Coca-Cola is rolling out its Fuze range of tea, a $1 billion global brand, in India in a move aimed at widening its portfolio of healthier beverages. This is the company’s second launch in the country in two years, after introducing the no-sugar drink — Coca-Cola Zero — last year.
The maker of carbonated soft drinks such as Coca-Cola, Fanta, Thums Up and Sprite has nursed ambitions of operating in the packaged tea category ever since a global venture with foods firm Nestle was called off in 2012.
The fruit juice-based Fuze tea will compete with Hindustan Unilever’s Lipton ice tea, which is sold in a tie-up with Coke rival PepsiCo.
Ready-to-drink tea remains a niche segment that’s estimated at close to Rs 100 crore. Though small, marketers are betting on healthier beverages to expand their product range and rope in more consumers of packaged beverages. Industry observers said Coca-Cola’s move is an attempt to reduce the risk of its largely-aerated drinks ortfolio and make its business less reliant on the seasons.
“The launch of Fuze should lighten Coca-Cola’s assortment. Not only does it reduce dependence on carbonated soft drinks, it also de-risks from seasonality because consumption of tea isn’t restricted to seasons,” said Devendra Chawla, group president, food & FMCG at Future Group, the retailing giant.
The April-June quarter contributes as much as 40% to annual sales of carbonated soft drinks and both Coca-Cola and PepsiCo depend heavily on these three months to drive growth momentum through the year.
Erratic or excess rains can be a drag on sales growth, which has been in the low single digits through the last quarter. Fuze tea will be introduced in 250 ml pet bottles priced at Rs 30 each, a high-margin price point.
A Coca-Cola spokesperson declined to comment on the launch. The first phase of the rollout will be in Bengaluru, Chennai and Hyderabad, followed by Goa and Delhi, an official aware of the developments said.
The average per capita consumption of Coca-Cola beverages in the southern states is almost twice that of the national average of 14 bottles.
Tamil Nadu, Andhra Pradesh and Karnataka will account for over Rs 8,000 crore in sales of non-alcoholic, readyto-drink beverages this year, according to industry estimates.
The national market for these drinks is estimated at Rs 25,000 crore this year. Coca-Cola sells Georgia-branded tea in India through institutions and restaurants.
Coca-Cola, which leads the soft drinks market in India, also sells juices under the Minute Maid brand and niche high-margin products including Schweppes tonic, ginger ale and soda.
Source: Economic Times
