Coca-Cola (NYSE: KO) announced that it plans to drop a quarter of a billion dollars on expansion of its business in India. The investment will be spread throughout the supply chain, including a retail university and a new testing lab. The company will also expand its family of products. This comes on top of $1 billion the company has spent in the past ten years to grow this market. The investment has paid off in strong growth (12% in the last quarter) in the $2 billion Indian soda business.
Coca-Cola employs 6,000 people in the country, and claims to indirectly benefit 125,000. Nonetheless, it has struggled against a tide of negative public perceptions. The first is suspicion that its products contain pesticides, based on the detection of trace amounts in some of its soda in 2006. The company has strongly disputed the claims with lab reports and a broad PR campaign. Coke and competitor PepsiCo (NYSE: PEP) have also come under fire in areas of India suffering drought conditions, where locals believe the company's water usage has come at the expense of the residents. The company has engaged in water reclamation projects in an attempt to change public opinion.
The company's investment, despite the PR challenges, demonstrates its conviction about the potential for the Indian market.
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