Coca Cola retook market leadership in Sri Lanka form Ceylon Cold Stores, a unit of John Keells Holdings, last year. Coke has made inroads in most South Asian markets which are under the command of Ahmet Bozer who overlooks 90 countries in Europe, Asia and Africa.

He was interviewed by LBR’s Shamindra Kulamannage.

Q: I’m going to ask you about challenges in the South Asian market in terms of other beverages you compete with. Tea is a popular beverage in Sri Lanka, in India also in Turkey and Middle East. How do you strategize when faced with traditional beverages like that; is this a unique thing to the region?

Bozer: First of all the scope of our business as we define it, we call it NARTD, nonalcoholic ready to drink beverages. So the ready to drink pieces are packaged beverages. Over time we see that this market has huge potential because people migrate for convenience. In many places you see many people migrate from hot to cold. So in almost all of our territories we are very much focused on packaged beverages. So there is tremendous potential to grow in this area.

There is also sparkling beverages and there you have sugar and diets and you get flavours and colours, and then with the non-sparkling you have juices, waters, energy drinks. So there is a very wide portfolio available to us in nonalcoholic ready to drink beverages and over time we see that the growth opportunity is fairly large and we could see that the per capita numbers around the world, for example in Sri Lankan compared to other parts of the world are still very low. So that category alone could give us a growth opportunity for a long time to come.

Q: If raising per capita consumption is one of your major challenges in this part of the region, how do you approach it as a brand?

Bozer: There are number of pillars that make this work for us. First of all it is your portfolio, do you have the brands and products in your portfolio that is locally relevant, that is loved. That’s one pillar that we have to make sure in order to achieve the right products, also right communication and messaging is very important.

Then pricing and packaging is very important in this part of the world as well as in most part of my territory. Affordability is very important so you have to make your products accessible to different income groups so that they are able to enjoy the products. So the right pricing and packaging portfolio is also very important.

Then how do you get the product to the consumer, as we call within arms reach of desire. There are all kinds of options, there are distributive partners, you could use your own distribution network and then we also try to become part of the fabric in any local community that we operate. So for example in Sri Lanka, we are engaged in cricket and music which we believe are passions for this country. So those are what we call platforms where we are able to communicate our messages to the consumers in a very locally relevant way. So if we manage this process properly then we are able to grow.

Q: You mentioned that price is an important factor in this region. So is my understanding right, your cost structure would be very similar in most countries, except for perhaps the labour arbitrage and you would have lower margins probably in South Asia than what you would have in rich markets?

Bozer: It’s fairly typical and widely known that developing markets generally could have lower margins than developed markets like Europe or the United States. But the benefit of developing markets is that your growth rate in the top line is much higher. So it’s really a balancing act and obviously since we are trying to grow per capita our investments are quite high. So it is a matter of investing for growth with a certain margin structure for high levels of percentage growth that balances this to make a very profitable growth-value equation.

Q: Do you think the challenges your brand your faces in emerging markets like Sri Lanka and India for instance in this growth phase they are in, are any different to what they were, say 30 or 40 years ago in more developed markets at a time when you were growing?

Bozer: There are similarities and there are differences. May be 30 or 40 years ago the consumer choice was not as proliferated as today. If you were building a business 30 years ago you could say you can really focus on sparkling beverages and then at the right point in time you could extend into still-beverages. But if you were developing a market from today, the consumer choice is proliferated and the world is more connected and more open, so therefore, the consumer choices are different. Therefore you have to have a different portfolio today than you had before.

Now what is similar is the 124 year old brand, the brand called Coca Cola, I call it the 124 year old youngster; because for so long it has been able to keep its energy and vibrancy and still able to grow in most parts of the world from this very high base. So how do you build Coca Cola? The values of Coca Cola have been the same. We talk about ‘Open happiness’ here in Sri Lanka (advertising campaign) and our message has been consistent all throughout the years and it is relevant to all humanity. It’s relevant to people in Sri Lanka, but maybe how we communicate it is a little different than in some other counties to make it more locally relevant. But the enjoyment the product provides is something that doesn’t change.

Q: Last year was a tough one for the businesses all over the world. South Asia also did not grow as fast as it used to. What was the impact on your business in South Asia?

Bozer: I would say few things. First of all we are very fortunate to be in the beverages business. Beverages business gets impacted by external economic impacts much less. Maybe in heavier industries you may get impacted on your growth rates and you maybe declining in rates.

Now within the Eurasia-Africa group we were able to see different pockets with different dynamics. So I would start from the best. These countries are crisis unaware, so South West Asia, Sri Lanka, India countries in the region demonstrated business dynamics that were no different than a normal year. Sri Lanka might have been impacted a little bit more; but because of our continued commitment and investment our business actually grew in a very healthy way last year in Sri Lanka. So in that region business went almost as usual for us where we continued our investments in an uninterrupted way.

Now there were parts of the territory where there were some impacts of the crisis in terms of the growth rate not being as high as before but we were still able to grow. We still continue to invest, we did not sort of pull back the support behind our brands. Then there were some markets that were impacted a bit more like Russia for several reasons and then we went on to grow our market share even though our business in 2009 declined slightly. But we became stronger by gaining market share and by continuing our investments there.

Q: You talked about the proliferating choice that consumers have now as opposed to 30 or 40 years ago. Are South Asian consumers looking for healthier products as consumers do in more developed markets like in Turkey or South Africa, that you cover?

Bozer: This really applies everywhere; the difference is the pace of change. So you may be proliferating into much wider portfolio much quicker in some locations. As I said the world is more connected and people see more choices and they want more choices. Obviously there has to be a logic to the portfolio, we are not talking about unlimited proliferation of the portfolio but yes this would certainly be the case here and I’m not looking at now or next year, I’m looking at next 3 to 5 years I would see that this proliferation will continue. However, within that I think it is very important to note that our core sparkling beverages led by coca cola will continue to grow. So the opportunity of new beverages or variants comes on top of this growth.

Q: Coke globally has this model of partnerships with bottlers and you tend to work together to make sure you meet the challenges in the market. Recently in the U.S you acquired most of your bottling capacity and this has also happened in some places, in Europe like Norway for instance. Has coke changed its strategy here?

Bozer: The commitment of the company to the franchise system is unwavering. We believe in the franchise systems that it works for us, it works for our bottlers, and it works for our consumers and customers. So we are committed to the franchise system.

In Europe we actually did not purchase, we actually gave our Nordic bottlers to Coca Cola Enterprises, so the transaction was Nordic bottlers too will become coca cola enterprises and they have an option to go and purchase the German bottlers from us. Therefore this is proof that we are not doing this for the sake of buying bottlers. From time to time a company could choose to acquire bottlers in a certain country for a specific purpose. But that doesn’t mean that we are not committed to the franchise system.

Q: What’s the outlook for Coke in South Asia over the next couple of years?

Bozer: Specially within the Eurasia-Africa group, South West Asia as I would like to call it is going to be a very strong pillar of growth. The contribution of growth from this region to the group numbers is very significant. So we will continue to invest in this country I believe we have invested around 20 million dollars in the last three years and we will be investing 20 to 25 million in the next three years here in Sri Lanka. So we will continue to invest because we believe the population in this country is sizable when you compare it with many other markets. There is more stability now that the war is over and per capita income is relatively high compared to the other countries. So in the interest of making our growth more broad based we will continue to invest and expect a large growth from this part of the world.