RIZWAN Ullah Khan joined Coca-Cola in 1996, and was appointed as its country manager for Pakistan and Afghanistan in September 2005. Over the years, Pakistan became one of the company’s high priority markets, with the business doubling in four years.

Owing to this exponential growth, the company has continuously expanded its brand portfolio in the country.

Rizwan Ullah Khan was also a key catalyst in the formation of the American Business Forum, which he is currently heading as its first president. Mr Khan holds a degree in management from Hiram College, Ohio, USA. His interview follows.

Q1. What is the current size of the beverage market, and the near-future outlook for both local and foreign brands and their market segments? And what are your present market share and future targets?

Ans. In Pakistan, this overall beverage market is dominated by tea, and carbonated soft drinks overall are not a very large percentage. Having said that, carbonated beverages are quite popular across society and especially amongst the youth; our products are great in providing hydration and energy.

According to industry estimates, the CSD beverage industry’s revenue is about Rs185 billion. Coca-Cola is one of the leading beverage companies, with a market share in the heavy double digits.

The future outlook for all beverage manufacturers, whether local or multinational, is quite bright, with a growing population and changing lifestyles that demand refreshment on the move; something which our beverage products readily provide.

In the coming years and starting in 2013, we are investing heavily to bring about systemic improvements within our existing facilities, and we are also building three new greenfield production plants.

Equally importantly, and based on our global commitment to the environment, we are replacing our coolers phase-wise by investing in new technology and energy-efficient merchandising coolers.

Our future targets include a strategy to diversify our product portfolio by launching new products that fulfill consumer needs, desires and preferences. Our business is extremely consumer-centric and we remain dynamically responsive to ever-evolving market conditions.

We have now been in business in Pakistan for over 60 years, and we intend to keep our business growing and sharing the benefits of our business with all our stakeholders and the civil society at large.

Q.2. Can you provide a brief profile of your greenfield projects ?

Ans. In the next three years, Coca-Cola will be investing $380 million in Pakistan. A significant percentage of this will go towards building three new greenfield projects in Multan, Islamabad and Karachi. The plants will be fully equipped with state-of-the-art production lines and product warehousing facilities.

As a leading beverage company, we have a high demand for our beverage portfolio, which, partially due to capacity constraints, we are not able to meet fully. Through these new projects, we will be fully equipped to expand our business to meet current and future market demand.

Besides, we are also investing to bring about systemic improvements to our existing facilities in Karachi, Gujranwala, Multan, Lahore, Rahimyar Khan, and Faisalabad.

Q.3. Have you ever considered listing your enterprise on the stock exchange to raise funds for expansion? Is the investment being made by your retained earnings or being funded by your parent company, or both?

Ans. The majority shareholder in the bottling company, Coca-Cola Beverages Pakistan Limited, is a Turkey-based company, Coca-Cola Icecek AS (CCI), which is engaged in bottling and distribution of alcohol-free beverages in 10 countries, including Pakistan. It is listed on the Istanbul stock exchange in Turkey.

CCI operates production facilities in different regions of Turkey as well as abroad. Thus, we, the Coca-Cola Export Corporation, and the CCI work in conjunction.

CCI continues to invest heavily in Pakistan due to the changing market dynamics and the large young population with the median age of 21 years, which showcases bright future growth for international beverages like ours.

According to the Consumer Beverage Landscape, Pakistan is the world’s fifth largest beverage consumption market with a burgeoning middle class, and most importantly, with incremental increases in disposable incomes across all segments of society.

This offers us a huge potential for growth, and due to this latent opportunity, both the parent company and CCI are investing here to diversify our product portfolio. So, our ongoing investment is coming both from retained earnings and from substantial new direct foreign investment.

Q4. One can see imported Coca-Cola cans in the market. Is there any prospect of you exporting from Pakistan to neighboring countries?

Ans. Whilst one can see the penetration of imported cans within the market, I would like to add that Coca-Cola Pakistan also produces its own cans. In 2013, we launched 250ml ‘slim’ cans, adding another option to our varied stock keeping units (SKUs), which cater to all socio-economic classes and consumer preferences.

By introducing the ‘slims’ cans at Rs25, we aim to provide our consumers with an affordable on-the-go pack. Besides, we have also created limited edition cans such as Coke Studio theme cans to create a buzz around our marketing asset, which uniquely adds value or meaning to the act of consumption.

At present, owing to burgeoning domestic demand, export of cans to neighbouring countries is not envisaged. But who can say about the future?

Q5. What are the challenges that the beverage industry and your organisation face in doing business in Pakistan?

Ans. While Pakistan offers huge potential, it is important to note that doing business here is not for the faint-hearted. Being one of the leading beverage companies here, we face both industry-specific challenges and others that are macroeconomic in nature that all businesses operating in the country face.

Perhaps the most debilitating challenge for the industry is taxation. Taxation needs to be rationalised and a level playing field should be provided to all players in the industry to ensure healthy competition.

Coca-Cola and its bottler are amongst the leading taxpayers; last year we paid over Rs11 billion in duties and taxes. We believe the government needs to create incentive schemes for diligent and transparent taxpayers.

Secondly, grossly ineffective action against violators of intellectual property rights (IPR) serves as a major impediment for regulated sectors such as ours. It is not only that the producers of spurious and counterfeit products are illicitly gaining market share, their products pose a very serious health risk for consumers.

To top this, even the government is losing out on duties and taxes to the tune of over Rs1 billion every year. Whilst the federal and provincial governments have taken efforts to counter this menace, we believe the IPR issue needs to be given much more attention, with violators given exemplary punishment. Spurious and counterfeit products enjoy up to 20 per cent of the market share in some parts of the country today.

Our third most important challenge is the insecure operational environment, in terms of the energy crisis and the law and order situation, among others.