Bottlers for some of the country’s top beverage majors such as PepsiCo and Coca-Cola India expect a weak September quarter as an extended monsoon season is hurting demand, notably during the festive period this month.
While traditionally, September marks the withdrawal of the southwest monsoon season, this year rains have continued in several states, including Maharashtra, Gujarat, Goa, Telangana, Kerala, Tamil Nadu, Andhra Pradesh and the North-East.
The forecast is that rains could last till the first week of October, implying there could be some impact on beverage sales during Dussehra, which will be celebrated on October 2, sector experts said.
What do analysts predict?
Analysts at JP Morgan said that volume growth for the September quarter will likely be flat for beverage bottlers, the second straight period after the June quarter when unseasonal rains hurt summer sales.
“There has been 40% more rainfall during this monsoon season versus last year. So yes, demand has been affected in the September quarter, though the December quarter will be likely better due to tailwinds from GST cuts and the festive and wedding season,” Paritosh Ladhani, joint MD, SLMG Beverages, Coca-Cola India’s largest independent bottler, said.
While India will celebrate Diwali in mid-October, the wedding season will begin from November 15, stretching up to February/March next year.
What are the plans of soft beverage companies?
Executives at Varun Beverages, bottler for PepsiCo in India, said demand was soft in the September quarter, as rainfall levels were above normal in many parts of the country. However, the company was preparing for a favourable consumption environment in the December quarter with glass bottle offerings priced at 10 and more promotional packs such as a 400-ml packs priced at20 a unit.
Both SLMG Beverages and Varun Beverages are also counting on higher consumption of juices, dairy and water segments, which now attract 5% GST. Almost a third of the two companies’ portfolios will benefit from the GST rate rationalisation, sector experts said.
However, competition from Reliance Consumer, which has recently launched its Campa Sure and Independence water brands at price points 20-40% lower than rivals, will be keenly watched, analysts at Motilal Oswal said. Bisleri, Coca-Cola’s Kinley and PepsiCo’s Aquafina are among incumbents in the category.
Both SLMG and Varun Beverages said competition at entry-level price points will expand the market and that they will respond appropriately. In soft drinks, for instance, Campa Cola, which was relaunched in 2023, was priced at `10 for a 200-ml packs, forcing incumbents to make both price and volume adjustments.