the company has introduced products like Fanta Fun Taste Powder at Rs 5 price point. Fanta Fun Taste powder is a 23.5 gm sachet that makes 200ml of beverage when mixed with water. The company claims to have fortified the product with Vitamins B3, B6, B9 and B12. To target the bottom of the socio economic pyramid, the product has recently been rolled out in 15,000 outlets in Gujarat and Maharashtra.
Added to this, is Coca Cola’s belief (based on independent industry reports) that close to 120 billion liters of beverages gets consumed in India annually. Out of which just 4 per cent is consumed in the packaged ready to drink form. This demonstrates the immense opportunity for beverage companies including Coca-Cola India. However given the sheer size of the country and the fact that close to 70 per cent of India still resides in rural areas, therein lies a huge challenge for beverage companies to unlock this potential.
Hence communicating to that audience in the right manner also plays a role. The company recently rolled out consumer engagement initiatives in small twns and villages of Uttar Pradesh and Bihar. “Jalsa is a unique consumer engagement initiative based on the local ‘Folk Fare’- narrated through dance, poetry & plays. The program includes organising shows (read Jalsa’s) for an audience of 15,000-20,000 per show. ‘Thums Up Jalsa’ witnesses professional dancers perform live on some of the most popular Hindi and Bhojpuri songs. This show lasts for about 2 to 3 hours. About 3 days prior to the event an auto rickshaw advertises / communicates about show timings and the event to the rural consumers,” the spokesperson explains.
Additionally, point of sale communication material is put at villages where the programme is being activated. To be a part of the Thums Up Jalsa, the consumers just need to buy a bottle of Thums Up and get free entry tickets. For example, a consumer on buying one returnable glass bottle of any of Coca Cola’s soft drink beverage receives one ticket to the show. Sometimes each ticket also carries a unique number, which entitles the consumer to win prizes like TV / music systems, in contests organised during the show. “In the end, consumers buy our beverages, come to the show and have a good time along with their families,” the spokesperson sums up.