Coca Cola plans its future in Lanka

By Mel Gunasekera

Q: Can you briefly explain F&N Coca Cola's business?

A: F&N Coca Cola is an Anchor bottler of the Coca Cola company. An anchor bottler has a specific designation of the Coca Cola Company. It means that the bottler has a special relationship with the Coca Cola Company. 

To be an anchor bottler you must be geographically diverse (we operate in 8 countries in South East, South West Asia), you must be committed to the brands and the vision of the Coca Cola Company long term. You must have the managerial expertise and depth to manage a business on a multi-country basis. You must have the financial resources to invest in the market, to grow the business and you must have the necessary money to expand into other markets that you don't already own. 

So F&N Coca Cola does about a 180 mn cases throughout all of those markets. Operations in Nepal, Pakistan, Sri Lanka, Singapore, Malaysia, Brunei, Cambodia and Vietnam today.

We are actively engaged in the negotiations for additional acquisition on a continuous basis where the opportunities may exist. In all of these businesses, we are in business with a joint venture partner. 

In Sri Lanka we happened to be owned at least in part by F&N shareholders. We own little over 90% of Pure Beverages Company (PBC). In the last couple of days we have bought a large number of shares that became available on the open market.

Q: Where did the anchor bottler concept first originate?

A: The anchor bottler concept was first begun in the USA. The concept of joint venturing with bottler was first begun in the Philippines. 

This does not mean that the Philippines was never an anchor bottler. The reason was that it was self-contained, it was one country. So it didn't meet criteri on one, where it had to be geographically diverse. It's a big business there, it's the 6th largest Coca Cola business in the world. It's because of the history of Coca Cola presence in the Philippines dating back many years, a very strong partner, San Miguel Corporation. Philippines is what I refer to as 'Salt drink heaven', it's like Sri Lanka. it's hot, relatively young population, so it has great opportunity for Coca Cola.

Q: Was it Coke's worldwide policy to give the franchise to one bottler?

A: Yes. Anchor bottlers' are special. They have the capability to run, they have the shared vision for the long term business and as such they want to work with those anchor bottlers, they are prepared to help anchor bottlers acquire other franchises. 

Q: What about India?

A: India is right now in management and ownership control of the Coca Cola Company. This is always the case. The Coca Cola company takes over markets, develops them up to a certain point and sell them on to an anchor bottler. Right now, the Coca Cola Company operating in India, one of these days it will be spun off and sold to an anchor bottler.

When we went to India we bought the big brands like 'Thumbs Up' which were some of the biggest brands at that time, and so they are brands owned by the Coca Cola company. So Coca Cola, Fanta, Sprite are gradually being introduced to the Indian market, and I understand they are doing very well at the moment. 

Q: What is your global market share?

A: They vary across the markets. For instance in Nepal we have 90%, in Singapore 65%, about 69% in Malaysia, in Vietnam around 55% so it varies widely depending on the competition.

Q: What's the market share in Sri Lanka like?

A: As you are aware, we went through a very rough year, a year ago. There were labour disagreements which I'm very pleased are sorted out. We dropped share down to 39% of the market during that strike period. Today we are back up to 51% and are the leaders in the market. 

Q: What was your market share prior to the strike?

A: I think we obtained, at one point the highest share of 64%. 

Q: Your target audience is young people?

A: Target audience is a very interesting concept. The importance of the fact means, I'm in the older generation, but I still need to have 2 litres of liquid a day to survive just like you. A 13-year-old child needs 2 litres of liquid, so why not drink your liquid in a refreshing drink Coca Cola, or Portello or Fanta, Sprite rather than drinking just say water. So the concept that teenagers are seen to like Coca Cola makes youth obviously a primary target. We give everybody in Sri Lanka the opportunity to consume our brands. 

Q: You have introduced other products like Fanta and Sprite. Do you plan to introduce any new products here?

A: Well you never know. Primarily we are focusing on our four brands here in Sri Lanka. But what we can do in the future you never can tell.

Q: Portello, incidentally is not a Coke product, its rather indigenous?

A: Yes it's not a brand of the Coca Cola Company but we have acquired our position in PBC as a viable brand, it trades a lot of volume, profits and as such it would be considered as one of our four brands.

Q: Would you consider exporting Portello to other countries?

A: We are franchised geographically as part of the Coca Cola Company, so we don't export out of Sri Lanka. 

Q: When F&N eventually acquires 100% of PBC, do you plan to de-list the company?

A: I don't know if we will ever get a 100% of ownership. Today we have a little over 90%, I have no plans at this time to de-list the company. You never know what may happen in the future, but I don't have plans for that right now.

Q: How many people do you have from F&N on the present PBC board?

A: In Sri Lanka we have none. There are no F&N Coca Cola employees. My director of operations is responsible for all our operations in terms of the daily operation of the business. He is headquartered in Singapore and he has regular contact. We have a regional manager who looks after our West Asia operations and is headquartered in Lahore Pakistan. All of our employees here at PBC are local. They are very good in general management here. 

Q: Do you send your staff to learn the various operations abroad?

A: We have a philosophy of communication that says everybody should be aware of everything going on in other operations. So they can take what works and may be of use locally. They should also know about things that don't work. So you take proven concepts and localise them into the Sri Lankan idiom and then present them to the consumer in that manner. 

Q: What are the other areas that Coke is involved in other than soft drinks?

A: There are a tremendous number of soft drinks. In Japan where I worked for 3 1/2 years, we have over 80 different brands from canned coffee, canned tea to yogurt based products. You name it, we had it. Where there is a big consumer demand for a particular type of product, or a particular flavour, we are quite prepared to introduce a new brand to take advantage of that consumer driven desire. 

Q: Is Coca Cola involved in the restaurant business?

A: As a business practice we do not believe it smart to compete with our customers. We do business with a lot of different customers and if we got into the restaurant business we would be competing directly with our customers. This is not something we like to do.

Q: What are your plans for Sri Lanka?

A: There is no guarantee that we will acquire total 100% of the company. But let say if we did, there would be no real changes in the operation in Sri Lanka. 

We prefer it to remain a Sri Lankan business. We have a huge water treatment facility at our Biyagama plant, and are very committed to the environmental aspects of our business. 

The most obvious and notable change will be a change in the name of PBC. F&N Coca Cola has a philosophy that we like to name our business after our flagship brand, Coca Cola. So we may change the name to Coca Cola Beverages Sri Lanka. This is good because it reflects that Coca Cola and Sri Lanka are naturally linked. We have the same thing in other countries like Pakistan and Vietnam. 

Dialog launches DiaText

Dialog GSM ,the only digital cellular operator in Sri Lanka, launched their latest feature, DiaText Family service last week. 

With this new service it became one of the few cellular operators in this part of the world to provide such a sophisticated service.

The DiaText is a family of text services based on 'GSM Short Messaging Service', which allows text messages from any part of the world to the particular phone .

The other features are DiaMail and DiaStock, which are unique features in the local cellular world .

DiaMail is a message forwarding system from E-Mail.' said Naushad Perera , head of sales and marketing of Dialog.

The customer, who subscribes to DiaMail will be notified as and when E-Mails are received on the computer.

This will take away the hassle of dialing and checking for E-Mail. 

DiaStock is announced as a unique service to mobile users furnishing live information on the stock market.

Stock movements, indices changes and other information will be delivered to the Dialog GSM hand set.

According to the CEO of Dialog GSM, Dr. Hans Wijesuriya, the Diatext service rate is fixed at the lowest rate, Rs. 1 per message and Rs.2 for stock update.

He said the network targets 35,000 subscribers by the end of the year.

NDB gifts Multi Media computer to GHS Kandy

A brand new multimedia computer equipped with a range of educational and 'edutainment' software on CD ROM was gifted to the students of Girls High School Kandy, by the National Development Bank, as part of its programme of promoting IT for schools. 

The software selected is designed to foster imagination and critical thinking, presenting subjects in the school curriculum such as Maths and Science with stimulating multimedia, and opening up a world of discovery through encyclopaedias of natural science, history and geography.

This is part of a pilot project for the exciting programme, undertaken by the Bank, designed to develop young minds and give access to the vast reservoir of knowledge available on CD Rom, adding a new dimension to IT education, a news release said.

The bank has in recent times, been seen to get more involved in many corporate responsibility programmes. Heartening no doubt, at a time when the market is facing many difficulties and competitive pressures.

"We have to work harder to maintain the high performance standards we have achieved as Sri Lanka's number 1 development bank. For these are difficult times. But we do not believe in taking the easy way out by cutting back from our commitment to society. We have embarked on this project as part of building a better tomorrow. We will keep looking forward and facing the challenges as they come", said Mr. Ranjith Fernando Director General Manager NDB.
Business Briefs

Business Briefs

From Gestetner

Gestetner has been appointed an authorised distributor of Fujitsu Computers recently. Both LifeBook & DeskPower and network systems were launched in their new and ultra modern showroom and office automation display centre in Vauxhall Street across the street from Gestetner head office.

Turnover growth at Eagle

CTC Eagle's turnover of Rs. 1 billion was a 24% growth in the nine months ending September 1998. "Life new business production surpassed targets and was 40% above 1997" a news release said.

The General Insurance business underwriting profit of Rs. 21 million was 8% above 1997, although there was a deterioration in claims ratios. Investment income was lower, on account of lower yields and the fall in market value of equities.

An insurance broker arrived at a negotiated settlement with the company for outstanding dues and paid Rs. 12 million as full and final settlement. A company spokesman said that "this resulted in a reversal of Rs. 10 million provision for bad debts and company dismissed action filed in the Commercial High Court against the broker."

The share of Eagle NDB Fund Management loss, after adjusting for minority interest is Rs. 4.3 million above 1997. The increased loss in Eagle NDB Fund Management is mainly due to investments made in building brand value for the Eagle Mutual Funds.

The profit of Rs. 31 million attributable to the company for the nine months is marginally above 1997 and the Chairman said that "the Board remains confident that shareholders can expect a growth in dividends in real terms" the release added.

Japan provides grant assistance

Japan has provided Rs. 1.2 billion in grant aid to Sri Lanka to increase food production.

According to the grant aid agreement, Sri Lanka will deposit an amount in local currency equivalent to at least two-thirds of the yen disbursement, as a counterpart fund. This counterpart fund will be used for economic and social development projects in Sri Lanka, upon consultation between the two governments.

The second grant is for primary school education.

E-Commerce Centre in Singapore

General Electric Information Services (GEIS), a leading global service provider in business-to-business electronic commerce, and ST Computer Systems and Services Limited (STCS), the IT arm of SembCorp Industries, has announced setting up of regional E-Commerce Centre in Singapore.

BC Computers Ltd. represents GEIS in Sri Lanka and is actively involved in setting up of the National EDI Network Switch with Sri Lanka EDI Network Services ( Pvt.) Ltd., a Government approved BOI Company set up to cater to the Electronic Commerce/ EDI needs of the local trading community, a news release said.

This regional E-Commerce service centre represents GE's and STCS' significant investments and commitment of Singapore and the regional markets. The E-Commerce regional centre will over time build a critical mass of E-Commerce expertise in consulting, service support, marketing and sales and community building. This will enhance Singapore's position to tap into the global E-Commerce market which is forecast to reach US $ 300 billion in the year 2002

SLSI upgrades training programmes

The Sri Lanka Standards Institution (SLSI) will upgrade some of its training programmes to be on par with the syllabuses of the Institute of Quality Assurance (UK). This will enable the participants to sit for examinations conducted by the Institute of Quality Assurance which are recognized worldwide, a news release said.

This is an outcome of the discussions held between the Director General - SLSI and the senior officials of the Institute of Quality Assurance during a recent visit to the Institute.

The Institute of Quality Assurance is a professional body for quality practitioners. Its aim is to promote and advance Quality Management practices in all sectors of the economy. IQA has over 13,000 individual members and over 7,000 affiliated company members in UK and overseas.

Tourism gets export status

Madan Lal Khurana, Minister of Tourism, India, announced the grant of export status to the tourist industry in India. Export status was also approved by the commerce minister Rama Krishna Hegde and finance minister Yashwant Sinha.

The reason for granting Export Status was the earning of foreign exchange for the country, a chamber release said.

Export status entitles the tourist industry to a number of benefits including substantial income tax concessions, imports of equipment and cars against foreign exchange earnings, import of equipment without bank guarantees.

In addition the 3 ministers concerned also recommended marketing development assistance for initiatives taken by the private sector and the state governments.

At the 1997 meeting of ministers of tourism of SAARC countries held in Colombo it was unanimously decided to recommend to the respective governments that tourism be granted export status with all the benefits that accrue to other export industries.

Pakistan has also declared tourism as an export industry.

Dehiwela gets Pizza Hut

Pizza Hut, the first international restaurant chain to come to Sri Lanka, has now become the first to expand beyond Colombo, with a restaurant in Dehiwala.

The restaurant joins the original Union Place location and the two Pizza Hut Express units in making up the chain in Sri Lanka.

Pizza Hut Dehiwala offers the same hugely popular menu as at Union Place - an appealing mix of pizzas, pastas, and the nation's favourite salad bar, The acclaimed service and family atmosphere also match the original.

However, Dehiwala customers get a brand new decor theme that is bright, fresh and distinctive, and is only the third of its kind in Asia. The 105 seat restaurant features an open-kitchen concept that allows patrons to actually witness the strictly hygienic conditions in which their food is prepared, a news release said.

Trans Asia signs with Multivision

The first cable television network, Multivision has signed up with Trans Asia Hotel for in-house entertainment. Multivision launched its commercial service in early November and since then launched into the commercial market, a company release says.

Trans Asia is the first Colombo Hotel to offer such a facility to their guests, it added.

Multivision's blockbuster channel line -up includes HBO ( Home Box Office) Cinemax, ESPN, STAR Sports, the Hallmark Channel, National Geographic, The Kermit Channel, AXN Action Network and Cartoon/TNT. Multivision has singed an exclusive agreement with HBO ( Home Box Office) to be the sole distributor of the 24 hour a day, commercial free movie channel to commercial subscribers. 

HBO is Asia's pre-eminent movie channel, currently, available in 20 markets across Asia. Multivision's channel line -up will increase and continue to provide subscribers with the best entertainment available in Sri Lanka.

Multivision is also available for residential use.

Eagle promotes professionalism

Eagle Insurance has set-up a trust fund to provide an opportunity for insurance industry personnel to obtain national recognition.

The aim is to encourage and motivate more people to enter and excel professionally in this field, so that customers will eventually benefit through a reliable, dependable and caring service, a company release said.

The Trust Fund has been set up in memory of their Consultant Actuary the late A.S. Mani. This is in recognition of his contribution towards the advancement of insurance professionalism in the area of Actuarial Science.

This memorial Fund will enable the awarding of a 22 carat gold medal annually, to the student (who will be nominated by the Sri Lanka Insurance Institute), who acquires the best proficiency in examinations of any recognised Actuarial Institute of learning

New Generator in Market

United Tractor & Equipment Ltd. (UTE) the local dealer for Caterpillar has just launched the Olympian range of generator sets to the Sri Lankan market. As a result of Caterpillar's investment in Emerson Electric's subsidiary F.G. Wilson in 1996 the Olympian brand generator sets are now packaged by F.G. Wilson U.K. exclusively for Caterpillar Dealers.

With the introduction of the Olympian range, UTE is now "The One Safe Source" for smaller industries because the Olympian brand ranges from 10 KVA to 200 KVA. The same unmatched product support services enjoyed by Caterpillar customers will be offered to Olympian customers.

Janashakti at Horowpatana

Janashakthi Life Insurance Company Area Development office at Horowpatana was opened recently by Mr. Sudath Liyanasuriya, Sales Manager. N. Abubacker, a resident of Horowpatana handed his proposal form to Mr. Liyanasuriya. N. Leuke - ADO Horowpatana, Mr. U.L Habib - Business Promotion Officer and Mr. N.G. Nanayakkara - Assistant Area Sales Manager also participated in the function.

Computerland NA Distributors 

ComputerLand (pvt) Ltd., was recently appointed distributors for Network Associates' range of network security and management products. 

The US-based Network Associates formed late last year with the merger of McAfee Associates and Network General is today the 7th largest software company in the world and is said to be the most profitable after Microsoft among the Top 10. 

It also controls 70 percent of the Anti-virus market share worldwide. Regional Sales Manager, Network Associates, Deb Dutta said that ComputerLand was chosen for the distribution of the company's products for two reasons. 

Firstly, because they were an entrenched company which could serve as a strong distribution partner, and secondly, because there existed a very close alignment between Microsoft products for which ComputerLand is the sole distributor and Network Associates' solutions. 

Bangkok Bonanza

Lanka Payphones Ltd. held the first fortnightly draw of the Bangkok Bonanza. Ten winners will each receive a free air ticket to Bangkok. Food, accommodation and Rs.10,000 as spending money will also be provided. Twenty more prizes have to be won. Buy a Lanka Payphone card and be one of the lucky ones.

Mobitel felicitates Abans

In appreciation of five years of dealership with Mobitel, a special plaque was presented to Mrs. Aban Pestonjee, Chairperson of Abans Group, by Ms. Cathy Aston, MD/CEO of Mobitel. This presentation was made at a function held recently at the Hilton Hotel.

Ms. Aston thanked Abans for their supportive role over the years that had made Mobitel a leading mobile phone company today. Ms Aston said that Mobitel greatly valued the contribution made towards the rapid growth of the company within a short period of five years.

"Mobitel has plans for a major development program within the next few months that will not only benefit the existing customers but also the country at large" she added.

Lion continues to roar across boundaries

The Ceylon Brewery Ltd. recently marked a remarkable year in terms of production and sales. With an unprecedented increase in sales both within Sri Lanka and abroad. a parallel achievement saw the award of the 5th Monde Selection Award for beverage quality and excellence in accordance with international standards.

With active marketing in the field of exports, and the newly completed Lion Brewery which recently commenced production, the last six months have seen Lion Stout and Lion Lager shipped to destinations in the UK, France, Germany, Sweden, the USA, Canada, Singapore, Hong Kong and other states worldwide. 

Fourth American trade fair at Hilton

The American Chamber of Commerce in Sri Lanka, (Amcham) is organizing the Fourth American Trade Fair at the Colombo Hilton from February 8-11.1999

The United States is currently Sri Lanka's biggest trading partner and a key source of capital and technological know-how for direct investment.

The U.S. Embassy is working closely with AmCham to ensure the success of the Fourth American Trade Fair. U.S. Ambassador Shaun E. Donnelly will lead the official U.S presence at this event, a news release said.

AmCham is an association of 220 U.S and Sri Lanka companies. AmCham/Sri Lanka is affiliated to the U.S Chamber of Commerce which represents the interests of over 200,000 U.S companies.

Mindada from SLIC

Sri Lanka Insurance Corporation Limited has launched "Mindada" policy to ensure future annuity payments during their youthful age.

"Mindada" will provide assistance for higher studies, self employment and ensure a stable future annuity to your children,.

Price of Big Mac here and a broad

The price of a Big Mac in USA is US $1.50. Prices of a Big Mac around the world are given below. says Abans Restaurant's System Pvt. Ltd. Ms Rusi Pestonjee in response to the above article "Ups and Downs of Big Mac index" in The Sunday Times Business of October 25.

Australia A$2.60

United Kingdom UK£1.90

Singapore S$ 3.20

India I Rs.48.00 

The item you referred to by analyst Chaminda Silva CDIC Sasoon Research on the above article as 50 cts in USA is a Beef Burger which compares with our Beef Burger which is sold at Rs. 35.00

The above mentioned information shows that the products in Sri Lanka are priced on par with other markets selling the Big Mac around the world.

AATSL holds its 7th convocation

The Association of Accounting Technicians held its 7th Convocation and 10 year celebration recently at the BMICH. The chief guest at the function was Kingsley T. Wickrema-ratne, Minister of Internal & International Commerce and Food & Deshabandu Karu Jayasuriya, Mayor of Colombo.

AATSL granted Hon. Membership to Mr. Wickramaratne and Mr. Jayasuriya at this function. 

In the picture Mr. R.Watawala confers the Hon. Membership on Mr. Jayasuriya,the released adds.

Pelawatte goes for alcohol

Three new alcohol products were introduced to the market not with standing a proposed ban on advertising of tobacco and alcohol in the new year and the recent budget's excise duty hike. 

Pelawatte Sugar Distilleries (Pvt.) Ltd. in collaboration with Vayamba Distilleries (Pvt.) Ltd. recently launched three of their products of Extra Special Arrack, Blue Special and Old Arrack. 

The three products made from a by-product of cane sugar, known as molasses, is claimed to be of a higher quality. 

The three products were formally available in the market under the same name, but produced using imported spirits. Company officials have plans to use other cane sugar by-products too. They hope to introduce new alcohol brands in the near future.

At present their plant has a capacity to bottle 40,000 to 50,000 bottles a day. Officials said that if a favourable demand exists they hope to invest in an additional bottling plant.

The ban on advertising and the duty hike seem to be of very little concern to the company. They said that they would continue to advertise until the ban was imposed and that the hike made the prices go up by Rs. 16.50.

Optimistic company officials said that they expect profits of Rs. 100 mn or more by the end of 1999.

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