Friday, February 28, 2014

Coke plans sustainable social development

One of the top global brands in 2013, Coca Cola is manufactured in Nepal in two places at Balaju – by the Bottlers Nepal (Balaju) – and at Bharatpur – by the Bottlers Nepal (Tarai) – both of which are listed companies at the Nepal Stock Exchange (Nepse). Bottlers Nepal (Balaju) has listed 1,948,787 units, whereas Bottlers Nepal (Tarai) has listed 1,210,000 units of shares at the Nepse. Both the shares have been trading at around Rs 1,700 per unit at the stock market. Coca Cola that has come to an existence some 127 years ago is a multinational company and popular around the globe. Coke's country manager for Bhutan and Nepal Shadab Khan speaks about the company's plan, CSR activities, market and quality;


How is the market of cold drinks in Nepal?
Khan: I think the market is extremely buoyant. Personally from Coca Cola stand point of view I am extremely excited about the opportunity. We just made $26 million investment last year in Bharatpur. That only shows the commitment we have for the market and what we think of the market is going to be. So the market for us is growing and continues to grow.

Will there be any difference in company's policies from past years to next year?
Khan: I think from a market perspective, consumer preferences are getting more and more evolved. But at the same time you have a lots of Nepalese who have not tasted a beverage once a year. So from that perspective, its going to be an interesting challenge for companies like ourselves to be able to play that differently across metro Nepal, which is all the top 12 towns and places where we already have distribution. Worse is rural Nepal. So our focus is going to be how we will ensure more and more places that we can reach and ensure more and more Nepalis have 'a sip of happiness' as we call it.

Market expansion is one aspect, whereas equally important is ensuing quality. Mostly in the rural parts there has been complaints about the quality. What is the company's strategy to supervise and monitor quality regularly across Nepal?
Khan: Quality for Coca Cola is paramount. We have reached here because extremely quality focused and quality sensitive. We have an extremely robust mechanism for ensuring good and safe quality products. There are two aspects to quality. One is quality within and how you manufacture the products. We are ensuring the state of the art technology that goes in. Our $26 million plant is a testament to that, apart from the best equipment we put in to manufacture and processes that we do have, which are regularly audited. Our audits are not scheduled. We don't tell you that I am coming. Our auditors just land up on the door and they open and start checking. Its always a surprise audit, which ensures that quality. We call ourselves 'audit ready system'. That's the simple matrix around to ensure quality in all our products and all our factories. We have global standards. There is no different standard from Africa or US or for Asia. It is the same quality of product that you get every where around the world. One you have to ensure what you do is water tight and the second aspects is what we do in market. There are more compliance checks again. We fix the basics and then ensure that what you do in the market. We have a full-fledged Dual Product Management (DPM) team that is regularly visiting the market. This is different from the Sales Team. Its not the sales guys going there, it’s a quality team that goes in the market and does checks. There is a monthly check that happens from the Atlanta Global Team as well. To check on beverage quality, package quality, what's happening in the market and all of these are fed back to plant to ensure the things are improved. The sale steam does its own checks, its regular monitoring mechanism. From the supply chain team as well, there is what we call warehouse upkeep audit and route vehicle upkeep audit. They check how our distributors ensuring stocks, managed, maintained. And at the end, the last mile, all of us from managing director to sales executive have our personal journey plan (PJP) regularly. We visit the market ourselves constantly keeping the check on what is happning. Even now we are actively picking back products and destroying. And we are now keeping the Department of Commerce posted on steps that we are taking.


How is the competition in the market?
Khan: Competition is strong everywhere. Thankfully because of the love Nepali consumers have for our brands we are strong and continue to gain share. We fully respect competition because unless you have competition in the market, you tend to get sometimes complaisant. Somebody who is on your toes can only ensure that you are doing what best you can.

How is the competition helping you diversify products?
Khan: It’s a question of market dynamics. And what we can do in each market. Apart from Coke, Fanta, sprite and kinly soda, we are looking at other categories that make sense. From a Nepal market perspectives, what we can do efficiently here. We have stared importing Maaza, and cans. Step by step whatever we see as market demands, we tap in like Maaza was only started last year. Every year we look at trying to do something interesting fro the consumers.

Is there any plans to start manufacturing Maaza in Nepal or starting any new plants?    
Khan: I never say no. Right now we have had fantastic response fro Maaza. But for any new manufacturing to start we have to be able to sustain plant investment. Yes, as and when we believe there is potential for us, we start manufacturing locally. About plans for new plant, not that I know of immediately. But we have just expanded our operations in Chitwan. Atleast fro the nest few years, we have more than enough capacity to ensure that we can service our market efficiently.

What do you think CSR activities help establish brands or the companies feel it morally responsible to give back to society under CSR?
Khan: The brand a moral responsibility. As I call it, we are a global company but in local business too. We hire, live, manufacture, distribute locally. We operate in this environment. You could be whoever, operating anywhere but you are operating in this environment. And given brands like us, we have the scope and able to do sustainably something. Therefore it makes imperative for large brands like us to do CSR. We believe in golden triangle. As one company we cannot do everything but government, civil society and our partners come together, that's what we call golden triangle, we can do something. So, corporate civil society and governments can really start to make difference.

But most of the companies do CSR to establish and promote their brands. How is the case with Coca Cola?
Khan: Every company has their own ways of doing things. But Coke does it primarily because we genuinely believe. We have the ability and responsibility to do better. So, sustainability for us is its in our blood. Coke flows in our blood so sustainability also flows in our blood. We don't do things that make difference in our business. We have three large buckets; Me, We, World. Me is for the individual. We do things like supporting marathons, healthy active living programmes whether football like Coca Cola Cup or cricket programme in Sri Lanka and India. In the We part, its about community. As we are a global company with a local business. We operate within a community. We have started a programme called 5BY20, which is our chairman's promise empowering five million women by 2020 across the world. We have launched that programme in Nepal as well. Last year, we have trained 1,015 women retailers on how to run a shop. We also support My School, which is basically a programme where we go and rejuvenate schools. We have done with 13 schools so far between Kathmandu, Lalitpur and Bhaktapur. Over 13,00 students benefitted from the programme. There are five different aspects of the programme like ensuring clean drinking water by water harvesting programmes with Sajha, recreational facilities, sanitation, and ensuring they start to become a good citizen. This rounded development should start from very early ages. In the World piece, we do a lots of things like environment. we are now working with Hamri Bahini, Sagarmatha Pollution Control Committee and Everest marathon. We believe that its our duty in many ways to do it.


What is the CSR budget of Coke?
Khan: Globally we do separate about one per cent of the our profit. In Nepal also we do separate one per cent of profit but the beauty of Nepal is, we also leverage our global funds very well. The Coca Cola Foundation has a lot of foundation money and we try to get as much as we can from that kitty as well. We have started working with WWF on the Koshi Basin, that funding is all from global team. Similarly, we also do our projects like UN Habitat on the safe water project in Tarai to ensure household water treatment. Because one of the biggest reasons for diarrhea is bad quality water. As a responsible corporate operating in Kathmandu, Kathmandu is extremely water stressed, so we tied with Smart Pani for water recycling, which we have always been doing. With Sajha Yatayat in 130 ropanis of land we have started water recycling plant that can recharge almost 10,000 kilolitres of water annually. It will be continued with other partners in other parts of the country too.

Generally multinational companies are said to be interested in third world countries like Nepal only to make money. Is Coke going to change people's perception with all these good work?
Khan: All organisations either local or multinations exist to make money. I don’t think commercial aspect to business is bad. Business needs to have commercial aspects. Besides that business also needs to be responsible. For companies like Coca Cola, its in our blood. We have been doing CSR and not talking about it since we have started 127 years ago. And even today we don't talk much about it. It is something all companies absolutely needs to do. We have reached the position where we can make change we need to do.


What are the three major challenges for business expansion in Nepal?
Khan: It’s a mix of both external and internal. How we ensure more and more consumers make available of our products, that's one key aspect. last year, there has been a fair amount of disturbances due to closure that has impacted our ability to manufacture. Now with new government and Constitution in next 12 months, its going to be better situation. Infrastructure is another bottleneck as getting to some parts of Nepal is extremely costly. Its all a question of time, and all of this is going to be sorted out. For me problems are always short-term. The current challenge is what we can do as a company and make our products available everywhere.

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