Coke and IKEA to Invest $5B in India in a Sign of Certitude – ValueWalk Premium

Coke and IKEA to Invest $5B in India in a Sign of Certitude

Coke and IKEA to Invest $5B in India in a Sign of Certitude

The Coca-Cola Company (NYSE:KO) recently announced that they would be investing an additional $3 billion in India over the next eight years as Coke looks to continue its domination over rivals such as PepsiCo, Inc. (NYSE:PEP), reports Reuters.

Coke had just announced that they, along with its bottlers were going to invest $2 billion over five years back in November.  However, after careful consideration, Coke sees a lot more potential out of India which will help India as well.  Indian government officials are looking to turn around a lagging investor confidence which is at a nine year low during the first quarter.  Coke is one of the greatest brands out there that is easily recognizable and if people start to see them putting billions into India, they may follow suit.

Another uptick for India was IKEA’s announcement that they will be investing 1.5 billion euros ($1.9 billion) to open 25 stores over the next 15 to 20 years.

Unfortunately for Coke, Pepsi currently has a controlling hold over the Indian beverage market and the company has been looking to advance further in market share.  Well the buck stops here for Pepsi because Coke is stepping up their game in India and before we know it Coke will have the controlling stake in India as well.

Coke and India have had a shaky past as the company only reentered the country in 1993 after being absent since 1977.  Before the beverage maker left in 1977, the Indian government wanted Coke to reveal their secret formula.  Smartly, Coke decided to be safe and pull out of country all together.

Since 1993, Coke has only invested about $2 billion in the country but as the cola wars heat up and Coke looks to take over Pepsi “hotspots”, India has become the new battle ground for the cola makers.

The bottom line here is that Coke is looking to boost investment in countries that have potential to raise sales and beat rivals such as Pepsi.  India is just one of those places.

Pepsi currently has a controlling stake in the market but Coke is looking to make that change very soon as the company continues to press forward with its investment.

The cola wars could prove to be great for India’s investor confidence as investors see that two large beverage makers are aggressively expanding investment in the country and looking to take over each other’s market share.

Disclosure: No Positions


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