The non-carbonated beverage market in India has gained market share as consumers opt for healthier alternatives, while the carbonated drinks segment has lost its fizz over the past two summers. The non-alcoholic beverage market is expected to grow at a CAGR of 16.68% till 2025, fuelled by the growth in consumption of health and juice-based beverages, says a report by Netscribes.
Last summer, major carbonated beverage brands witnessed double-digit degrowth owing to the national lockdown. In the months that followed, packaged juices, water, energy and health drinks gained market share, whereas carbonated drinks saw stagnated demand.
In the fourth quarter of FY21, Dabur’s juices business reported an over 27% jump. Monisha Prasher, AGM, marketing (beverages), Dabur India, says, “In the last financial year, we expanded our portfolio by entering bigger categories like mango-based drinks and milkshakes.” The company launched premium health-focussed variants, including low-calorie drinks under Réal Activ, an aloe-kiwi beverage under the brand Réal, and carbonated fruit drink Réal FizzIn.
PepsiCo launched Mountain Dew Ice ahead of the summer season this year. “While early industry reports in 2020 show that household expenditure on FMCG went up during March-May in comparison to the same period a year ago, there has been a paradigm shift in the business due to the altered consumption behaviour,” says a spokesperson of PepsiCo India. The brand recently introduced friendship and celebratory packs to appeal to pocket-conscious consumers. It has partnered with hyper-local delivery platforms Dunzo and Swiggy, BigBasket, as well as B2B platform Udaan to ensure product availability across locations.
In light of the growing demand for immunity products during the pandemic, ITC’s B Natural launched B Natural+ last year, which is a mixture of orange and mixed fruit, including a ‘clinically proven ingredient’ to support immunity. “This range was launched in partnership with Amway India to ensure that products reach consumers through a credible partner,” says Sanjay Singal, chief operating officer, dairy and beverages, ITC. The company followed this up with the launch of the B Natural+ pomegranate variant recently.
Glass half full
As per Crisil Ratings, due to localised restrictions this year, the out-of-home consumption of beverages — which contributes 20-25% of the overall sales of beverage brands — will be affected in the first quarter of FY22. Fewer occasions for impulse-driven purchases, with travelling and dining out suspended, for two consecutive summers — especially during March-July — have especially hit the carbonated beverage market hard. Carbonated drink brands are not likely to reclaim double-digit growth of pre-pandemic levels this year, analysts say.
“To restore their relevance and ensure growth, carbonated beverage brands must focus on ensuring visibility both offline, such as placing products at nearby chemists, and online, whether that is through the D2C model, food delivery or e-commerce apps, with last-mile delivery,” says Anand Ramanathan, partner, Deloitte India.
Fruit-based non-carbonated alternatives have gained traction lately, and are growing at 15-20% per annum, says Ankur Bisen, senior vice president, Technopak Advisors. While brands have been innovating with flavours, be it Dabur innovating with different fruit juices or Baidyanath’s recently launched Shunya Fizz, “this cannot compensate for the sales that are fundamentally dependent on consumer behaviour driven by out-of-home consumption,” Bisen adds.