Answer to Question #121250 in Management for kajol

Question

ABC Ltd is a leading corporate in India in FMCG. After an extensive research by their Marketing department they found out they should diversify into Foods & Beverages. The top management decided to get in the manufacturing of a coconut flavoured soft drink and a coconut flavoured milk based drink. Pumping capital in the venture into the business is not a major concern for the company as they have many regular investors on hand. The company would like to have a major presence with a pan India distribution network a. Do you think the idea of getting into the business of a coconut flavoured drinks a feasible business/ product on for a FMCG company? Give your views with reasons. b. Assuming that the business idea would have a very encouraging response, suggest a suitable plant location to set up the beverage manufacturing. Give reasons for the same.

Answer 1

Part (a)

Coconuts are well known for its health benefits. It is rich in potassium, sodium and calcium and for this reason, people will highly incline towards this products for it's health benefits. Nevertheless, it can not go unnoticed that most Indians have most of their meals cooked with coconut for its natural sweetness. With regards to the love of coconut products by the Indians, it is to my opinion going to be a major profit generation to the company.

Part (b)

A beverage manufacturing set up should be located nearer the raw material, potential consumers, good transport channels and production capacity. The location should be easily reachable to get the coconuts before the competitors to get hold of them (if there are any). Coconut milk being highly perishable, the location should be nearer the market and be channeled with the best means of transportation to avoid loses. The production capacity is with regards to power, man power and water sources as well as government or authority approval. In a nut shell, the location should be well accessible in order to reach rising demand.