Soft Drinks in India

8/3/2019 Soft Drinks in India

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Soft drinks in India Huge Potential Ahead

According to the Product Insights: Soft Drinks in Indiareport,

The global soft drinks market grew at a compound annual growth rate (CAGR) of 3.45% from 2005

to 2009 and was valued at $494.5 billion in 2009. New product launches in the global soft drinks

market increased by 8.59% in 2009. The US was the top country by retail sales as well as by

number of new product launches, followed by Japan which ranked second in both categories.

Globally, India ranked 25th in terms of retail sales and 13th in terms of the number of new product

launches in the soft drinks market in 2009.

In spite of Indias huge population and the fact that around 47% of the population is composed of persons

below 30 years of age, the per-capita consumption of soft drinks in India remains very low, at

approximately at 5.2 liters against the world average of nearly 85.22 liters. Developed countries such as

the US, Germany, Italy and Spain all have per-capita consumption in the range of 280-400 liters,

showcasing the huge potential for market growth in India.

Coca-Cola remains the market leader in the carbonates category with a market share of more than 60%

in the Indian market, followed by Pepsi with around 35%. In the bottled water category, Parles Bisleri and

Kinley from Coca-Cola are the leading players. The packaged juices market in India continues to be

dominated by Maaza and Frooti, followed by brands such as Slice, Tropicana and Real which have

registered good growths in their market shares in the past few years. Red Bull with its strong dominance

of the energy drinks category, which is the largest segment in the functional drinks category, is the

market leader in the functional drinks market.

Considering the overall development of the Indian soft drinks market, a comparison can be drawn

between various soft drink categories based on the major consumer segment for each category using age

and economic status as the two judging criterion. For instance, while carbonates are consumed by

consumers from almost all economic segments and ages in the India, considering the various packaging

sizes and price points for these products, segments such as energy drinks and sports drinks are mainly

consumed in the age group of around 24 years who are on the higher side in terms of economic status,

i.e. working executives and the affluent class. Based on these trends, a comparison chart can be drawn

between the different soft drink categories in India as given below:


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Current Situation:

According to the Product Insights: Soft Drinks in Indiareport from Datamonitor,

With improving literacy rates, consumers have become increasingly aware of health and fitness-

related issues. Additionally, due to greater disposable incomes, particularly in urban areas,

consumers are seeking healthier beverages even if they are relatively more expensive, due to their

positioning.

Raising awareness levels with regard to obesity and other weight related health issues in the last decade,

especially amongst teenagers and young adults, has helped push sales of non-carbonates. Sales of non-

carbonated drinks also got a boost from the pesticide controversy which led some consumers to switch

loyalties from carbonates to juices, functional drinks etc. Products such as Juice are now fast becoming

as an essential part of breakfast table with urban families. Leading beverage corporations such as Coca-

cola and PepsiCo have identified this trend and are adopting strategies to benefit from this development.

Previously, product strategy of these large corporations was largely Cola based; given that a large part of

their product volumes would come from the carbonates segment. However, in the last few years, with the

strong growth in the non-carbonate sector and tapering of growth within the cola segment companies

such as PepsiCo have announced plans of moving towards a well diversified portfolio by increasing the

volume share of other soft drink segments including juices, functional drinks and other products with

health benefits etc. This is evident from the strong marketing campaigns which preceded the launch of

brands such as Tropicana and Minute Maid.

Middle

Y-Axis: Consumer

Age Group

X-Axis: Consumer

Economic Segment

AffluentWorking Executives/Upper

Middle Class

15 years

24 years

40 years

60 years

Carbonate

Juices

Energy Drinksand Sports

Carbonate

Carbonate

Juices

Nutraceutic

al Drinks


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Growing consumer awareness about the harmful effects of artificial ingredients in food and

beverages has fueled the demand for natural or free from products over the last few years.According to Datamonitors latest consumer survey, 62% of respondents globally are influenced

by the claims of no artificial additives including colors, flavorings and preservatives when

making food and beverage choices. The survey further reveals that the natural/organic claim

influences the major proportion of consumers in developing countries like Brazil and China, and a

significant proportion in developed economies like the US and the UK.

In line with the trends as reflected in the report, several new brands such as Nimbooz, Minute Maid

Nimbu Fresh, and Cocojal (from Jain Agro) have been launched in the past few years in the Indian

market. These recent entrants have used the natural claim to market their product with consumers, with

products being modeled on traditional Indian drinks. For instance, Nimbooz is based on the traditional

lemon drink consumed in homes and the ads reflect the natural flavors and the homemade like taste of

the product.

Product Launches/Marketing Strategies:

As per the Product Insights: Soft Drinks in Indiareport from Datamonitor, US, followed by Japan werethe top countries in terms of new product launches as well as by market value. India was ranked13th by new product launches and 25th by market value. India had the third highest percentagegrowth (11%) in global soft drinks market in 2009 in terms of value. The figure below depicts thetop 10 countries based on number of new products launched in the soft drinks market in 2009.

Figure 1: Top 10 countries based on number of new soft drinks product launches,2009

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Rank 1

US

Rank 2

Japan

Rank 3

China

Rank 4

UK

Rank 5

Germany

Rank 6

Russia

Rank 7

France

Rank 8

Canada

Rank 9

Italy

Rank 10

Brazil

Rank 13

India

%c

ontribution

Source: Datamonitors Product Launch Analytics D A T A M O N I T O R


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In addition to health related product launches, manufacturers are also using innovative marketing

strategies to reach out to a larger consumer base. For example, Real juices used Disney characters for

the promotion of its fruit juices amongst school going kids. Booster Juice, an international company which

manufactures smoothies has used an innovative marketing initiative by signing the only Indian Ultraman

athlete (Ultraman is a title conferred for completion of a combination of high endurance athletic events

such as long-distance triathlon etc.), Anu Vaidyanathan as its brand ambassador for its smoothies

promoting the importance of nutrition and fitness through its brands. Similarly, Dabur has signed Zaheer

Khan, a leading Indian cricketer as the brand ambassador for its energy drink brand, Dabur Glucose.

Coca-Cola in its recent Ad campaign used a traditional Indian art form, Warli to capture the mood of the

festive season of Diwali. It also has several marketing initiatives such as offers of free home trips to

participants from any part of the country etc. Considering that the soft drinks sector in India is seasonal

and sales pick up a bit after during the festive season, most players in the market are actively

campaigning to capture this demand.

On-Trade:

Apart from the retail market, foodservice or on-trade sector appears to be another lucrative avenue for

manufacturers to cash in on the growing demand for soft drinks in India. Segments such as carbonates,

energy drinks, bottled water etc. already enjoy a high share from the on-trade segment. However, for

categories such as juice, which is in its nascent stage in the country, the on-trade sector promises a huge

potential for growth. The juice bar model is similar to the caf outlets such as Barista and Coffee Day

chains and these enterprises aim to replicate the success of the latter to provide a healthier alternative.

Figure consciousness being the latest fad, these juice bars appears to be the ideal place to visit after a

grueling work-out at the gym for students and executives. This model is already a big hit in the western

markets with players such as Jamba Juice and Smoothie King garnering good volumes in the USmarket. Currently, places with large footfalls such as shopping malls, office complexes and convention

centers have juice bar joints in India. Apart from these, there are a few independent juice bar chains that

are coming up in different parts of the country. Retail outlets such as Amorettos in Delhi, HAS Juice bar

in Mumbai and Bloom Juices in Mohali and multinational chains such as New Zealand Naturals fall

under the juice bar category. Apart from offering the regular fresh fruit juices, these outlets also offer

exotic options such as Fresh Wheat Grass, Fat Free Smoothies and ayurvedic herb based natural fruit

juices in their menu. The benefits with each of these different juices are clearly explained so that the

customers have greater awareness about the ideal juices for themselves.

Similarly, other categories such as RTD teas, coffees etc. can be a hit with consumers in the on-trade

sector. While the foodservice establishments offer the advantage of more information and hygienic

conditions they are still far behind when it comes to price competition with the unorganized sector outletssuch as road side juice shops. The price in these outlets as compared to the unorganized sector for a

product like juice is higher by 3-4 times. This becomes a critical factor for the success amongst the price

conscious Indian consumers. This sector has to come up with initiatives which increase awareness levels

amongst consumers regarding the health benefits etc. offered through their products in order to gain

acceptance in the Indian market.

- ENDS

This is based on Datamonitors analysis and inputs from Datamonitors latest report Soft drinks in India.For further

information on this title, please contact Aartee Sundheep on +91 40 6672 9586 or [email protected].

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Soft Drinks in India