SOFT DRINK INDUSTRY

Soft drink industry in India

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Soft drink industry in India

Introduction

The Indian population evidently continued to exhibit a tendency towards dynamic demand patterns in 2010. Although consumers were still health-orientated and moved away from carbonates towards fruit/vegetable juice and bottled water in general, the rate at which this occurred was somewhat contained by unusually high growth of carbonates in both 2009 and 2010. High volume growth rates of bottled water and carbonates in 2009 were due to the prolonged summer season, which also led to drought-like conditions in many parts of the country. Seen as good thirst quenchers, both these categories, received significant growth boosts through “on-the-go” consumption. In addition, sports and energy drinks registered strong growth volumes in 2010 in spite of unit price increases (Rugman 2009, pp. 50-63). Their usefulness during exercise and in enabling optimal performance when performing various daily tasks is very much in line with modern lifestyles.

Current Impact

Constituting 40% of soft drinks off-trade value sales in 2010, carbonates remained the leading category within soft drinks. Carbonates, bottled water, sports drinks and energy drinks registered off-trade volume growth of 12%, 21%, 67%, and 39% respectively in 2010. In 2009, carbonates registered unprecedented off-trade volume growth of 19% as all leading brands including Thums Up, Sprite, Pepsi and Coca-Cola put up impressive growth (Majumdar 2010, pp. 308-312). Spurred by volume growth, PepsiCo, Aqua Montana and Zydus Wellness all launched low-calorie carbonated products in 2010. The respective brands Pepsi Max, Aqua Montana Slim and Sugar Free D'lite all catered to health-conscious consumers who like carbonates. Bottled water also witnessed premium product launches such as Qua+ by Narang Group and Vedica by Parle Bisleri, which introduced in 2010. Sports drinks witnessed astronomical growth on the back of Heinz' and GlaxoSmithKline's entry to the category in 2010, while energy drinks saw Coca-Cola's Burn come to India.

Overview

With continuing shortage of potable drinking water in large parts of the country, India has a thriving demand for bottled water. This, coupled with the rural expansion plans of bottled water players, will continue driving volume growth of bottled water in the forecast period. However, unless India sees another outstanding year with extended summers in the forecast period, the growth of consumption of carbonates expected to decrease in coming years (Browaeys 2008, pp. 63-72). Both sports and energy drinks will regularly achieve strong growth in the same expected period. More public awareness is generated among the people of India, regarding the role of sports drinks in exercise and in maintaining alertness when performing tasks for energy drinks. This, in turn, will widen the consumer base of the young and affluent for these categories.

The Future Impact

With the key to sales being utility, several unexplored categories could become better known in the forecast period. While RTD tea will be a healthy and close alternative to carbonates, fruit/vegetable juice will continue to record excessive growth in the light of being naturally healthy. Carbonates itself will see a gradual shift from dominant, regular cola carbonates towards lemon/lime, ...