Thinking outside the bottle
Even
the world’s biggest brands can struggle to succeed in India. Coca-Cola chairman
and CEO Muhtar Kent urges global companies to accept the market as it is, not
as they wish it to be.
I moved to India with my family as a young boy. My father, a career
diplomat, was dispatched to New Delhi to serve as the Republic of Turkey’s
ambassador to India. We lived in New Delhi for two magical years. I don’t
remember anything from those days about India’s politics or economics. What I
do remember are the vibrant colors of clothing and flowers and shops that lined
the streets, and the natural beauty of the Indian countryside, from the
mountains to the north to the plains of the Ganges basin to the south. I remember
the mysterious music, the aromas of spicy curries and chutneys that friends of
my parents would prepare for us. And of course I remember the people: friendly,
bright-eyed, ambitious, and sometimes very poor. Everywhere, crowds of people.
India was unlike any of the other
places my family had lived—Sweden, Iran, Poland, Thailand, and the United
States. From the moment I arrived, India captured my imagination.
Today, as a businessman, I see
global companies drawn to India in much the same way I was as a boy. They are
dazzled by the promise of adventure and extraordinary opportunity. They are
intoxicated, even overwhelmed.
But as I learned, even as a young a
boy, in India, appearances can be deceiving. For outsiders, there is always a
hint of mystery. Even if you live and work there, you can never be entirely
sure you understand. It is best to assume that you do not. If you come to India
with some grand, predetermined strategy or master plan, prepare to be
distracted, deterred, and even demoralized.
That’s something I keep in mind as I
think of The Coca-Cola Company’s experiences in India. Coca-Cola launched
operations in India in 1950 shortly after independence. Our business grew
steadily. But in 1977, we exited (along with other multinational companies)
after a new law diluted ownership of our assets and operations.
We returned to rebuild our business
in 1993 as economic reforms unleashed a period of robust growth. It was harder
going than we’d imagined. We struggled at first to find and keep talented
employees. We learned that although Indian consumers were eager to embrace
global brands, they resented any hint of global corporate dominance. It took us
time to understand that small stores, many operated by families out of the
front of their homes, were an unappreciated source of economic opportunity.
Today our India business is
thriving. I am happy to report that India now ranks among our top ten markets
in unit-case sales. Our growth in recent years has been particularly dynamic. I
still see enormous potential in India—which is why last summer I went to New
Delhi to announce that The Coca-Cola Company and its global bottling partners
will invest $5 billion in our India operations between 2012 and 2020. By the
end of that period, we think India could be one of our top five global markets.
The key to this success has been
learning to see the Indian market as it is, not as we wished it to be.
Our first challenge was building the
right team. For many years after our return to India, turnover among Coca-Cola
workers was too high; as recently as a decade ago, our Indian attrition rates
were 34 percent. That was a key weakness, not least because it prevented us
from building relations with suppliers and consumers. So we focused on training
and talent recruitment. We recruited a lot of young professionals with deep
experience in India’s retailing culture and provided them additional training
in customer-relationship management, sales, service, and conflict resolution.
These changes helped lower attrition by two-thirds.
At the same time, we worked hard to
source more products from within India and deepen our ties to the Indian
market. For example, we began growing mangoes and invested in citrus farms that
supplied our business. Those efforts helped send an important message: all over
India, people knew we were there not just to sell to them but to buy from them
and invest in them as well.
And we made it a point to understand
our customers. India’s people still cherished long-held goals of
self-sufficiency and sustainability—and those ideals were essential to our
continued growth. Through careful study of how Indian consumers live—people all
over the nation, not just those in cities—we learned that most are more likely
to buy our products at a small family store than a big supermarket.
At the same time, we saw how a
rising generation of young Indians, most of them raised without landline
telecommunications infrastructure, has embraced wireless technologies and, in
many ways, is leading the global revolution in mobile commerce.
Recognizing that small stores play a
huge role in the lives of our customers has required us to do many things
differently in India than we do in developed markets. We figured out, for
example, that it wasn’t enough to provide small stores with Coke signs and
teach them to display our products. Often, these stores had more basic
concerns. Many couldn’t keep our drinks cold, because they weren’t connected to
the electrical grid. More critically, small stores in India often are run by
women, who have more difficulty than men in exercising economic rights like
getting access to credit. We found we could help store owners address those and
similar problems in ways that helped them, helped their communities, and also
helped Coke.
For instance, when our bottlers help
supply nearby villages with access to running water, the women in those
villages are spared the considerable time and trouble of walking to a well,
drawing water, and bringing it home. When we help bring electric power to
village stores, that helps us sell our products cold—but it also means
electricity for the whole village, boosting literacy rates by making it easier
for kids to study after dark. When we help a woman secure property rights for
her store, that makes it easier for us to sell Coke products and also enables
her to build a business and employ other residents. We recently launched our
“5by20” initiative, which seeks to bring additional business training, finance
opportunities, and mentoring to five million women entrepreneurs across our global
value chain by 2020. Indian women make up a significant focus of this program.
One of my favorite examples of how
we’re trying to come up with solutions tailored for the Indian market is
eKOCool, a solar-powered mobile cooler we developed for use in the tens of
thousands of rural Indian villages that lack electricity. The eKOCool looks a
little like an ordinary pushcart, but it’s actually a sophisticated marriage of
technology and local market savvy. Stores using our eKOCool solar coolers can
stay open later and generate enough extra power to do double duty, recharging
mobile phones or electric lanterns. We hope to distribute more than one
thousand eKOCool carts to rural store owners in India by the end of 2013—and we
have begun testing them in dozens of other countries.
Back when my father was stationed in
India, the country was only a few years removed from colonialism. Indians had
had a long and painful experience with foreign businesses exploiting their
market without contributing to the well-being of the local economy. What we now
understand intimately—and what other companies who want to sell in India must
recognize—is that our future is tied to the communities where we operate. A
thriving and sustainable India creates thriving and sustainable business
opportunities for us.
For The Coca-Cola Company in India,
the rewards from being in the market will materialize only if we see our
investment in broad terms: not just capital investment in bottling plants and
trucks but also human investment in schools and training, social investment in
women entrepreneurs, and technological investment in innovations like solar
carts that can power a cooler, a mobile phone, or a lantern by which a young
boy or girl can study. That’s an expression of our commitment to India—and our
commitment to succeed on India’s terms.
About
the author
Muhtar Kent is chairman and CEO of The Coca-Cola Company. This essay is
excerpted from Reimagining India: Unlocking the Potential of Asia’s Next
Superpower. Copyright © 2013 by McKinsey & Company. Published by Simon
& Schuster, Inc. Reprinted by permission. All rights reserved.
http://www.mckinsey.com/Insights/Asia-Pacific/Thinking_outside_the_bottle?cid=reimagining_india-eml-alt-mip-mck-oth-1312
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