Indian soft drink industry analysis: Is it still a potential market? 

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  • Indian soft drink industry analysis: Is it still a potential market? 

    Today’s topic is about  Indian soft drink industry analysis: Is it still a potential market? This article is for market research, market analysis and making business strategies to create a practical product for everyone. 

    Let’s invest your precious time in this writing to gain basic knowledge of the Indian soft drink industry right away!

    The soft drink global market overview

    Revenue of soft drink manufacturing in India from 2008 to 2018 - Indian soft drink industry analysis Revenue of soft drink manufacturing in India from 2008 to 20218

    The soft drink market segment consists of non-alcoholic water-based beverages with added sugar. These include carbonated drinks such as cola and soda, non-carbonated drinks such as fruit nectar, fruit juice drinks, flavored water and ready-to-drink (RTD) tea and coffee, energy drinks, and sports drinks. 

    Carbonated soft drinks have been declining for quite some time as health-conscious consumers switch to low-sugar diets. Still, smaller non-carbonated beverages, especially RTD tea and coffee, have addressed some of this gap. I am. The most critical brand makers in the soft drink category are Coca-Cola Corporation, PepsiCo, Suntory, Red Bull, and Dr. Keurig. Pepper. 

    The non-alcoholic beverage market is divided into retail sales for home use and on-premises or food service sales for out-of-home consumption. The domestic market, also known as the off-trade market, consists of all retail sales through supermarkets, hypermarkets, convenience stores, or similar channels. 

    The Out-of-Home Market, also known as On-trade-Markt, Out-of-Home market, or HORECA, consists of hotels, restaurants, catering, cafes, bars, and similar catering facilities. Both the in-home and out-of-home markets are valued at retail prices, including sales and sales taxes. 

    Since out-of-home consumption was previously valued at wholesale prices, valuing the out-of-home segment at retail prices represents a significant change in market definition compared to previous iterations of the consumer market outlook. 

    This means that the overall market figures cannot be compared to the public data of the last year. The price per unit is always based on liters. One liter of soft drink is roughly equivalent to 2-3 servings (0.5 or 0.33 liters, respectively). 

    Wholesale prices, valuing the out-of-home segment at retail prices represents a significant change in market definitionWholesale prices, valuing the out-of-home segment at retail prices represents a significant change in market definition

    Soft drinks are the giant pillar on which the business of non-alcoholic drinks rests. The most prominent players in the field – Coca-Cola and PepsiCo – are, at their core, soft drink manufacturers. The segment is characterized by multinational brand players focusing on product development and marketing and regional bottlers that license their brands for distribution in selected areas. 

    Strategically, the industry has witnessed a trend toward streamlining operations and hunting for novel products to fill a niche.

    According to a report from Statista, the soft drink international market have several highlight elements as follows: 

    • Revenue withinside the Soft drinks segment to US$823,558m in 2021. The market is expected to broaden every year by 6.14% (CAGR 2021-2026). 
    • In international comparison, most income is generated withinside the United States (US$310,946m in 2021). 
    • Typical population figures, in line with an individual income of US$109.59, are made in 2021. In 2026, 44% of spending and 14% of consumption within the Soft Drinks segment is probably due to out-of-home consumption (e.g., bars and restaurants). 
    • In the Soft Drinks segment, the amount is expected to amount to 385,135.0ML thru 2026. The Soft Drinks segment is expected to expose an amount growth of 1.6% in 2022.
    • The standard quantity in keeping with character withinside the Soft Drinks phase is anticipated to amount to 47.18 L in 2021.

    Recommended reading: Why is the soft drink industry so profitable/ Analysis

    Indian beverage industry

    Indians now have the option of catering to their changing consumption patterns - Indian soft drink industry analysisIndians now have the option of catering to their changing consumption patterns

    Indian beverages, both alcoholic and non-alcoholic, are as diverse as their people, influenced by the country’s vast geography and the weather it brings. Hot summers necessitate thirst-quenching, refreshing drinks, whereas cold winters necessitate steaming hot cups of chai and coffee. Every region has its own eclectic set of drinks that are appropriate for each season. These are most likely made up of a combination of spices and herbs, with blends created with the health benefits of sourcing natural ingredients.

    Traditional drinks include Aam Panna and Aamras (both made from mangoes) and Jal-Jeera (literally translating to cumin water in Hindi), which is also used in Pani Puris Kashmiri Khawah – a kind of tea made from a spice mix for cold areas. 

    Tea, also known as chai, is a popular milk-based drink, as is coffee—Lassi (a yogurt-based drink, either sweet or salted) or buttermilk and other variations. Nutrient-balanced milk drinks are also popular in the Indian beverage market. Bournvita, Boost, and Horlicks were well-known brands.

    Among the many traditional alcoholic beverages, Bhaang and Kallu or toddy appeared to be popular. The former is created from buttermilk and cannabis and is popular during the Holi festival, particularly in the northern regions. Toddy is a coconut tree tapped. The country drink segment of India’s alcohol market comprises indigenous alcohol of this variety from various parts of the country.

    With economic growth, increasing urbanization, and the ease of travel around the world, Indians now have the option of catering to their changing consumption patterns. As a result, carbonated, non-alcoholic beverages have amassed a sizable market share across the country. Unsurprisingly, urban areas held a larger share than rural India. This segment was expected to grow substantially and diversify to include a fusion of drinks in the coming years. Besides that, the convenience of being ready-to-drink and easily accessible benefits prominent players such as Pepsi, Coca-Cola, Parle Agro, and Dabur.

    Indian soft drink industry insight

    The non-alcoholic beverage market in India has grown steadily over the years. - Indian soft drink industry analysisThe non-alcoholic beverage market in India has grown steadily over the years.

    With nearly 1.30 billion people, India provides enormous opportunities for domestic and international beverage companies. The non-alcoholic beverage market in India has grown steadily over the years.

    The Indian non-alcoholic beverage market is expanding. Due to favorable demographics, low per capita consumption, long summers, and higher packaging spending. This, combined with ongoing product packaging and sizing innovations to improve product affordability, will likely result in overly rapid growth rates. India has one of the world’s fastest middle-class populations. This segment’s rising aspirations are expected to drive non-alcoholic beverage demand to new highs in the coming years. 

    India’s aggregate consumer expenditure is expected to more than triple from 45 trillion in 2010 to nearly 150 trillion by 2020. Affluent and aspirant households increase from 48 million to more than 100 million.

    According to Market Research, the carbonated soft drinks market in India in 2015 was worth 173.00 million USD (at retail prices). The drinks market in India is expected to reach 402.43 million USD (in retail prices) by 2025, raising at a CAGR of 7.60 percent per year between 2020 and 2025. This decreases the 10.19 percent annual growth rate recorded from 2015 to 2019.

    In terms of value, the average capita consumption in 2015 was 0.13 USD per capita (in retail prices). It grew at an annual CAGR of 8.94% over the next five years. In the medium term (by 2025), the indicator is expected to slow and rise at a CAGR of 6.50 percent per year.

    Furthermore, Goldstein Research predicts that India’s packaged non-alcoholic beverages market will grow at a CAGR of 16.2 percent between 2017 and 2030. Besides that, as more people switch to packaged drinks, the market size is forecast to get 20.4 billion USD by the end of 2030.

    According to Varun Beverages’ 2018 annual report, India’s soft yearly drink consumption is relatively low at 44 bottles per capita, compared to matured markets such as the United States (1,496 bottles), Mexico (1,489 bottles), and Germany (1,221 bottles), as well as developing markets such as Brazil (537 bottles).

    Challenges for the Indian non-alcoholic beverage market

    Revenue of soft drink manufacturing in India from 2008 to 20218Revenue of soft drink manufacturing in India from 2008 to 20218

    One of the most challenging difficulties for the Indian soft drink industry is reaching out to rural markets, which account for roughly 67 percent of India’s total population. In addition to the rapidly growing population, reaching rural consumers across the country’s vast geography presents significant distribution challenges. Making chilled carbonated drinks available to this large population is also challenging.

    Despite numerous opportunities offered by a vast population base, there are several challenges for the Indian non-alcoholic beverage industry and producers. 

    The effect of COVID-19

    Many food service businesses will never be able to recover from the pandemicMany food service businesses will never be able to recover from the pandemic.

    COVID-19 impact on soft drinks

    The April-June quarter accounts for most sales of soft drinks in India. This, combined with the fact that most soft drink consumption in India occurs on the go or outside, and when a significant number of food service channels were closed, only served to complicate the scenario for the soft drinks industry in 2020.

    Impact of COVID-19 on countries

    The Indian lockdown went into effect on March 25, 2020. Except for those classified as essential workers, such as medical workers, police officers, and grocery store owners, all forms of the movement were restricted to consumers.

    Response from the company

    PepsiCo and Coca-Cola collaborated with Common Services Centres (CSC) to list their products on the Grameen e-Store to tap into rural demand and the increase in in-home consumption caused by the pandemic. Companies address the need for rural last-mile delivery services as demand rises due to various factors, including reverse migration.

    COVID-19, a retailing shift, had an impact on the distribution model. Face-to-face selling, the backbone of Indian distribution, was discouraged because retailers did not want sales assistants to check their stores.

    Foodservice vs. retail division

    Many food service businesses will never be able to recover from the pandemic. As people returned to their cities during the lockdown, the main challenges were high rents and a lack of staff.

    What is the future of soft drinks?

    For the foreseeable future, soft drink off-trade sales will be fueled by in-home consumption. The more prominent players in the market will seek to reduce the sugar content in their products to address consumers’ growing health concerns.  

    Wrap up

    This article is just a simple summary of the entire Indian soft drink industry analysis, which will be very helpful for market research and making a strategic business plan.

    You can learn more about Indian or other beverage industries at Tan Do blog any time!

    Lilian Nguyen
    Hi! I'm Lilian Nguyen. I'm an expert in OEM, ODM, private label beverage industry with 8 years of experience. I believe that it is crucial for companies to focus on the benefits which the product provides to their target customer and what does it mean to the community. When i am not working, i run a blog on making healthy snacks & drinks and join in a hiking club. I'm an expert in the beverage industry invited by Tan Do Beverage to work. I'm in charge of publishing articles, research articles on the beverage industry or anything healthy to help readers have a better view of what they are looking to do, prepare to do or are doing related to the beverage industry. Email: lilian.nguyen@tdfood.com.vn

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