The Coca-Cola Company is looking to sell its capital-intensive bottling operations in India at a valuation of US$1 billion as it focuses on brands, marketing and strategy, reports a business daily.
“Coca-Cola plans to start talks with large industrial houses for the potential divestment. The deal could take 12-18 months to close,” says the financial newspaper.
Hindustan Coca-Cola Beverages (HCCB) has 24 plants. It is in charge of bottling and distribution of Coca-Cola Company’s beverages in India, along with 13 franchisee bottlers who together have 24 additinal plants.
HCCB bottles 65% of Coca-Cola Company’s total volume in India.
Coca-Cola India supplies concentrate to all bottlers and is responsible for marketing, strategy and R&D.
The proposed sale of the bottling business marks a reversal of the strategy by Coca-Cola Company from what it followed at the time of its return to India in 1993 after a 17-year absence, reports the paper.
The acquisition of Parle’s beverage business gave Coca-Cola Company access to bottling, distribution infrastructure and a 60% share of the market. It also inherited 55 Parle bottlers as franchisees.
Coca-Cola then launched a process to buy out the franchisee bottlers, with some of them resisting the company’s moves, reports the paper.
Source: India Infoline
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