Coca Cola India's Thirst for the Rural Market

CCI'S RURAL MARKETING STRATEGY Contd..

FIGURE I
CCI's DISTRIBUTION SYSTEM IN URBAN AREAS

FIGURE II

CCI's RURAL DISTRIBUTION NETWORK

Source: Case Studies and Management Resources

Under the hub and spoke distribution system, stock was transported from the bottling plants to hubs and then from hubs, the stock was transported to spokes which were situated in small towns. These spokes fed the retailers catering to the demand in rural areas. CCI not only changed its distribution model, it also changed the type of vehicles used for transportation. The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes. For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles. Commenting on the transportation of stock in rural markets, a company spokesperson said, “We use all possible means of transport that range from trucks, auto rickshaws, cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas, to cart our products from the nearest hub^[7].”

In late 2002, CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the company's bottlers) to meet rural demand. By March 2003, the company had added 25 production lines and doubled its glass and PET bottle capacity^[8] . Further it also distributed around 2,00,000 refrigerators to its rural retailers. It also purchased 5,000 new trucks and auto rickshaws for boosting its rural distribution. Through its rural distribution initiatives, CCI was able to increase its presence in rural areas from a coverage of 81,383 villages in 2001 to 1,58,342 villages in August 2003. Apart from strengthening its distribution network, CCI also focused on pricing in rural market.

^[7] Shashidhar, Ajit, Colas'Countryside Crusade, The Hindu Business Line – Catalyst, July 3, 2003.

^[8] Apart from the rural markets, CCI also began to focus on the home segment, by introducing – 1 litre, 1.5 and 2 litre PET bottles.

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