Download - Coca-Cola Distribution Network
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DISTRIBUTION NETWORK (SEC A -- GROUP 5)
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Players at Various Levels
Concentrate Manufacturing: Coca-Cola India Pvt. Ltd. Responsible for manufacturing & selling of beverage
base/syrups/powder base etc and marketing activities
Bottling: Hindustan Coca-Cola Beverages Pvt. Ltd & 13 authorized bottling partners Each has its own territory Develop markets and prepare, package, sell and
lastly distribute SKUs
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Some Facts
50 Bottling Plants in India700,000 retail outlets to be serviced25,000 system employees1,50,000 indirect employeesIndore Distribution:
Division into 30 Routes 2 types of routes: Institutional & Fragmented 2 Persons/ Route: Market Developer + Salesperson
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: Distribution Strategy
CCI has built a distribution network in combination with its bottling partners and contract manufacturers
Urban Markets: Direct distribution, from bottling plants to retailers
Rural Markets: A three-tier ‘Hub and Spoke’ distribution model
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Distribution: From Factory to Fridge
Ingredients Concentrate Manufacturing Bottling
Direct Sales Depot (WH)
TransportVisi Cooler/ Shelves
Fountain
Syrup Only
CO2 Only
Coca Cola Company
Bottler
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The 3 As of ‘Thanda matlab
Availability: A CDS as in the urban areas would be infeasible, instead, a Hub and Spoke Model was adopted by Coca Cola
Central Warehouse
(Hub)
Warehouses (Spoke) Bottling Plant
RetailersBicycles are used too!
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The 3 As of ‘Thanda matlab
Affordability: ‘Chota Coke’ (200ml) at ` 5/- using a ‘push’ strategy for the price-sensitive rural consumer
Acceptability: Participating in the weekly mandies by setting up temporary retail outlets; taking part in the annual haats
Rural penetration increased from 9% in 2001 to 25% in 2003
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Distribution Process
Market Developer
Punches the order through Blackberry Application
Order enters DSD ERP system
After 7 PM, Pre Seller Orders (‘Dumps’) printed by DSD
DB Code Generated & Delivery Trucks Loaded
Next Morning, Order Transferred to Salesperson’s Handheld Device
SP goes with Delivery Truck, Delivers Goods
Retailer/Customer
Requirement
Visits the Retailer/Customer once or twice a week
PaymentCash & Carry Only
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Key Account Outlets
•Channel
Class
Channel Type•Hy
per - >10 checkout counters
•Super – 4-9 checkout counters
•Convenio – 4 checkout counters
•Cash & Carry
Modern Trade
•Quick Service Restaurants
•Take Away
•Fine Dine
•Night Life
Eatery and Dining
•Single Screen
•Multi Screen
Cinema
•Hotels
•Amusement Parks
Entertainment and Leisure
•Airlines – Budget
•Airlines – Full Service
•Airport Kiosks
•Fuel Station
Travel
•At Work
•CSD Canteen
•Education College/ School Canteen
•Hospital Canteens
Institutions
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Trade Margins and Promotions
Margin of 10-12% per SKU to retailersMargin decided by CCI; no influence by DSD or
retailersTrade promotion of around 20 days announced
every 2-3 months by CCI, such as: 2 tetra packs free with every crate Free diet coke with Kebab platter in Sayaji restaurant
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Conditions of Sale
Payment Terms Cash and carry Zero credit policy
An order-to-payment cycle of 24 hoursOrder taking time: 9am to 7pmAverage inventory of about 4-5 days of sale by retailerProducer guarantee against defective bottles at the
time of delivery onlyProduct return only in case of expired productTarget based on previous year sales, and price, are
centrally set by CCI
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A typical order punched in by a Market Developer
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Degree of effort
Coca Cola employs both push and pull strategies.Push:
Frequent trade promotions Exclusive tie-ups with chains like McDonalds, Domino’s,
etc. Large display in stores New store acquisition
Pull: Heavy advertisement Sales promotions (scratch and win, etc.)
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Channel Conflicts
Policy of zero credit: Small store owners demand credit from salesmen
Retailers demand to return defective products even after delivery
Shrinkage of trade margins during price wars
“Cold drink retailers are finding themselves in a duopoly squeeze for the first time now...Coke and Pepsi have cut retailer margins by more than half from Rs 48 a crate (24 bottles of 300ml each) to Rs 20 now. On small bottles of 200ml, the
margin is down to Rs 16 a crate from Rs 18 a few weeks ago.”- ET report
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Training and Performance Measurement
Coca-Cola University has launched Parivartan, an innovative training program for traditional "mom-and-pop" retailers in India to equip them with the skills, tools and techniques required to succeed in India's evolving retail landscape
7 days’ field training for Market Developers (MD) and salesmen An elaborate DEEP RED evaluation score for measurement of
performance of MD and salesmen DEEP RED outlines the execution framework for key accounts. It aims to define the Picture of Success (PicOS) for key account
categories PicOS elements are the key strategic execution elements for
creation, registration, evaluation and maintenance of execution Key Performance Indicators (KPIs)
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Distributor Management by DeepRED
Right Execution Daily is defined as a tool to measure the performance of the distributor
RED surveys were started in 2007, and is done by A.C. Nielson, monthly report is sent to HCCB
The following is checked daily by the Market Developer and scored on a scale of 100 points: Check the visi-cooler management (30 points) Check the availability of the product in the outlet (50 points) Check the activation in the outlet (20 points)
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DEEP RED
Deep Red Score (100)
Chilling Equipments (20)
Size (10)
Purity (10)
Availability (50)
Cola + 3 Brands (35)
Diet Coke (5)
Juice (5)
Water (5)
Activation (30)
Display (10)
Mention in Menu (10)
Combo Pack (10)
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A typical Visi-cooler: Notice the sequence: Coke > Sprite > Fanta > Kinley
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Sources
Websites: http://www.coca-colaindia.com/ http://articles.economictimes.indiatimes.com/ http://online.wsj.com/article/ http://www.icmrindia.org/casestudies/CocaCola.html
Outlets Covered: Malls: C21,Malhar, Treasure Island: Big Bazaar,
Mangal City Eating Joints: McDonalds, Dominos, Radisson,
Sayaji
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Thank YouThank You