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Pakistan: Interview: Coca-Cola to invest $280m by 2013 for greenfield projects

5/2/12  www.dailytimes.com.pk

Fahad Qadir, Director Public Affairs, Communications for Pakistan, Afghanistan Region Coca-Cola
By Muhammad Yasir

Fahad Qadir has been with Coca-Cola for nearly five years. He leads the ongoing stakeholder engagement with the government, media, non-governmental organisations (NGOs) and others. He also manages the corporate and brand personal relation (PR) strategy and Coca-Cola’s corporate social responsibility (CSR) programme. 


As a result of his advocacy for socio-economic development of local communities in Pakistan, Coca-Cola has initiated various projects to support environment conservation, education and rehabilitation of physically challenged.
Qadir is leading key PR projects for Coca-Cola’s Eurasia and Africa Group, comprising 92 countries. He is a member of International Government Relations Network of the company and leads Partners for a New Beginning (PNB) projects in Pakistan.


Prior to Coca-Cola, Qadir worked for Lahore University of Management Sciences and Din Media Group.
In honorary capacity, he advises NGOs like Lahore Businessmen Association of Rehabilitation of Disabled and CARE. He was also a key member of American Business Forum’s founding committee.

The challenges of beverage industry are the same as the ones faced by all industries, which are mainly electricity and gas shortage. The paucity of utilities has put the lifeline of industries at risk, and beverage producers too have been facing tough times to meet the demand on time ”

Daily Times: How do you see the potential of business for a soft drink company in Pakistan?
Fahad Qadir:
 Pakistan is a high potential country for a soft drink company. Not only is it the 6th most populous country in the world, the consumption of soft drink per head is still comparatively low in our society; but it is increasing all the time.
Soft drinks, offering fast relief from thirst are becoming a regular part of the daily diet and people’s intake of soft drinks is particularly increasing at events and festivals as an essential item on the menu.
Thus the growth in consumption has been strong in Pakistan over a period of time, with changing lifestyle and food intake, which interestingly enough is often a combination of international and local dishes.
The soft drinks consumption reaches a high level during Ramazan and the warm season, particularly in the main metropolis, but intake is also surging in smaller cities and even in villages.

DT: What are the expansion plans of Coca-Cola in Pakistan?
FQ:
 Coca-Cola has aggressive and big plans for the Pakistani market, which as I mentioned has a high population and hence high potential for beverage business.
The company previously invested $250 million in the period 2005-2010. Now it has planned to invest another $280 million by 2013 for establishing greenfield projects, which are aimed at increasing the production of different brands and expand our overall beverages portfolio. A number of new marketing and sales channels will be added to the country’s network, which will definitely boost the supplies and availability of products at a fast pace. This spending will translate into large-scale impact on our business, and particularly on our market share, which will go up with the growing demand of our products in Pakistan.

DT: What is the impact of investment in Pakistan?
FQ:
 The investment is substantial, particularly in the beverage industry of the country. Its impact will be enormous, both directly and indirectly. The reason behind this spending is to meet the needs of our customers who we believe are currently under-served.
As the company enhances its production, it will definitely also enhance its market share in the country. Besides boosting the business volume of about 300 allied industries dependent on the beverages industry, giving these allied industries long-term growth opportunities. Coca-Cola owns six bottling plants presently, giving employment to about 3,700 permanent and 2,200 temporary staff. The indirect employment generated is substantial and numbers more than 51,000 in distribution channels and allied industries.
Also, with the growth of our business, the revenues of the government will increase manifold, as even today the beverages industry’s share stands at approximately 1.8 percent in the overall gross domestic product, and Coca-Cola is one of the leading market players of the industry. The company is currently contributing handsomely to the national exchequer, as it stands among one of the highest taxpayers of the country.

DT: What are your strategies to explore and grab local markets?
FQ:
 The Coca-Cola Company’s flagship soft drink brand is of course ‘Coca-Cola’, and a number of other brands are also being marketed in Pakistan. These include Diet Coke, Sprite, Sprite Zero, Fanta and Minute Maid, all of which are quite popular in the country. The company is streamlining its marketing and sales channels to ensure its brands are available to the maximum number of people across the country. The new strategy is focused on this and on introducing new soft drink brands, juices and mineral water in the market. The variety of the brands will definitely provide choices to customers according to their taste preference, occasion and even mood.
Coca-Cola will also ensure its maximum participation in social and sports events as part of its strategy, which strengthens its brand image and its business.
As far as the target audience is concerned, we will focus as we have always done, on the biggest segment of the society, which is the youth. They are the ones who drive majority of consumption and determine new social trends for the industry.
All products of Coca-Cola are produced with purely ‘Halal’ ingredients.

DT: How do you see the overcoming of the problems being faced by the beverage industry?
FQ:
 The taxation issue had for long been an unresolved issue in the industry, which not only restricted the growth of market players directly, but also impacted negatively on the business of allied industries. The beverage producers were prone to pay high taxes of up to 38 percent on different accounts. This included double taxation on many inputs and raw materials as general sales tax and Federal Excise Duty. The taxes’ burden increased the cost of production of the beverage companies substantially and their revenues were not significant despite heavy sales of their products. But the problem has now been solved very much and the tax rate has been reduced to 16 percent. This relief by the government has increased the confidence of foreign investors and has given them a level playing field, so now they are interested in making new investment and growing their business aggressively.

DT: What are the challenges for the beverage industry?
FQ:
 The challenges of beverage industry are the same as the ones faced by all industries, which are mainly electricity and gas shortage. The paucity of utilities has put the lifeline of industries at risk, and beverage producers too have been facing tough times to meet the demand on time.
The issue of power and gas is common for all industries. So if these will be resolved the growth will be back on track in future. Besides, there are issues of Intellectual Property Rights infringement in Pakistan, which are crucial to resolve in the larger interest of the public and the country.

DT: What is the issue of counterfeit products in Pakistan?
FQ:
 The availability of counterfeit product is rampant, particularly in small cities and towns, where the quantities of fake soft drinks supplied to customers are at a massive level. These counterfeit drinks are of course highly damaging both for the customers and for the company, besides causing huge loss of revenue to the government.
These fake drinks are extremely harmful for customers’ health because of non-standard and unhygienic ingredients being used. People who consume these drinks risk their health while also losing their money.
The counterfeit products also affect the company’s reputation, because people are misguided into believing that the product is genuine, as they are familiar with the brand names but are unaware that it is a counterfeit product. Coca-Cola inspection teams have pinpointed counterfeit producers and their manufacturing plants several times, but the authorities need to do more in taking action against the culprits. If this is done, then public health is not at risk and government revenues also increase.

DT: How do you see the role of Coke Studio as a persuasive tool?
FQ:
 Coke Studio has proved to be a unique and highly successful marketing project for Coca-Cola, having strong indirect impact on the company’s branding and sales.
But beyond its effect on the company’s business, Coke Studio has established itself as the most recognised music event of the country. Every year it is now a much-awaited event and has certainly become a flagship music show out of Pakistan, attracting music lovers from all over the world.
With Coke Studio, the company has played a vital role in reviving successfully classical and folk music, singers and musicians of the country at the national and the international levels. The event’s audience has been increasing every year through media and video-sharing websites. At the same time it has also enhanced collaboration and motivation among singers and music producers.
The event has vastly improved the soft image of the country, even among foreign investors and businessmen, with far reaching impact on the economy of the country.

DT: What are CSR activities of Coca-Cola in Pakistan?
FQ:
 Coca-Cola is a very active organisation through its different initiatives as far as CSR is concerned. The company is working on different health, educational and environmental projects, primarily for the welfare of the less privileged in the society. It has also been among the first to respond to natural disasters, be it floods or earthquakes, arranging relief for the unfortunate victims and participating in their rehabilitation effort.
The company was the first to pledge donation of Rs 150 million for the 2005 earthquake relief and rehabilitation. This was apart from in-kind donations of medicines, shelter, food and pre-fabricated homes. Subsequently the company donated more than Rs 85 million for relief and rehabilitation of flood victims nationwide.
Its Water and Environment Conservation project undertaken with the WWF entailed plantation of more than 30,000 trees, 72 rainwater harvesting schemes, nurseries for 10,000 multipurpose trees and water filtration plants access for 10,000 people. It also included a Rs 29 million component for the clean up of Lake Saif-ul-Maluk.
Coca-Cola has also supported the establishment of the Vocational Education Centre for the Disabled, a state-of-art vocational education centre for disabled with housing, training, educational and job placement facilities for the physically challenged people. The project cost is Rs 16 million and work is being done on it. A 20 million worth project – Adopt-a-School Programme – benefited more than 5,000 students and five schools have been adopted by CCBPL. The company has supported by building classrooms, libraries, computer labs and provision of books and curriculum. ***


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