Coca-Cola has announced its intention to reinvest a significant portion of its capital investment into expanding capacity in India. The beverage giant highlighted the substantial growth experienced by its India business in 2023, leading to increased investments aimed at scaling up operations.
During a post-earnings management commentary on Tuesday, Coca-Cola’s president and chief financial officer, John Murphy, emphasized the company’s commitment to building capacity for its global dairy business, Fairlife, and its Indian operations. Murphy noted that India, along with Brazil, played a key role in driving growth in the Asia-Pacific region.
Coca-Cola reported 2% growth in developing and emerging markets, attributed largely to the performance in India and Brazil during the December quarter. India stands out as Coca-Cola’s fifth-largest market, indicating its strategic importance for the company’s global operations.
Murphy underscored the company’s financial strength, stating that they have the flexibility to reinvest in their business for growth while also returning capital to shareholders. In contrast, developed markets experienced 1% growth, with notable contributions from Mexico and Germany.
Meanwhile, Coca-Cola’s bottling partner in India, Hindustan Coca-Cola Beverages (HCCB), has announced a significant investment of Rs 3,000 crore in Gujarat to bolster its manufacturing capabilities for juices and aerated drinks. This expansion is anticipated to be operational by 2026. Also, recent announcements include HCCB’s decision to divest some of its company-owned bottling operations in certain regions, signalling strategic realignment within the Indian market.
In 2023, Coca-Cola noted an increase in its value share in non-aerated, ready-to-drink beverages, particularly in markets like India, the Philippines, South Korea, and Japan. However, specific market share gains were not disclosed.
In the future, Coca-Cola anticipates generating close to $9.2 billion in free cash flow in 2024, with approximately $11.4 billion in cash flow from operations and a reduced capital expenditure of $2.2 billion, as outlined in its earnings forecast.