Coca Cola the agriculture investor

The world renowned beverage company, Coca Cola is all set to invest Rs 11,000 crore rupees in the next five years in the agricultural ecosystem of India. This new venture into the food processing and sourcing network is a divergent pursuit from the production of the standard carbonated beverages.

Motive behind the investment

Stated by the Coca Cola Pvt Limited, “The amount for the contribution will be from grove to glass through a concept called ‘fruit circular economy’.” The major reason for a change in the process of production was due to the recent experience of sluggish sales of beverages.

Though India’s growth journey was different from many developed countries, where development occurred from agriculture to manufacturing to the service sector. India jumped from inadequate development in agriculture sector to the service sector. Hence, the need of the hour is not only concentration in the manufacturing sector but simultaneously in the agriculture sector as well.

The growing demand for healthy and natural fruit drinks; specifically from urban citizens would have been the deciding factor for this new venture by Coca Cola. In the fast base cities, where the lack of time to maintain health and fitness affect the lifestyles of many, natural and healthy drinks offer the best solution to maintain a strong and fit life to continue day to day routines.

Assessment

The impact of this action on the Indian economy is two faced i.e., there are both positive and negative impacts. Like any business enterprise which experiences a slowdown in the growth process, the solution will be to expand its market. This new step in the food processing industry will prove to be advantageous for Coca Cola as it will prove to be a strong contender in the monopolistic market.

The need for fruit pulp in this market will generate a high demand causing an increase in the supply of fruits from agricultural markets. By means of eliminating the role of the middleman in the trade of fruits from the farmers, it will be the highly advantageous for farmers to increase their yield and earn profits.

On the contrary, the irregular nature of the Indian monsoon has a drastic effect on the yield and on the nature of trade between the company and the farmers. Thus, the role of government to protect the rights of the farmers and maintain productive relations with multinational corporations is of crucial importance.