DISTRIBUTION NETWORK

(SEC A -- GROUP 5)

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

Some Facts
50 Bottling Plants in India 700,000 retail outlets to be serviced 25,000 system employees 1,50,000 indirect employees Indore Distribution:
Division into 30 Routes 2 types of routes: Institutional & Fragmented 2 Persons/ Route: Market Developer + Salesperson

: 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

Distribution: From Factory to Fridge

Bottler

Ingredients Coca Cola Company

Concentrate Manufacturing Syrup Only

Bottling

CO2 Only
Direct Sales Depot (WH) Fountain

Visi Cooler/ Shelves

Transport

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

Retailers

Bicycles are used too!

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

Distribution Process
Payment Cash & Carry Only

Retailer/Customer
Requirement

Visits the Retailer/Customer once or twice a week

SP goes with Delivery Truck, Delivers Goods

Market Developer

Next Morning, Order Transferred to Salespersons Handheld Device

Punches the order through Blackberry Application

Order enters DSD ERP DB Code Generated & Delivery system Trucks Loaded After 7 PM, Pre Seller Orders (Dumps) printed by DSD

Key Account Outlets

Channel Type Channel Class Modern Trade

Eatery and Dining

Cinema

Hyper - >10 checkout counters Super 4-9 checkout counters Convenio 4 checkout counters Cash & Carry Quick Service Restaurants Take Away Fine Dine Night Life Single Screen Multi Screen

Entertainment and Leisure

Hotels Amusement Parks

Travel

Institutions

Airlines Budget Airlines Full Service Airport Kiosks Fuel Station At Work CSD Canteen Education College/ School Canteen Hospital Canteens

Trade Margins and Promotions

Margin of 10-12% per SKU to retailers Margin decided by CCI; no influence by DSD or retailers Trade 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

Conditions of Sale
Payment Terms
Cash and carry Zero credit policy

An order-to-payment cycle of 24 hours Order taking time: 9am to 7pm Average inventory of about 4-5 days of sale by retailer Producer guarantee against defective bottles at the time of delivery only Product return only in case of expired product Target based on previous year sales, and price, are centrally set by CCI

A typical order punched in by a Market Developer

Degree of effort
Coca Cola employs both push and pull strategies. Push:
Frequent trade promotions Exclusive tie-ups with chains like McDonalds, Dominos, etc. Large display in stores New store acquisition

Pull:
Heavy advertisement Sales promotions (scratch and win, etc.)

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

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)

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)

DEEP RED
Deep Red Score (100)

Chilling Equipments (20)

Availability (50)

Activation (30)

Size (10)

Cola + 3 Brands (35)

Display (10)

Diet Coke (5) Purity (10) Juice (5) Combo Pack (10) Water (5) Mention in Menu (10)

A typical Visi-cooler: Notice the sequence: Coke > Sprite > Fanta > Kinley

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

Thank You Thank You