Could you give us some more background information on Coca Cola bottlers in Uzbekistan in terms of its historical background, its structure and main activities today?
The historical background of Coca-Cola in Uzbekistan began in October 1992. There were three partners who formed the JV. The Coca-Cola Company, ROZ Trading (affiliate company of ROZ Group) and Uzpisheprom. The first production commenced in March 27, 1993 and it started with one 250-ml RGB line. At that time there were 72 employees in total. CCBU was one of the first consumer goods investments in Uzbekistan and CCBU was the second company who manufactured products of The Coca-Cola Company in all of the former Soviet Union countries except Georgia. The partners have invested more than 140 million US dollars in this JV as of today. We have three production facilities, one here in Tashkent, one in Namangan covering Fergana Valley, and one in Urgench in the Khorezm Region. Besides our production facilities we also have seven Distribution Warehouses throughout Uzbekistan.
I like to mention that CCBU was the recipient of the "Bottler Of The Year Award", from our Division which was made out of 26 countries at that time. It must be noted that CCBU was the recipient of this award two years in a row both in 1996 and 1997. That was a very big accomplishment and this achievement makes everyone in CCBU very proud considering that CCBU was a young company and included among top countries in the Coca-Cola System.
What has been your philosophy to achieve the "Bottler Of The Year Award" in 1996-97 and what is the philosophy today?
I have been in this industry for 17 years and my philosophy has been, creating an environment where motivated people can achieve and team work. This philosophy has not changed and some people might view this as anachronistic -sustaining the same philosophy- but I am very satisfied where it has gotten me to date, and above all it has been great along the way. Every manager's goal in CCBU is to create value. In order to achieve this goal the most important element is Total Quality in everything we do. Not only in the way we source our material, manufacture our products and distribute to our customers, etc., but in all aspects of business day in day out. At CCBU all must be done in a quality manner, and in order to achieve this, people must be motivated. I believe that people are by nature motivated or not motivated and I try to create the proper environment for motivated people to achieve. If people are by nature motivated and work in an environment they enjoy working in then they would attain their goals and objectives. In essence the end result ends up being a unified team effort trying to achieve common goals and objectives, which stems from individual efforts striving to achieve and to be successful. This has been and is my philosophy.
How would you describe your contribution to the Uzbek economy since you established the business here?
One of the biggest contributions besides being a major employer to Uzbekistan citizens is the accumulation of state revenues that has collected various taxes we have paid throughout the years, and amount into billions of sums. I am talking about the taxes that we pay always in time and without default. This is I think one of the biggest contributions that a company like ours makes. Not only in Tashkent where we have our headquarters but to other regions where we have distribution centers, warehouses and other production facilities like Samarkand, Urgench and Bukhara in the Khoresm Region and Namangan, Andijan Margilan and Kokand in Fergana Valley.
We also have created close to two thousand direct jobs in Uzbekistan and we have estimated about 20 thousand jobs indirectly that have been created through retail shops, distributors, wholesalers, advertising agencies, local transportation companies and suppliers of various services. I recall reading that there are ten jobs created by Coca-Cola world wide for every direct hiring.
Another positive contribution of our business activity in Uzbekistan is the creation of a well-trained and skilled work force. We have extensive training programs for all departments and in our Mega Plant we have build a state of the art training center for to train our employees and also employees from other bottlers and personnel from TCCC within our region and division. We have had various courses implemented and organized by our training and development department in close collaboration with our Division's training department in Istanbul. Trainers for the courses came all the way from Finland, Sweden, Germany, Russia, Turkey, Greece, and the USA.
I like to point that we are the first company to introduce direct selling to customers. We have a 78-truck fleet, which go directly to the customer and provide a service, which is not very common in this part of the world. Our sales force executes programmed daily routes and we deliver to our customers within 24 hours. Moreover, we provide a phone call follow up by our customer service department staff to customers to make certain that everything is according to our policy. This way we can detect unsatisfied customers and we can proceed with the necessary corrective measures as required..
Can you tell us more about your market? Do you also export a lot and to what countries?
We are not allowed to export anywhere because we are restricted by the Bottler's agreement, and if we need to export, the agreement and authorization must come from The Coca-Cola Company. Therefore, we sell only within Uzbekistan.
Regarding our market and competition I would say that our biggest competitor right now is tea. Tea consumption is a cultural habit in Uzbekistan but we know that marketing is about changing and forming habits. It is impossible to change over night people from drinking warm tea with the traditional meals of «ploff» and «shashlik» to Coca-Cola. That is why our current strategy in our advertising and marketing efforts are targeted in consumers enjoying drinking a refreshing ice cold Coca-Cola with their meals. We commission internationally known research agencies to research the attitude and behavior of consumers and to determine patterns in people's habits, desires, wants and needs which helps us to select the strategy and a unique selling proposition.
It has been shown that water is becoming a major competitor in many markets around the world and it is true also in our market. For instance the local production output and consumption in Uzbekistan has more than doubled the past two years, and the demand for water is on the rise. Water has 45% of volume share at present, so, water in Uzbekistan as in other major markets is a dominant force to compete with. The main reason for water being a strong competitor to carbonated soft drinks in Uzbekistan is because of consumer affordability. Disposable income is diminishing and it is more affordable to quench a thirst with a bottle of water rather than Coca-Cola, which retails three times higher. In this region of our world affordability is a major issue for every enterprise in the FMCG sector. | From a financial approach, how successful have you been last year?
This year we are looking for a 10% increase in volume compared to last year. For next year, we want to maintain this growth trend in volume so we are looking for another 10% increase. Considering the transitional phase of the economies in this region, the consequent impact on disposable income and affordability levels, attaining another 10% compounded growth is a healthy increase.
Are there any other projects you are working at the moment, new plans?
We are planning to undertake different projects. One major project is investing $1.5 million in upgrading our production infrastructure facilities of our Mega Plant here in Tashkent and Namangan. This is the installation of CO2 plants, which can be considered as backward integration.
As we speak all the necessary equipment are on their way from Germany destine to both locations. We took the decision to produce the CO2 ourselves because we will have cost savings and exercise greater if not absolute control in one of the main materials required for the production of our products. Every product that enters our premises is from authorized suppliers by TCCC and it is thoroughly checked by our quality department and they in turn authorize it for use after it has passed through all the necessary required tests. We have installed a CO2 plant in Urgench already where we have our own production facility within the plant, a mega plant that will be ready by next March. There is also one in Namangan that should be completed by the end of the year.
There are projects that are not necessarily directed to our production needs or selling our products but we do consider ourselves a good corporate citizen in the Republic and sponsor various social projects. Foe example our major shareholder ROZ has a fund which sponsors an orphanage housing 150 children. Besides renovating the building we also build inside the premises a basketball court, a tennis court, a soccer field, a volleyball court and a playground for the younger ones. The whole idea is to keep the children busy by teaching and involving them in sports, arts, organizing special event days, taking them to field trips etc. Doing this our aim is to prevent these children from being bored and engaging in wrongdoing.
Two years ago CCBU contributed one million dollars to the regions of Fergana where there was a disaster caused by floods. Not to many people know this, but I stress that we do not do this for publicity, we just do it as good will for the people of Uzbekistan.
We sponsor the basketball federation, the national tennis team and the federation of tennis. As for the President's cup the annual prestigious event, CCBU is a main sponsor providing our services in many ways. Just the other day we sponsored a group of college students that went to United States on a educational program.
Regarding our plans for new products I can say that we have a lot of products in the advanced level of development, and there are countless products and brands from TCCC ready for market introduction whenever there will be a demand from the consumers.
The investment climate in developing countries is very challenging due to new laws and regulations that are being introduced but this is a natural evolution within a country. Specifically for Uzbekistan I would like to say that, we must understand the phase which the country is going through, that is reforms and restructuring in the legal, banking, business sector, and the economic sector. I can say that the country has come a long way and has a lot of potential. I look at my own employees how they have progressed in the past four years that I have been working with them and their progress and development gives me great hope for the future.
Some people complain about the investment climate, but I always tell everyone that we can not compare Uzbekistan with the Western countries at this point in time, because Uzbekistan's evolution and transitional phase has just began. The Western countries have gone through hundreds of years of development whereas Uzbekistan has gone through only a relative much shorter period. I see this change in our company, where CCBU was at the beginning of its activities and how much we have accomplished in a short period of time through determination.
For our business, I see many exciting things that are waiting to happen and we in CCBU will continue to deliver satisfaction to our consumers, service to our customers, contribution to the economy and support to society. I personally see light at the end of the tunnel while being aware of pessimism, but if you consider that we have invested 140 million dollars, you can imagine that we at CCBU are not pessimistic at all. I see that the people of Uzbekistan are determined and proud people and I do not think that they had the chance that others have had. I am sure they have the will to do better for themselves and their families. They want a good future and I think they will have it, because Uzbekistan has a lot to offer as the leading nation in Central Asia.
Could you also tell us more about yourself?
I started working for Coca-Cola in 1982. It was during my second last year in university and I got a summer job as a helper loading and unloading trucks. The following year I saw that the drivers were making better money so I got myself a driver's license and became a Coca-Cola truck driver. Looking back it was one of the most enjoyable positions I have had, because it was a great school and learned a lot about our business When I finished university I was promoted to a management position and further I had an opportunity to go internationally. I joint a Coca-Cola bottler based in Athens Greece called Leventis which today is called Coca-Cola Hellenic Bottling Company, and is one of the biggest bottling companies in the world. I worked for them for five years. In 1990 I joint Coca-Cola Export Corporation in the Regional Office in Athens overseeing Greece, Cyprus, Israel and Bulgaria. In 1996 I joined DHL International as Commercial Director but after there months I realized that Coca-Cola was were I belonged. At that time I was doing my MBA and needed some time to do my dissertation, so I resigned and took 6 months off to finish. When I was finished I went back in the system and had other offers besides CCBU but I chose to come to Tashkent. I made the choice of Tashkent because the business plans CCBU had were very challenging and further I was impressed by the majority shareholders. I came to work as a Sales and Marketing Manager, after a year I became the Sales and Marketing Director and after a year I became the General Manager. I feel very proud working for this joint venture between ROZ Group and TCCC, and I have to say, that I am especially fortunate to be working close with our President Mr. Mansur Maqsudi, and that remains a great privilege for me.
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Coca Cola Bottlers Uzbekistan Ltd. (CCBU)