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Tuesday, June 26, 2012

Coca-Cola Heads Back to India

Story first appeared in The Associated Press.

The Coca-Cola Co. plans to invest another $3 billion in India over the next eight years as it looks to boost its stake in the rapidly growing market.

The world's biggest beverage maker, whose brands include Minute Maid, Dasani and Powerade, has seen some of its biggest gains come from emerging markets as growth at home has slowed.

In April, Coca-Cola said its first-quarter volume in India rose 20 percent, compared with a 2 percent increase in North America.

Including the new cash infusion, Coca-Cola said Tuesday that it now plans to invest $5 billion in India between 2012 and 2020. That's on top of the more than $2 billion it invested since re-entering the country in 1993. The Atlanta-based company had left India in 1977 to avoid handing control over to its Indian subsidiary and revealing its secret formula.

Globally, Coca-Cola's market share of carbonated soft drinks is 52 percent, versus 21.4 percent for PepsiCo Inc., according to Beverage Digest, an industry tracker.

In most markets outside the U.S., Coke has a very large lead in carbonated soft drinks. In India, however, the gap is smaller; Coca-Cola has 56 percent of the market versus PepsiCo's 40 percent.

Coca-Cola said that its Thums Up - a spicier local soda it acquired in 1993 - and Sprite are the top selling soft drink brands in India, while its Maaza is the top-selling juice. Coca-Cola said its namesake soda also grew 27 percent in the first quarter.

The India business has been growing at a robust rate over the last five years, and Coca-Cola's goal is to continue this momentum.

The Chairman and CEO said that the company's growth in India is part of its plan to double revenue over this decade.

Coca-Cola and its bottling partners are investing more than $30 billion globally over the next five years - including new manufacturing plants, new distribution systems and new marketing in emerging markets - to support expected growth.

The company is also seeking its first stock split in 16 years. The company wants a 2-for-1 stock split. The move is subject to approval by shareholders on July 10.

Its shares fell 15 cents to $74.62 in morning trading Tuesday. They are still trading near the high end of their 52-week range of $63.34 to $77.82.

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