Coca-Cola Co.'s CEO Muhtar Kent said the company and its bottling partners will invest $5 billion in India by 2020 as it looks to raise its presence in one of its fastest-growing emerging markets.
"We think there's potential here," Kent said Tuesday during a visit to India, adding that the company wants "to stay ahead of the curve" in the country.
India, a country of 1.2 billion people, remains one of the last big frontiers for the Atlanta-based beverage giant. As Kent pointed out, Indians on average consume only 12 eight-ounce bottles of Coke a year compared with 240 in Brazil and 90 bottles globally.
The investment outlay of $5 billion marks an increase on plans announced late last year to invest $2 billion in India over the next five years. Coca-Cola has put $2 billion into its Indian operations in the past two decades.
The company plans to spend the money increasing capacity at its Indian bottling unit and at its 13 bottling franchisees, expanding distribution and brand building.
Kent's bullishness comes despite the company's tumultuous history in India. In the late 1970s, Coca-Cola left the country after refusing to partner with an Indian company and hand over its secret ingredients. It returned in 1993 after India liberalized its economy.
It has faced other challenges since then. In 2006, the company took out ads in Indian newspapers to counter unfounded claims by local non-government groups that its products contained illegal levels of pesticides.
For India, Coca-Cola's optimism on the country is a rare bit of good news at a time when foreign businesses have soured on the country for policy flip-flops, including plans to retroactively tax deals involving overseas investors.
Other consumer goods companies also are planning to expand in India. Last week, Swedish furniture company IKEA Group said it would invest nearly $1.9 billion in the country to set up 25 stores in coming years. Later this year, Seattle-based coffee-chain operator Starbucks Corp. is expected to open its first store in India.
Copyright (c) 2012 Dow Jones & Company Inc.
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