New Delhi Beverage maker Coca-Cola India Pvt. After years of focusing on disposable plastic bottles, Ltd. is once again promoting returnable glass bottles. A top company executive said the change helps the company reach more users and reduce packaging costs.
Over the years, beverage companies have phased out the ubiquitous returnable glass bottles, replacing them with the travel- and storage-friendly PET bottles that now dominate the industry.
“In 2021, we can anticipate that inflation is going to be one of the major challenges in the coming year and glass bottle packaging is the least affected by inflation. It also gives us the power play in large parts of India,” Sanket Ray, president of India and South-West Asia, Coca-Cola, said in an interview.
bottles last year a . rolled over Available at 10 price points (200 ml) in select states across the company’s best-selling brands such as Coca-Cola, Thums Up and Sprite. In some markets, glass bottles now make up 30% of beverage sales. Overall, they account for a little less than 10% of the company’s business.
Coca-Cola’s move comes at a time when inflation is eating into the household budget, raising prices of everything from soap to fuel. As a result, buyers are moving towards more affordable packs or cheaper brands.
The carbonated beverage maker Sprite and Coca-Cola said it has reduced the price of such glass bottles from 12-14 10 out of the seven states in India to drive their affordability agenda.
“We’ve started expanding distribution, inputting more glass and marketing behind it,” Ray said. The company is seeing a “really strong momentum” in sales of such bottles, largely due to emerging demand from smaller towns and rural areas.
The company sold an additional 500 million bottles in India in the three months ended 31 March 2022. About 70% of these incremental transactions were driven by small packages such as returnable glass bottles and affordable, single-serve PET packages, the company said in an earnings statement. Its India business grew in the “mid-teens” in the first quarter of the current year on the back of an early summer and improved out-of-home consumption.
With prices rising for everything from packaging materials to edible oils, packaged consumer goods firms are also witnessing unprecedented input cost inflation.
“For us, logistics cost is a significant part of our cost. In addition, any increase in the price of the fuel has an impact on the cost of the (plastic) resin.
Ray said glass bottles are least affected by inflation due to the negligible cost of packaging material. “It’s a one-time cost and the bottles are rotated,” Ray said.
Ray said inflation is a “big issue” for every consumer company.
“Our expectation was that inflation would be between 3% and 5% – this has increased somewhat now. Inflation is going to be part of the strategy; if we want to expand in India, we need to focus on affordability as a solution. For this we have to invest in glass bottles.”
The company also took pricing action in the last quarter of 2021.
“We are playing with our pack, which is revenue growth management, especially pack and pricing. For example, when we did some pricing on large PET packs, we also strengthened our focus on 10 price points through our glass bottles. We have strongly relaunched it in certain markets, so that we do not lose consumer due to the effects of inflation.”
India isn’t the only market where Coca-Cola is trying out glass bottles to combat inflation—a recent Reuters report says Coca-Cola is distributing its inexpensive returnable glass bottles in several emerging markets. is expanding.
Meanwhile, Coca-Cola also plans to sell its products in more stores as the traditional business makes a smart recovery.
The company added 250,000 outlets to its distribution network of 4 million stores in the March quarter. It will add to the same number in the next two quarters.