Coca-Cola Company (NYSE: KO) has confirmed that it is targeting an additional $3 billion worth of capital investment to support long-term and sustainable growth in India. This may not sound massive on the surface when you consider that it is from 2012 to 2020, but this is actually a more aggressive attack on rival Pepsico Inc. (NYSE: PEP) and is on top of a $2 billion pledge.
It was late in 2011 when Coca-Cola went after a $2 billion investment in India. Now it is going to be $3 billion more through 2020. For people living in India, this may be a very pertinent question. The big consideration is that Pepsi’s Chairman and CEO Indra Nooyi is, after all, an Indian-born American. The reason that this market matters so much is that it is second-largest in the nation behind China for population. The United States is just over 310 million as its resident population as of today; India is listed in the CIA World Factbook as having nearly 1.2 billion.
Both Coke and Pepsi have had a presence in India for years. The issue is that this is a huge growth market that offers exponential gains for both Coke and for Pepsi through time if you consider the decade or two beyond 2020. It is a beverage market share war which is far from over but Coca-Cola has now decided to go after it in a much harder and faster way.
The market does not care as far as the tape is concerned on Tuesday as this is not the sort of news that drives trading on a one-day basis. This is a matter which should be good for long-term investors.
JON C. OGG