KARACHI: The Coca-Cola Export Corporation of Pakistan—one of the biggest soft drink makers in the world,
KARACHI: The Coca-Cola Export Corporation of Pakistan—one of the biggest soft drink makers in the world, sees significant investment potential in the country’s food and beverages market due to growing consumer demand and gains in market share, its general manager for Pakistan and Afghanistan, Rizwan U Khan said in an exclusive interview with The News.
However, the intellectual property rights infringements and taxation rules are the obstacles, which could dim growth prospects, Khan added.
Q. Does the company have expansion plans in Pakistan and Afghanistan?
A. The Coca-Cola Company has been operating in Pakistan for over 60 years and expanding continuously. We have been investing significantly in the country for several years and our future plans are to add another $300 million to $350 million in the coming three to four years. This investment will go towards new Greenfields, upgrading existing plants injecting glass, and chilling equipment.
Afghanistan is a comparatively new and under developed market as compared to Pakistan. While we all understand the challenges faced in operating in Afghanistan, it has not held us back from expanding our business throughout that country. We have managed to strategically align Coca-Cola Pakistan’s core and support business functions with Afghanistan, and it’s been showing signs of improvement.
Q. Any updates on Greenfield investment projects in the country?
A. Greenfields form is an integral part of the company’s investment portfolio. I would like to share that our Multan Greenfield is complete and ready for commissioning. We feel that the government has undertaken several measures to attract investment and more could be done to make Pakistan an ideal investment destination.
Q. What is the contribution of Coca-Cola towards the transformation of technology in Pakistan and other developing countries?
A. Coca-Cola is amongst the most innovative companies, especially within the food and beverages sector. One of our major strengths is to leverage and import ‘best practices’ from any part of the world into another country. Such is the case of Pakistan as well, where we have not only introduced new technological and business practices but also improved the learning curve of our suppliers and partners.
In Pakistan, we continue to expand our research and development footprint through import of world-class machinery and also educate local technicians to operate, handle and ensure maintenance of this equipment. There are over 300 allied industries linked with the beverages sector and our advancement in technology is helping them improve their standards.
Q. What is the company's current market share? And what are the major competitors in Pakistan?
A. Well you are aware of the typical major players in the beverage industry of Pakistan but in recent years, there has been an increase of new entrants. This boasts the market’s potential and creates room for healthy competition. We at Coca-Cola have been consistently gaining market share over the past few years and launched several successful brands along the way. This represents our focus towards innovation and providing more options to our consumers.
Q. What are the key challenges being faced by beverage manufacturers in the country?
A. The issue of Intellectual Property Rights (IPR) infringements has always been in bad spotlight, especially in the beverage industry. Spurious and counterfeit products are a real threat to consumers’ health, besides causing substantial loss of revenue for the government, as illegal producers do not pay duties and taxes.
The other major challenge is taxation. For years, our sector has faced discriminatory tax, ie Federal Excise Duty (FED). No other sector within F&B is taxed under FED and Sales Tax regime. This is proving to be a major deterrent for existing and potential investors. We have long pleaded our case to the governments, and earlier this year, the ministry decided to reduce the proposed increase rate, but our stance remains the same – FED has to be eliminated on beverages.
Q. Any comments on corporate and sales tax related policies?
A. Ministry of Finance in Pakistan has introduced slight amendments to corporate income tax, where there has been a one percent reduction. This will help rationalise the tax structure, but it is also important to ensure that all companies, regardless of the sectors, pay their fair share of taxes. Policies like these can only be beneficial if they are implemented correctly.
Q. Is the Coca-Cola Company playing its role as a 'responsible investor' in terms of health and environment?
A. Indeed! I take great pride in saying that The Coca-Cola Company has been leading the notion of creating sustainable shared value, extended over the framework model of ‘Me, We and World’.
We believe that our business can only prosper if the communities around us thrive and remain healthy. At Coca-Cola Pakistan, we have a CSR portfolio worth more than $7.0 million (over the last 6 years), with key focus on women empowerment, education, environment, water conservation, and sustainable agriculture.
The writer is a staff member
