The Coca-Cola Company (KO) & Fighting Obesity

Last year the company said that it will spend around $5 billion in India through 2020 on expanding manufacturing and distribution facilities and product promotions. This is a significant jump from the $1.4 billion that the company spent here in the previous decade.

Where PepsiCo stands

PepsiCo, Inc. (NYSE:PEP), too, is facing similar issues to The Coca-Cola Company (NYSE:KO) in terms of falling sales in the US and is looking for new markets like China and India to drive growth.

PepsiCo has a similar pledge of not advertising products “that meet specific nutrition criteria” to children below 12 years in the US and key markets like India, China, Mexico and the European Union. The company also sponsors physical activities like summer camps through its Gatorade brand. It remains to be seen whether like Coca-Cola it will make these initiatives more global.

PepsiCo, Inc. (NYSE:PEP) has scored a brownie point in China due to its strategic alliance with the beverage subsidiary of Tingyi, China’s major food and beverage company. This alliance gives PepsiCo access to Tingyi’s huge distribution network.

The results are already visible in the first-quarter numbers where the company has reported 17% growth in beverage volumes in Asia, Middle East & Africa driven by double-digit gains in China. In comparison The Coca-Cola Company (NYSE:KO) could only grow its sales by 1% in the first quarter in China.

In India both companies reported similar overall growth trends. While Coca-Cola’s volumes increased by 8% it was a similar high single-digit growth for PepsiCo.

Summing Up

Coca-Cola’s move is in the right direction. This will bolster its image and also give momentum to its plans for big new markets like China and India. Unless PepsiCo acts immediately, Coca-Cola may also have the first mover advantage when it comes to meeting the demand for diet drinks in these emerging markets.

The article Coca-Cola’s Game Plan originally appeared on Fool.com and is written by Eshna De.

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