Summer is the best time for soft drink market in India. It is not just the colas which see a demand but also the non-carbonated drinks, milk based beverages and even the natural tender coconut water
The overall market size of the soft drink market in India stands at a whopping Rs.65,000 crore and is poised to grow at an annual rate of 28-30% for 30 years. The carbonated drinks segment is the largest with a share of Rs.25,000 crore while the juices or fruit drink segment stands at Rs.8,000 crore. Bottled water and other drinks make up the rest of the market. Apart from this, there is also the nonorganised market of soft drinks and small time vendors engaged in selling both carbonated and non-carbonated drinks. The rising temperature, the new lifestyle, easy availability in different sizes, availability of branded products, boom in modern retail and mall culture, all cater to the growth of the market. The demand for fruit drinks and packaged juice products increased dramatically during the last ten years. Despite the issues related to health concerns and pressure from government policies, the hopes remain high for the industry.
PepsiCo and Coca-Cola remain the two giants inInnovation, new consumption occasions, and focus on execution are set to be the biggest growth drivers of the soft drink segment, the report has pointed out
Among the carbonated soft drinks Coca Cola, Sprite and Pepsi make up more than 70% of the total beverages market. A report by market research firm Nielsen has noted that over the past two years, the soft drink industry has seen a value growth of 11% compound annual growth rate (CAGR) and a volume growth of 5%.
Even though Indians drink around 6-7 billion litres of soft drinks in a year, it is far behind nations like US, Kuwait, Thailand, Philippines and Malaysia. Innovation, new consumption occasions, and focus on execution are set to be the biggest growth drivers of the soft drink segment, the report has pointed out. The opportunity for soft drinks lies in this factor.
Genuine innovations, as distinguished from “me-too’’ drinks, also appear to have paid off for the soft drink industry. Another growth driver highlighted was the entry of new regional players in the soft drinks category, “who are likely to bring both investment as well as variety.”
Though the category is dominated by two national players, regional players are steadily gaining ground in pockets. Large markets like Tamil Nadu, Uttar Pradesh, Delhi and Madhya Pradesh, have seen the emergence of regional brands that have grown the pie as far as both consumption as well as retail presence are concerned, the report notes.
Innovation in flavour has also worked wonders. New variants have been launched by companies to lure the customers to try different flavours. Apple, orange, mixed fruit flavours, guava, pomegranate and litchi were all introduced by brands like Tropicana (PepsiCo) and Real (Dabur). Currently both this brands dominate the non-carbonated market. FMCG giant ITC is also planning to introduce the market with its new fruit juices, fruit-based beverages and milk-based readyto-drink beverages. The products will be introduced into the market by this year itself says Sanjiv Puri, Chief Executive Officer, ITC.
However, when it comes to quenchingthirst, consumers tend to typically choose between soft drinks and packaged drinking water. The report noticed that there were two times more players in the packaged drinking water category than in soft drinks. Stating the retail water segment is far more fragmented, as the top two players contribute only 35% of the volume, the report said.
Comparatively, the top two soft drink players contribute 80% of the volume in their category. The report alluded to another trend working in favour of soft drinks — the relatively lacklustre appetite for packaged drinking water, with consumers choosing soft drinks over branded packaged drinking water.
Milk based beverages
Milk based beverages is another area which has got high potential. The health benefits of them over carbonated drinks works in favour of them. Dairy beverages as a segment is estimated to post sales of Rs.6,400 crore in India by fiscal 2021, compared with Rs.1,280 crore in fiscal 2015, says a report by the Tata Strategic Management Group. As against traditional milk-based beverages like lassi, butter milk and plain flavoured milk, dairies and aerated beverage makers have of late come up with products like oats milk, coffee milk and juices mixed with milk, registering quicker acceptance.
While most of the estimated Rs.90,000 crore dairy market in India is unorganised, milk-based beverages are a fast growing segment. According to a study by market intelligence agency Mintel, during the first six months of 2017, more than 39% of fresh launches in the ready-to-drink segment were flavoured milk offerings.
Britannia Industries Ltd and Gujarat Cooperative Milk Marketing Federation Ltd that owns the Amul brand, are the top firms in the flavoured milk market. Parag Milk Foods is another group that have successfully forayed into this market with its products Topp Up and Slurp. Aerated drink firms like PepsiCo (Quaker Oats + Milk) and Coca-Cola (Vio) have also made their presence felt in milk-based beverages. Milk-based beverages offer significantly higher margins than traditional milk drinks.While most of the estimated Rs.90,000 crore dairy market in India is unorganised, milk-based beverages are a fast growing segment
The milk based beverages are also innovating in the packing. As a result, the packs are also gaining more consumers with the designs in tetrapaks, metal cans, glass bottles, pet bottles and pouches.
As for the soft drink industry, the market looks largely bright. Be it the aerated drinks or the milk based beverages, innovation is the key to lead the market.