It is that time of the year that spells more advertising from cooling powders, air conditioners, refrigerators and, of course, cold drinks. And, as every summer, this year, too, beverage giants in the country are competing for the consumers’ share of wallet. As per an EY report, the Indian beverage industry, including alcoholic and non-alcoholic (soft drinks) segments, was valued at approximately Rs 2.9 trillion in 2015, and grew in value terms at a CAGR of approximately 3.6% during 2010-2015. In volume terms, the industry grew at a CAGR of 14.1% during the same period to reach 17.5 billion litres in 2015.The industry is expected to grow in value terms at a CAGR of 3.1% to reach Rs 3.3 trillion by 2019, while in volume terms the CAGR is expected to be 13.2% to reach 28.7 billion litres by 2019.
Summer is the most important quarter for non-alcoholic beverages companies. In the soft drinks market, almost 75% of the sales come from urban areas. However, the demand for soft drinks in the rural market has grown at 22% CAGR over the past five years, while the corresponding figure for urban markets is 18% CAGR.
“Demand from the rural market has been outpacing urban areas over the past four to five years owing to rising consumption there. Also, manufacturers have been targeting rural consumers due to the saturation in urban markets,” highlights Pinakiranjan Mishra, partner and national leader, retail and consumer products, EY.
Soft drinks manufacturers are focusing on expanding their presence in rural and semi-urban markets by introducing customised products based on specific requirements of rural consumers, such as smaller pack sizes and soft drinks in glass bottles to make the products available at lower price points. There is no denying that innovation is the key to survival in the competitive market today.
Nadia Chauhan, CMO and joint MD, Parle Agro, also believes that packaging is the first form of advertising. In 2013, Parle Agro had launched Frooti in Tetra Brik Aseptic Edge paper-based cartons, which helped it reach the interiors of India, while giving consumers cheaper options.
But apart from spending hundreds of crore on packaging and marketing, there are numerous other challenges beverage companies face. For instance, for fruit-based drinks, companies have to make sure the raw material — the fruit — has a consistent taste. The supply-side linkage is a challenge. However, through the government’s mega food park scheme, which will have facilities like production, processing plants, cold storage, collection centres and transport, brands are likely to attain the taste and quality they desire.
Logistics also plays spoilsport, as certain drinks need to be displayed and kept at a certain temperature, which isn’t always possible to achieve. To sustain the weather and transport, carbonated soft drinks are mainly sold in returnable glass bottles (RGB), aluminum cans and PET bottles, whereas fruit juice and fruit nectar categories are mainly sold in liquid packaging cartons. With the consumer changing her preferences faster than earlier, brands have to innovate to keep pace. The companies unanimously believe that with changing consumer patterns and evolving taste preferences, consumers are not only moving towards ready-to-drink beverages, but also looking at healthier options.