Coke aims to grow with middle class
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CEO says beverage giant will keep up local investment
Thailand, like most other emerging markets, represents high growth potential for the non-alcoholic-beverage industry in general and for Coke in particular because of the expanding middle class, said Muhtar Kent, chairman and chief executive officer of the Coca-Cola Company.
Speaking to The Nation, Kent expressed his optimistic outlook for the Thai market in which Coca-Cola and its local partners have invested Bt14 billion over the past two and a half years for business expansion.
He stressed that Coca-Cola planned to invest a similar amount over the next few years to capture the growing market in the Kingdom, where more consumers are joining the middle-class ranks with higher disposable income and changing lifestyles.
The Coca-Cola system in Thailand has 10,000 employees. For every job Coca-Cola creates, Kent said, there were 10 new jobs linked to it because of the multiplier effect from the supply chain. In effect, then, there are 100,000 people employed directly or indirectly within the Coca-Cola system.
Kent said demographic changes were benefiting global economic growth and driving business expansion. Over the next 10 years, 800 million to 1 billion people will graduate into the middle-class segment, providing ample opportunities for growth in consumer goods and products.
Growth in Asia, Africa and South America will be more spectacular than in the developed markets, Kent said. But at the same time people in developed countries have more disposable income because they all belong to the middle-class segment, he added.
Kent said he was lucky in a way that he is working in the non-alcoholic-beverage industry, which has huge growth potential, instead of selling cars, real estate or other products. The growing middle-class base in the world provides healthy demand for ready-to-drink products.
The Coca-Cola Co, based in Atlanta in the US state of Georgia, is one of the world’s top companies, with worldwide recognition of its Coke brand. Kent said Coca-Cola had been growing its business volume by 3-4 per cent annually, while its operating income was expanding at 6-8 per cent a year.
“But we have exceeded this target in the past years,” he said.
Kent, who is chairman emeritus of the US-Asean Business Council, painted a similar picture of the growth potential in the Asean market, which has more than 600 million people.
He said Coca-Cola had no plan to invest in Burma yet but the company had been following the political development, elections and the economic progress in that country very closely.
Regarding the Thai government’s policy of price controls for beverage products to hold down the Consumer Price Index, Kent said he disagreed with such a policy imposed by any government because it limited investment.
“Price control … curtails growth and inhibits employment,” Kent said.
“We should look at how price controls can be lifted, because that would help drive investment or allow for more investments to be created.”
