A

REPORT ON
ORGANIZATIONAL ATTACHMENT PROGRAMME (OAP)
SUBMIITED TO
INDUKAKA IPCOWALA INSTITUTE OF MANAGEMENT (I2IM)
CHAROTAR UNIVERSITY OF SCIENCE AND TECHNOLOGY (CHARUSAT)
PREPAID BY
SHIVANGI.RATHOD
ID No: 18BBA089
BBA PROGRAMME,
SEMESTER – 5
UNDER THE GUIDANCE OF
ASSISTANT PROFESSOR
JIGNASU.YAGNIK
FACULTY OF MANAGEMENT STUDIES
CHAROTAR UNIVERSITY OF SCIENCE AND TECHNOLOGY
(CHARUSAT)

INDUKAKA IPCOWALA INSTITUTE OF MANAGEMENT (I2IM)

CHAROTAR UNIVERSITY OF SCIENCE AND TECHNOLOGY (CHARUSAT)
AT. & PO. CHANGA – 388 421 TA: PETLAD DIST. ANAND, GUJARAT
NOVEMBER- 2019

1
 DECLERATION

I (SHIVANGI.RATHOD) Student Of The Semester V, BBA Programme At Indukaka Ipcowala

Institute Of Management (I2IM) Hereby Declare That The Report On Organizational Attachment
Programme (OAP) Entitled A Study On “(Non-Alcoholic Beverages)” Is The Result Of My Own Work. I
Also Acknowledge The Other Works / Publications Cited In The Report.

Place: Changa Signature

Date: 30 May, 2020 (SHIVANGI. RATHOD)

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 ACKNOWLEDGEMENT

On the outset of this report, I would like to extend my sincere thanks towards the entire personage who have
helped me in this report. Without their active guidance, help, cooperation and encouragement I would not have
headway in this report.
I am extremely thankful and pay my gratitude to my Professor Jignasu Yagnik for his valuable guidance and
support on completion in this project.
I also acknowledge with a great sense of reverence, my gratitude towards my parents and my family members,
who has supported me morally as well as economically.
At last but not least gratitude goes to all of my friends who directly or indirectly helped me to complete this
report.

Place: Changa ___________

Date: 30 May, 2020 (SHIVANGI.RATHOD)

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 INDEX

Sr. No.:
Particular
1.
Introduction
 Evolution and Growth of Industry in World
 Evolution and Growth of Industry in India
 Evolution and Growth of Firm
2.
Industry Scenario
 Global Scenario
 Indian Scenario
3.
Market Players and Market Share

4.
Major Products in the Industry
5.
Demand Determinants (Global and Indian)
 Price
 Income
 Penetration level
 Availability of Product/Service/Finance
 Promotion Schemes
 Recent Trends
6.

6.1 PESTEL Analysis

 Political/Legal factors
 Economic factors
 Sociocultural factors
 Technological factors
 Environmental factors

6.2 Porter’s Five Forces Analysis

 Rivalry Among Competitor
 Threats from New Entries

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  Threats from Substitute Product
 Bargaining Power of Suppliers
 Bargaining Power of Buyers

6.3 SWOT/C Analysis

 SW (Internal)
 OT/C (External)

6.4 BCG Matrix

 Stars
 Question Marks
 Cash Cows
 Dogs

6.5 Value Chain Analysis

6.6 McKinsey 7s Model

 Strategy
 Structure
 Systems
 Shared Values
 Skills
 Style
 Staff
7.
Key Issues and Trends
 Industry Prospects
 Challenges faced by Industry

8.
Future Outlook

9.
Industry Attractiveness

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EVOLUTION AND GROWTH OF NON
ALCOHOLIC INDUSTRY IN WORLD
The production, marketing, and distribution of non-alcoholic, and generally carbonated, flavoured, and
sweetened, water-based beverages. The history of Non-alcoholics in the United States illustrates important
business innovations, such as product development, franchising, and mass marketing, as well as the evolution
of consumer tastes and cultural trends.

Many Europeans long believed natural mineral waters held medicinal qualities and favoured them as alternatives
to often-polluted common drinking water. By 1772, British chemist Joseph Priestley invented a means to
synthetically carbonate water, and the commercial manufacturing of artificial mineral waters began with Jacob

Schweppes’s businesses in Geneva in the 1780s and London in the 1790s. The first known U.S. manufacturer
of soda water, as it was then known, was Yale University chemist Benjamin Silliman in 1807, though Joseph
Hawkins of Baltimore secured the first U.S. patent for the equipment to produce the drink two years later. By
the 1820s, pharmacies nationwide provided the beverage as a remedy for various ailments, especially digestive.

Though the drinks would continue to be sold in part for their therapeutic value, customers increasingly
consumed them for refreshment, especially after the 1830s, when sugar and flavourings were first added. Soda
fountains emerged as regular features of drugstores by the 1860s and served beverages flavoured with ginger,
vanilla, fruits, roots, and herbs. In 1874 a Philadelphia store combined two popular products to make the first
known ice-cream soda. The first cola drink appeared in 1881.

In the late 1800s, several brands emerged that were still popular a century later. Pharmacists experimenting at
local soda fountains invented Hires Root Beer in Philadelphia in 1876, Dr. Pepper in Waco, Texas, in 1885,
Coca-Cola in Atlanta, Georgia, in 1886, and Pepsi-Cola in New Bern, North Carolina, in 1893, among others.
Reflecting two of the middle-class mores of the period—temperance and feeling overwhelmed by the pace and
burdens of modern life—early marketing touted these drinks as alternatives to alcohol and/or as stimulants.
Coca-Cola inventor John S. Pemberton's first print advertisement for his creation read "Delicious! Refreshing!
Exhilarating! Invigorating!," while Asa Candler, the eventual founder of the Coca-Cola Company, promoted
his product in the years leading up to Prohibition as "The Great National Temperance Beverage."

The history of Coca-Cola reveals how national markets in soft-drink brands developed. To limit the cost of
transportation, manufacturers of syrup concentrates licensed bottlers to mix the product, package, and distribute
it within a specific territory. Candler underestimated the importance of the bottling side of the business and in
1899 sold the national rights to bottle Coke for a fairly small sum to Benjamin F. Thomas and Joseph B.
Whitehead, who then started a national network of bottlers, creating the basic franchising format by which the
industry is still run.

Candler and his Non Alcoholic Beveragesessor after 1923, Robert Woodruff, were aggressive and innovative
in marketing Coke as a leading consumer product and cultural icon. Coupons for free samples and giveaways
of items bearing the drink's name and logo publicized the beverage, and pioneering efforts in market
research helped define how best to take advantage of advertising and promotions. During World War II,
Woodruff opened bottling operations overseas to supply U.S. military personnel, and after the war, Coke was
poised to enter these international markets, not only as a consumer product, but also as a symbol of "the
American Century."

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After World War II, the soft-drink industry became a leader in television advertising, the use of celebrity
endorsements, catchy slogans, tie-ins with Hollywood movies, and other forms of mass marketing, particularly
focusing on young consumers and emphasizing youth-oriented themes. As health and fitness consciousness and
environmental awareness became popular, the industry responded with sugar-free and low-calorie diet sodas,
beginning in the 1960s, and later, caffeine-free colas and recyclable containers.

The most famous rivalry within the industry has been between Coke and Pepsi, which waged two rounds of
"cola wars" in the twentieth century. In the 1930s and 1940s, Pepsi challenged the industry leader by offering a
twelve-ounce bottle for the same five-cent price as Coke's standard six ounces. In the 1970s and 1980s, "Pepsi
challenge" taste-tests led Coke to change its formula in 1985, a campaign that failed because it underestimated
the attachment Coke drinkers had to the tradition and symbolism of the brand.

In 2001, the soft-drink industry included approximately five hundred U.S. bottlers with more than 183,000
employees, and it achieved retail sales of more than $61 billion. Americans that year consumed an average of
55 gallons of Non-alcoholics per person, up from 48 in 1990 and 34 in 1980. The nine leading companies Non
Alcoholic Beverage sounded for 96.5 percent of industry sales, led by Coca-Cola with more than 43 percent of
the Non-alcoholic market and Pepsi with 31 percent. Seven individual brands Non Alcoholic Beverage sounded
for almost two-thirds of all sales: Coca-Cola Classic (itself with nearly 20 percent of the market), Pepsi-Cola,
Diet Coke, Mountain Dew (a Pepsi product), Sprite (a Coca-Cola product), Dr. Pepper, and Diet Pepsi. Domestic
sales growth slowed in the late 1990s because of increased competition from coffee drinks, iced teas, juices,
sports drinks, and bottled waters. The industry continues, however, to tap lucrative international markets; Coke
and Pepsi each have bottling operations in more than 120 countries.

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EVOLUTION AND GROWTH OF NON
ALCOHOLIC BEVERAGES IN INDIA

The 50-bn-rupee Non-alcoholic industry is growing now at 6 to 7% annually. In India, Coke and Pepsi have a
combined market share of around 95% directly or through franchisees. Coco Cola has a 1% share, and the rest
is divided among local players. Industry watchers say, fake products also Non Alcoholic Beveragesount for a
good share of the balance. There are about 110 Non-alcoholic producing units (60% being owned by Indian
bottlers) in the country, employing about 125,000 people. There are two distinct segments of the market, cola
and non-cola drinks. The cola segment claims a share of 62%, while the non-cola segment includes soda, clear
lime, cloudy lime and drinks with orange and mango flavours.

The per capita consumption of Non-alcoholics in India is around 5 to 6 bottles (same as Nepal's) compared to
Pakistan's 17 bottles, Sri Lanka's 21, Thailand's 73, the Philippines 173 and Mexico 605. The industry
contributes over Rs 12 bn to the exchequer and exports goods worth Rs 2 bn. It also supports growth of industries
like glass, refrigeration, transportation, paper and sugar. The Department of Food Processing Industries had
stipulated that 'contains-no-fruit-juice' labels be pasted on returnable glass bottles. About 85% of the Non-
alcoholics are currently sold in returnable bottles. There was a floating stock of about 1000 mn bottles valued
at Rs 6 bn. If the industry were to abide by the new guidelines, it would have to invest in new bottles, resulting
in a cost outgo of Rs 5 bn. Neither Coke nor Pepsi is in a position to invest such a large amount.

Around 400,000 tonnes of raw material would be required to replace the existing stock of bottles. Instead, the
Non-alcoholic industry suggested that a seven-year moratorium be extended to the industry so that it can
incorporate the change in a phased manner. There is no such mandatory requirement anywhere in the world to

8
specifically label the glass surface of returnable bottles. The government has decided to extend the date for
replacing the bottles to end-march 2006. In the meantime, the producers have shifted substantially to the use of
PET bottles.

Soft and aerated drinks were considered products for the middle class and the affluent. That segregation is no
more valid. Soft and aerated drinks are consumed by all except those who cannot afford to buy any drink. An
NCAER study says that 91% Non-alcoholic sales are made to the lower, middle and upper middle classes. The
Non-alcoholic industry has been urging the government to categorise aerated waters (Non-alcoholics) equitably
with other consumer products of mass consumption and remove special excise duty.

The industry estimates that the beverage market should grow at twice the rate of GDP growth. The Indian market
should have, therefore, grown by at least 12%. However, it has been growing at a rate of about 6%. In contrast,
the Chinese market grew by 16% a year, while the Russian market expanded at almost four times the rate of
growth of the Indian market.

It may be recalled that Coca-Cola, the world's number one player, was present in India for a long time in
collaboration with an Indian producer but was thrown out in the late 1970s. It reappeared in India following the
economic liberalization era - but after its rival, world's number two, had already entered in a big way following
a long and tough fight against the opposition from the domestic producers. When Coca-Cola re-entered, it
installed a new milestone. It acquired the well flourishing India's top player, Parle. Since then it is basically a
fight between the two American giants. Others are playing a peripheral role, as adjuncts to the two
MNCs. World's third biggest player, Cadbury Schweppes, had also made an entry but was gobbled up by Coca-
Cola. When Coca-Cola acquired Parle brands, it was, in fact, buying the bottling facilities, the marketing
network, and the established consumer preference during the market build-up. The brands were a drag on the
global brand. Since Coca-Cola was not interested in brands (like Thumps Up), it did not promote them. The
result, at least, in the short run was a loss of the market to the competitor. Coca-Cola decided to market more
effectively the Parle brands. It had in its armoury Coke, Thumps Up, Limca and Fanta. The latest to enter market
was Parle’s erstwhile Rimzim, alongside Portello, a black currant flavoured drink, very popular in Srilanka.

Coca-Cola operates through 35 plants and 16 franchisees throughout the country, while PepsiCo has 20 plants,
but it has 7 more franchisees at 23 to 16 of its rival. Coca-Cola claims a market share of 51%, while Pepsi has
a share of 46%. The claims, however, remain disputed. The other smaller players like Pure Drinks Ltd claim the
rest of the market. The shares of the two lead players are consolidated figures, which include the respective
bottlers. Coca-Cola had approached the government for a five year extension for divesting 49% equity in its
bottling subsidiary, Hindustan Coca-Cola Holdings. It had set up the marketing subsidiary as part of its strategy
to integrate all its bottling operations, both company-owned and franchisee bottlers, apparently keeping in line
with its global policy. Altogether, it had bought initially over 38 franchisee bottlers.

Kandhari Beverages, coke bottlers for north have been eyeing to lift a stake in Coca-Cola India. Coca-Cola had
filed an application to offload 49% stake of its bottling operations in favour of their Indian operators. Besides
Kandhari, three other bottlers, one each from Uttar Pradesh, Gujarat and Jammu, were lined up to invest in
Hindustan Coca-Cola Holding. Kandhari has already invested Rs 300 MN in 1999 and 2000 to upgrade its
capacity. The total investment by all the four was expected to be Rs 1000 MN. Both Coca-Cola and PepsiCo
planned for the launch of lemon-flavored versions of their products. Both have been expanding their non-
carbonated drink line-ups, as consumers seem to be shifting away from carbonated Non-alcoholics. PepsiCo is
deliberating whether to come out with Pepsi Twist, a cola mixed with lemon. But while both companies have
juice sports drinks, bottled water and other such drinks in their line-ups, neither coke nor Pepsi has launched a
new national variety of a cola-flavoured carbonated Non-alcoholic in years.

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 PepsiCo had achieved Rs 3 bn worth of exports, which include processed foods, basmati rice, guar gum and
Non-alcoholics concentrate. PepsiCo completed the second phase of its expansion and with this expansion,
PepsiCo was to explore the possibility of expanding the export of concentrates to more countries in addition to
the exports to Russia and other South Asian countries.

Pepsi India has entered into a marketing tie up with Hindustan Lever to promote sales of Non-alcoholics through
Pepsi-HLL network of vending machines and fountains. The major Non-alcoholic brands in the Pepsi stable are
Pepsi, 7UP, Miranda, Tropicana and Aquafina.

As a major strategic departure, both MNCs were expanding their brand range. Consequent to some diversifying
moves, at present, the sales ratio of Coca-Cola between Non-alcoholics and other beverages is 95.5. The
company intended to change this to 80:20 in the next three years. Its juice brand, Maaza - acquired from Parle
a few years ago - is being given a major thrust. It has plans to go in for canned coffee, iced tea and purified
categories under expansion schemes. It has already launched its bottled water brand, Kinley, in the Indian
market. Besides, it is intending to acquire domestic brands in the non-carbonated beverages segment.

The global deal between Coca-Cola and P&G to form a snacks and beverages joint venture company was
reported to have slipped into rough weather. The P&G brand of potato wafer, Pringles, seemed to be faced with
distribution problems in India. P&G had globally tied up with Coca-Cola to form a stand-alone juice and snacks
company. The new firm is focused on developing and marketing new juices, juice based beverages and snacks
on a global basis. The Sharjah-based Allied Beverages was pushing its Ahlan brand in India, having entered the
market in mid-2000. Its target was carbonated drinks market in PET bottles. Its plans were to launch a PET
bottle in the popular 300 ml category. Ahlan expected to gain a 12% share of the total PET bottle market in
northern India. Of the total market, PET bottle segment is approximately 12%. Presently, Allied Beverages
has a manufacturing unit at Dharuhera in Haryana. The product range includes carbonated drinks - cola, orange,
lemon and soda in three pack sizes - 500 ml, 1500 ml and 2000 ml. Allied Beverages sells non-carbonated
drinks in 200 ml food grade cups priced at Rs 7 in its portfolio, available in four different flavours. The
company's future plans include pulp-based fruit drinks in flavours, which will be available in 200 ml non-
returnable glass bottles.

Non-alcoholic Beverages Market

A Non Alcoholic Beveragesording to a report, the beverage category contributes 8-9% of the Indian FMCG
market. The market is growing at 20-23% and is expected become three times the current size by 2020. The
recent liquor ban could turn the game in the favour of non-alcohol beverages and can fuel further growth than
the estimated projection.
The non-alcohol market is divided into three main categories:
•Hot beverages
• Carbonated drinks
• Powdered drinks, health drinks and juices
• Mineral and flavoured water

Hot Beverages
The coffee & tea industry is expected to reach Rs41, 800 crores by the end of 2017 as the domestic consumption
is rising swiftly. There is no denying the fact that the Indians love their tea and coffee when it comes to
something hot. India is the largest tea producing and consuming country and still rules over coffee. However,
the coffee has gradually evolved into a lifestyle beverage with the mushrooming of branded coffee outlets as a
popular hangout with friends or colleagues.

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Carbonated Drinks
Coca Cola introduced Indians to the taste of cola in 1970, before exiting the country in 1977 due to changes in
the government policies. Parle which was facing stiff competition from Coca Cola then took over the reins by
launching new carbonated drinks such as Thumbs Up, Gold Spot and Limca. However, Parle’s supremacy lasted
only until 1990 when Coca Cola and Pepsi forayed into the Indian market. Today, Coca Cola and Pepsi together
contribute to more than 60% of the carbonated drinks market. The rest is controlled by Parle, Dabur, Bisleri and
other local brands.
However, over the past few years, non-cola aerated drinks, especially those with fruit content has gained
traction. Hence, these brands are keen to explore this new market as well. For example:
• Parle has recently introduced Frooti Fizz, a fizzy version of its popular mango drink.
• Earlier this year, Bisleri International launched Bisleri Pop, an aerated fruit-based drink.
• Dabur has also launched a range of fruit juice based aerated drinks under the brand Real Volvo.
However, carbonated drinks are reeling under stagnation and sales have dipped as an increasing number of
people are switching to juices and other health drinks. People around the world are becoming health-conscious
and understand that carbonated beverages are high in sugar and lack nutritional content.

Powdered drinks, energy drinks and juices

Remember Rasna, the Non-alcoholic that every home served in the 80s? Rasna has evolved over the years, but
has lost its market share to other non-alcoholic beverages and its only competitor Tang. There isn’t much product
innovation in this category, so its growth potential is not very optimistic.
It is the juice market, which are flourishing extremely well in India. It is valued at Rs 1,100 crore ($200 million)
and is projected to grow at a CAGR of 15 per cent over the next three years. The key drivers of growth of juice
market are rise in the disposable income, people adopting Western culture, health awareness and import of fruits
to India.

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In fact, juice and juice based drinks are growing 2.5 times faster than aerated drinks. As per the sales figures
of 2016, juices and juice drinks such as Real, Slice, Tropicana, Rooh Afza, and Tang toppled Pepsi and Coca-
Cola out of the top 5 highest sold brands across modern retail chains.

The phenomenal Non Alcoholic Beverages of Manpasand Beverages which from an Rs 400 million revenues
in FY 2010 has grown to revenues of Rs550 crores in FY 2016 and has a market cap of greater than Rs3500
crores is strong testimony to the changing juices sector India. Sequoia invested in Paper Boat and recently in
cold pressed juices, RAW. The market for juices and health drinks has tremendous potential and will continue
to attract strong interest from the private equity and venture capital community.
Energy drinks are still an urban phenomenon and at nascent stage, but its opportunity is huge. The energy drinks
market, which was estimated to be worth Rs120-130 crores in 2010, has grown in excess of 40% year on year
during last 4-5 years.
The brands in this segment are mainly targeting school kids, college students, health freaks, sports professionals
and young working adults who are looking for stamina boosting beverages. Red Bull is the market leader and
continues to enjoy the first mover advantage, however, other the presence of others brands like Monster,
Mountain Dew, Cloud 9, Cafe Cuba, Extra Power and Burn indicates the potential of this segment.

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 EVOLUTION AND GROWTH OF
FIRM

The soaring popularity of non-alcoholic drinks continues to revolutionize the brewery world as industry titans,
esteemed bars, and well-respected bartenders board the booze-free train. Various formulations of the newcomers
include terms such as mock tails, faux spirits, alt-gin, and zero-proof drinks and beverages. Yet while the
cocktails might be ‘mock,’ they are bringing in real bucks – and big bucks to boot.

The non-alcoholic (NA) beer industry, in particular, has proliferated with sales expected to surpass $25 billion
by 2024, Non Alcoholic Beverages to research firm Global Market Insights. The year 2019 also witnessed the
astronomical rise to Non Alcoholic Beverages of the first non-alcoholic gin and whisky products from company
Ritual Zero Proof. Its six-month start up inventory sold out in a mere six weeks, necessitating a 400% increase
in production to meet demand. The company’s suNon Alcoholic Beveragesess has since garnered the attention
of Diageo, the industry giant whose brands include Smirnoff, Crown Royal, Johnnie Walker, and Don Julio. It
now has a small ownership stake and major cash investment in the company, enabling Ritual to expand
significantly.

Sober Bars
And it’s not just non-alcoholic drinks which are experiencing an upheaval: sober bars, an oxymoron within
itself, are popping up nationwide, along with the newly-coined term “sober curious population.” This refers to
the growing population who are decreasing or altogether ceasing their alcohol intake and questioning everything
about their relationship with alcohol and the societal pressures that have always caused them to consume
alcohol.

Zero-Proof Consumers
A Non Alcoholic Beveragesording to the experts, millennial and Gen Zers comprise the largest demographics.
Not only are they drinking less, but they are increasingly expecting to be offered a selection of zero-proof
options. In fact, a Non Alcoholic Beveragesording to Heineken’s chief marketing officer, Johnnie Cahill, the

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conglomerate recently launched their first “0.0” beer in response to the “growing trend toward health and
wellness, particularly with the younger cohort.” While they still want to drink socially, says Cahill, “In the U.S.,
30’% of people between 21 and 30 haven’t had a beer in the last month.”

Backing up his words are market analysis results from the beverage industry tracker IWSR Drinks. Not only is
the customer base for low-and no-alcohol drinks expected to grow, but American alcohol consumption has
declined for three years in a row, with 67% of people in the 25-34 year-old age range trying, or have tried in the
past, to reduce their alcohol intake.
So what aNon Alcoholic Beveragesounts for the current trends? Some familiar factors include health concerns,
being pregnant, being a responsible designated driver, training for an athletic competition, and a desire to avoid
a morning hangover. However, some newer reasons include the younger generation favouring marijuana over
booze, as well as fear of being caught over-drinking or drunk on social media. Explaining the phenomenon in
a Business Insider interview is global food-and-drink analyst Jonny Forsyth: “Control has become a key
watchword for today’s younger drinkers. Unlike previous cohorts, their nights out are documented through
photos, videos, and posts across social media where it is likely to remain for the rest of their lives…Over-
drinking is therefore something many seek to avoid.”

From Mock tails to Well-Crafted Zero-Proof Cocktails

As we begin to explore how bartenders can begin crafting their own zero-proof editions, let’s take a walk down
history lane and look at how yesterday’s sugary-sweet fruit juice and syrup-based mock tails have evolved into
refined spirits with distinct flavour profiles, carefully chosen ingredients, and even their own intricate distilling
process.

It all began in 2013 when Ben Branson, a UK pea farmer-turned-entrepreneur, was looking online for unusual
seeds to add to his vegetable patch. He came across a 17th-century book called the Art of Distillation that
contained non-alcoholic remedies for a variety of maladies (from kidney stones to epilepsy). A tinkerer at heart,
he began experimenting in his kitchen, and what he ended up with is Seed lip: the world’s first spirit made from
a distillate of botanicals as opposed to alcohol. More specifically, seed lip is made by distilling individual herbs
and botanical flavours (i.e. rosemary, thyme, peas, and spearmint), adding spices and citrus flavours, and
blending them into a final elixir.

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 Hobby Becomes Outstanding Business SuNon Alcoholic Beveragesess
What began as a hobby quickly turned into a business and Branson introduced his first non-alcoholic spirit, Seed
lip Spice 94, to the UK in late 2015. Described as a complex blend of warm citrus notes from lemon and
grapefruit peel, aromatic Jamaican allspice berry and cardamom, and a long bitter finish from the highest quality
barks (oak & cascarilla), it lay the foundation for his subsequent reinventions of the classic gin and tonic. His
second offering was Garden 108, made from home-grown peas and hay, while his most recent concoction,
Grove 42, is a citrus infused spirit made with bitter orange, mandarin, blood orange, lemongrass, ginger, and
lemon mixed with soda water.
Today Branson’s Seed lip company has a staff of 70 individuals and has expanded its reach to 20 countries. It
is served at over 250 Michelin-star restaurants globally and at over 1,000 restaurants, bars, hotels, and stores in
the US alone. Changing the face of traditional liquor and wine-based drinks forever, today Seed lip is one of
many primary ingredients used to make zero-proof beverages.

Zero-Proof Cocktail Ingredients

In addition to Seed lip, here is the scoop on some more increasingly common ingredients bartenders and chefs
can use to create their own signature alcohol-free offerings.

 Teas: Add flavour with a variety of brewed teas and tea-derived tastes, such as Earl Grey tea syrup. And here
is a special Insiders’ Tip: For an eye-catching, customer-pleasing head-turner, strain match tea over tonic water
and ice (with the optional addition of honey). Shake to produce a drink that is clear on the bottom with a beautiful
layer of vibrant green on top.
 Natural Sweeteners: Experiment with natural sweeteners by mixing club soda or a brewed tea with
pomegranate molasses, agave nectar, or avocado honey. Add an acidic component with fresh juice or verjus (the
pressed juice of unripe red or white grapes).
 Shrubs: In the drinking world, a shrub is a concentrated syrup made from fruit, sugar, and vinegar. The resulting
mixture can be enjoyed on its own or used in various mixed drinks along with herbs and spices to create
innovative flavour combinations there are a growing number of shrubs (aka drinkable vinegars) available today,
including new flavours such as apple pie and watermelon mint. If you are using shrubs that are particularly bitter
or acidic, veteran bartender Annie Williams (the first woman to win the United States Bartenders Guild’s Most

15
 Imaginative Bartender competition) recommends using one part shrub to four parts soda water and adding a
sweetener such as honey or fruit syrup.
 Aquafina: On the rise as a top ingredient in non-alcoholic beverages is aquafaba, aka chickpea water. Its frothy
nature when shaken adds character to any drink and it is also used an a egg white substitute in foamy cocktails.
To treat your customers to a refreshing tropical drink, combine one part aquafaba with two parts of sweetener
and three parts of lemon juice or water and shake.

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 GLOBAL SCENARIO

Study Period:

2016-2024
Base Year:

2019
Fastest Growing Market:

Asia Pacific
Largest Market:

Europe

CAGR:

4.7 %

Market Overview

17
Global non-alcoholic beverage market is projected to grow at a CAGR of 4.7% during the forecast period.

 The booming demand for functional beverages in order to supplement health without altering the taste
is propelling the non-alcoholic beverage market.
 Increase in aNon Alcoholic Beveragesessibility and regulations of non-alcoholic drinks globally is one
of the key factors increasing the product preference leading to increased consumption. Whereas, the
increasing health awareness and demand for nutrition-oriented products have affected the carbonated
drinks market majorly.

Scope of the Report

The non-alcoholic beverage market offers a wide range of products among carbonated and non- carbonated
beverages covering products, such as fruit and vegetable juice, functional drinks, RTD tea and coffee, and
others. The others segment includes jelly beverages, rose syrup based beverages. The market is majorly
operated by supermarket/ hypermarket, convenience store, online sales channels, and others. The other
distribution channel includes drug stores, vending machines, and kiosks.

Market Trends

Online Sales Supplementing the Market Growth

With the rising number of consumers with hectic schedules and lifestyles, online shopping is becoming a
convenient medium of shopping or buying non-alcoholic beverages and other food items. The trend of online
shopping is gaining momentum, as it is convenient for consumers to buy non-alcoholic beverages online and
save travel time, avoiding the rush at the stores. The online stores platform has established itself as a
convenient marketplace, offering a wide range of non-alcoholic beverages. The robust growth of e-commerce
has offered unique opportunities to these manufacturers. Few popular online sales channels, such as
Amazon, have allegedly witnessed a surge in the sales of functional beverages, due to attractive offers and
discounts offered by these sales channel coupled with the efficient delivery systems in place.

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Flourishing Opportunities in Asia-Pacific

The Asia-Pacific food and beverage industry are growing with the highest possible rates, surpassing that of
developed regions like Western Europe and North America. The region has a large and continuous growing
middle-class consumer society, which indicates the presence of potential growth, specifically in the iced/RTD
coffee drinks segment. Although the market is growing in all countries of Asia-Pacific, the high growth rate
for this area is driven by the rapid development of the Chinese and Indian markets. Carbonated drinks are
poised due to the largest segment in the non-alcoholic drinks segment. However, the consumption of these
carbonated beverages and Non-alcoholics is expected to decline over sugar content and preference for
healthier alternatives, such as 100% natural juice.

19
 Competitive Landscape

The market is highly fragmented due to a large number of companies involved in the manufacturing of
functional beverage. Some of the major players in the market are PepsiCo Inc., the Coca-Cola
Company, DANONE S.A., and Nestlé S.A. offering a range of carbonated and functional
beverages. Expansions and new agreement/ partnership strategies are some of the most preferred strategies
for the non-alcoholic drinks industry globally. The key players also form new agreements and partnerships
with local players to increase their foot print in the local market and release new products, aNon Alcoholic
Beveragesording to the consumers’ changing preferences.

Major Players

1. PepsiCo, Inc.
2. The Coca-Cola Company
3. DANONE S.A.
4. Nestlé S.A.
5. Arizona Beverages USA

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 INDIAN SCENARIO

India non- alcoholic beverage industry has witnessed major growth over the past few years. Growing middle-
class population, rapid urbanization and rising disposable income are some of the key factors strengthening this
growth. Moreover, with a population of 1.3 billion India is one of the largest consumer markets across the
globe. It is also demographically one of the youngest with around 50% of its population underneath the age of
25 and around 65% below the age of 35.
The majority of fast food consumption in India is driven by people between the ages of 18 and 40.These
demographic stats are expected to drive the market growth over the forecast period at a rapid pace. Additionally,
rising consciousness about heart- and weight-related health issues, especially among young adults, has
significantly pushed the consumption of packaged fruit drinks and growing at a faster pace as compared to
carbonated drinks.
Goldstein Research analysis the forecast of India packaged non-alcoholic beverages market to grow at a CAGR
of 16.2% during the forecast period 2016-2024. Further, the market is anticipated to reach USD 20.4 billion by
the end of the forecast period as more people are trading up to packaged drinks.

Market Segmentation

By Product Type
 Fruit Juices
 Carbonated Drinks
 Functional Drinks
 Packaged Drinking Water
 Ethnic Drinks
 Dairy-Based Drinks

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By Packaging Type
 Bottle
 Can
 Pouch
 Carton
 Other (Bulk, Glass etc.)

By Distribution Channel
 Offline Distribution Channel
 Online Distribution Channel

By Geography
 Tier- I Cities
 Tier- II Cities
 Tier- III Cities

Product & Region with Major Market Share

Based on product type, fruit juices aNon Alcoholic Beveragesounted for the largest market share aNon
Alcoholic Beveragesounted for the largest market share of 25.3% in 2016, while packaged drinking water
showed the fastest growth in terms of consumption in last few years and like to grow at a faster pace over the
forecast period.
Geographically, Tier-I cities aNon Alcoholic Beveragesounted for the highest revenue share in India packaged
non-alcoholic beverages market with around 55% market share. Tier-II and Tier-III cities are likely to be the
most opportunistic regions owing to growing demand for fruit juices in tier-II cities and significant growing
consumption of carbonated drinks in Tier-III cities of India.

Key Findings in India Packaged Non-Alcoholic Beverages Market

Increasing Foreign Investments by Multinational Companies Likely to Create Growth Opportunities

ANon Alcoholic Beveragesording to our India packaged non-alcoholic beverages market study on the basis of
extensive primary and secondary research, “increasing foreign investments and collaboration in India in the
food and beverage industry indicate a massive upsurge in the food and beverages products being offered by
global multinational companies as well as the domestic companies. Within this attractive Indian food and
beverage industry, there are immense opportunities for existing as well as new industry players.

Urbanization with Changing Lifestyles Anticipated to have Positive Impact on Consumption of Non-packaged
Beverages
ANon Alcoholic Beveragesording to the report, major driver in India packaged non-alcoholic beverages market
is rising urbanization with changing lifestyles. Rapid urbanization is leading to a variation in lifestyles and food
habits of consumers, who are shifting from traditional food to changing and adjusting urban food habits. Further,
urbanization also leading to an increase in the nuclear families, growth in the percentage of working women,

22
less time available for preparing meals and beverages at home and resulting in growing consumption of food at
eating joints, outlets, restaurants etc. This leads to increase in consumption of the on-the-go beverages as
consumers look for beverages that can be made quick and trusted for quality and health.

In the recent past, global leaders – PepsiCo and Coca-Cola – both have announced their plans to invest heavily
in India to exploit the growing demand and gain even stronger foothold in the emerging markets, as the sales in
developed economies continues to slow down. In 2013, PepsiCo announced to invest US$5.5 billion in India
by 2020 to expand its operation. In comparison, Coca-Cola also announced to invest US$5.0 in India by 2020
to capture the massive growth opportunities in the country.

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Intense Competition from Unorganized Market Players- Market Challenge
Further, the report states that one challenge in India packaged non-alcoholic beverages market is intense
competition from unorganized market players. 2016 witnessed the emergence of numerous small and regional
beverage companies such as Manpasand Beverages and Hector Beverages. All of these domestic companies are
fighting for significant market presence with global giants such as Coca-Cola India and PepsiCo India, among
other major multinational players. There is a transformation of un-organized to organized sectors but the
industry still need to cover quite a distance.

Covered in this India Packaged Non-Alcoholic Beverages Market Report

The report covers the present ground scenario and the future growth prospects of the India packaged non-
alcoholic beverages market for 2016-2024 along with the total revenue of beverage industry in every region.
We calculated the market size and revenue share on the basis of revenue generated per segment and region. The
revenue forecast is given on the basis of the number of market players and current growth rate of the market.
India Packaged Non-Alcoholic Beverages Market Outlook 2016-2024, has been prepared based on an in-depth
market analysis from industry experts. The report covers the competitive landscape and current position of major
players in the India packaged non-alcoholic beverages market. The report also includes Porter's five force model,
SWOT analysis, company profiling, business strategies of market players and their business models. The market
report also recognizes value chain analysis to understand the cost differentiation to provide a competitive
advantage to the existing and new entry players.

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 MARKET PLAYERS AND MARKET
SHARE

The global non-alcoholic drink market size was valued at USD 1.1 trillion in 2018. Shifting customer focus
towards a healthy lifestyle, coupled with changing diet patterns to consume nutrient-rich products, is expected
to be a major factor driving the industry. Furthermore, rising concerns over adverse health implications
associated with consumption of alcoholic drinks are projected to upscale the utility of alternative drinks
including functional beverages and Non-alcoholics.
Adult consumer groups are projected to remain key buyers over the forecast period. Increasing population of
working people, gym goers, and athletes is expected to promote the demand for nutritious drinks, which will
increase their performance as well as keep their energy level high throughout the day. This is expected to aid
the growth of non-alcoholic beverages such as energy drinks, juices, as well as functional drinks in the next few
years. Moreover, consumers are shifting towards natural and organic food products, which are tastier, healthier,
and more nutritious. This consumption trend is gaining popularity among the young adult population across the
globe.

Rising health consciousness has fuelled the demand for natural ingredients drinks. Therefore, the beverage
manufacturers are launching innovative low sugar and low calories Non-alcoholics and other natural drinks to
cater to the increasing demand from the health conscious consumers. Sports drinks, energy drinks, antioxidant
beverages, and functional drinks such as probiotic drinks are gaining popularity among health conscious
consumers and have become a key trend in the market. Manufacturers are taking efforts to promote various
health benefits associated with these products through various marketing strategies including celebrity
campaigns.

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Governments across the globe are taking initiatives in order to regulate and limit the consumption of alcoholic
beverages as well as promote the juices and healthy drinks. Over the past few years, food preferences of the
consumers have been shifting gradually to fresh fruit beverages. Furthermore, rising awareness regarding
healthy diets such as fresh fruit juice, raw food diet, and paleo diet is expected to remain one of the key trends.
ANon Alcoholic Beveragesording to the World Health Organization (WHO), in 2016, more than 1.9 billion
adults aged 18 years and older in the world were under the overweight category. Moreover, in 2016, more than
340 million children and adolescents aged between 5 to 19 were overweight or obese. These health issues are
expected to promote the utility of non-alcoholic beverages including functional drinks.

Product Insights

The functional beverage is expected to emerge as the fastest growing product segment over the forecast period.
The growth is attributed to the rise of smart consumers that are more value oriented and concerned toward
health. Key companies have well-established marketing intelligence department responsible for capturing the
experience of valuable and critical customers at each point of customer encounter with company’s products and
services. Most of the companies have also started the development of their good-for-you healthy and functional
beverage line by shifting from nutritive sweeteners to non-nutritive sweeteners.
The carbonated Non-alcoholic emerged as the most prominent product segment within this industry in 2016 and
represented over one-third of the global demand. Change in consumer preference owing to an increase in
awareness toward healthy and green products is pushing the industry toward developing herbal products.
Manufacturers are focusing on developing beverages made from plant-based protein such as grain, soy, almond
to cater the demanding customers.
Growth in smart consumers who are more health conscious and value-oriented is pushing the industry toward
changing the focus from carbonated Non-alcoholics to functional beverages. Fruit beverages segment is the
second-largest segment owing to unique healthy properties and substitutes to carbonated Non-alcoholics.
Bottled water is projected to witness the second-fastest growth rate due to the rising awareness of the quality of
tap water.
Distribution Channel Insights

Non-alcoholic beverage sales majorly depend on the ability of the industry player to bring diverse food products
to the market and distribute them through a highly efficient distribution channel such as large-scale supermarkets
or retailers such as Safeway, Walmart, and Carrefour. A significant factor contributing to the industry growth
has been an increase in distribution channels and their reach in urban as well as rural areas.

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Non-alcoholic beverages are sold through a wide variety of distribution channels. These products have been
increasingly supplied through hypermarkets, supermarkets, and convenience stores globally, displaying a strong
presence of non-alcoholic products across the region. The food service providers, hotels, and restaurants are
expected to be essential channels for propelling the industry growth globally. Supermarket and convenience
stores emerged as the most significant distribution channel for non-alcoholic beverage products in 2016, and it
is anticipated to progress with the fastest growth rate over the forecast period.
Food services and drinking places, which include takeaway outlets, fast-food joints, bars, and full-service
restaurants, is the another primary distribution channel. The demand from this channel is projected to increase
over the forecast period, and the segment is anticipated to witness significant growth rate over the forecast
period.
Advancements in recycling and beverage manufacturing technology coupled with rising disposable income and
standard of living are expected to foster the growth of this industry. The increase in demand with consideration
of enormous population in developing nations, such as India and China, is creating a favourable market for
increased production with high growth potential.

Regional Insights

Asia Pacific emerged as the fastest growing region in non-alcoholic beverage industry owing to the presence of
various untapped markets, huge population, and increasing disposable income. The region led by emerging
economies, such as China, India, Thailand, and Malaysia, has a competitive advantage over other areas on aNon
Alcoholic Beveragesount of availability of low-cost labour and raw materials. Increasing demand for various
non-alcoholic beverages from these regions is expected to drive the global non-alcoholic beverage market. Make
in India, 100% FDI in food, and One Belt One Road Initiative are attracting new entrants to establish their
production & distribution facilities in Asia Pacific.
Growing production of beverages and investments in packaging technology are projected to enhance demand
for various types of products across the world. Massive investments in development and blending of non-
alcoholic drinks in North America are anticipated to surge preference for these beverage products.

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North America aNon Alcoholic Beveragesounted for the largest market for this industry in 2016 owing to the
presence of developed economies and early adoption of soda products. The region, led by the U.S., is home to
many globally renowned beverage manufacturers such as PepsiCo and Coca-Cola. Growing obesity problem in
the U.S. and Mexico and taxes on sugar products imposed by the government are acting as restraints for CSDs
and as drivers for products made by low-calorie non-nutritive sweeteners.

Non-Alcoholic Beverage Market Share Insights

Product differentiation is a crucial factor in this industry, which is driving the research and innovation activities.
Rapidly changing technology coupled with demanding customer’s results in pressure for product augmentation
and new product development. Companies are spending heavily on research for developing new products to
meet standards and regulations imposed across the regions. Product line stretching and extension has been a
significant factor in achieving suNon Alcoholic Beveragesess in this industry.
In case of consumer goods, switching cost for the customers is meagre, which means companies need to engage
their customers through valued offerings with efforts to develop customer experience by creating more
customer-centric organizational culture. Apart from a quality product, promotion is one of the crucial processes
in improving brand recognition. Companies operating in this market are heavily spending on promotional
activities, trying to create a unique brand image that provides a competitive edge over others.
Manufacturers are engaged in forwarding integration to increase their participation in the value chain.
Combination of processes from inbound logistics to after-sales services is expected to become a new trend in
this market. This is projected to lead to better quality and less costly final products, which will ensure optimum
performance and provide maximum lifetime value.
Some of the companies engaged in the expansion of this industry include PepsiCo, Inc., The Coca-Cola
Company, Nestle S.A., Dr. Pepper Snapple Group, Inc., The Kraft Heinz Company, Reed’s, Inc., Appalachian
Brewing Co., Jones Soda Co., and Molson Coors Brewing Company.
Many key players, such as PepsiCo and The Coca-Cola Company, are promoting the e-commerce channel owing
to the development of technology and adoption of smartphones. The direct and e-commerce sales channels are
projected to provide more stability to companies by offering them alternative ways to market their products.

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 MAJOR PRODUCTS IN THE
INDUSTRY
The non-alcoholic beverage market is a highly competitive industry that includes two behemoths —The Coca-
Cola Company (KO) and PepsiCo, Inc. (PEP). Collectively, these companies hold about 70% of the US CSD
market. Dr Pepper Snapple Group, Inc. (DPS), Monster Beverage Corporation (MNST), and Cott Corporation
(COT) are some other key players in the CSD market.

Many international markets are also dominated by Coca-Cola and PepsiCo, but include other companies such
as Groupe DANONE, Nestle SA, and Suntory Holdings Limited.

Non-alcoholic beverage manufacturers, like Coca-Cola and PepsiCo, are part of the consumer staple sector.

DANONE
DANONE, formerly known as BSN Groupe is one of the largest food and beverage companies in the world and
the producer of dairy and nutrition products. The company operates in four core divisions including dairy
products, water beverages, advanced medical nutrition, and baby nutritional products. DANONE is also one of
the largest Non-alcoholic companies, with a continued focus on its functional and flavoured water brand; Aqua
drinks. DANONE Aqua is a top-selling bottled drinking water, dominating the markets in the Asia Pacific and
Latin America. Aqua Group was acquired by DANONE in 2001 and since then the brand has proved to be a
suNon Alcoholic Beveragesessful acquisition by DANONE. The company had also acquired bottled water
companies such as Naya Waters and Sparkling Spring Water Group in 2000 and 2002 respectively.

Nestlé Waters

Since its foundation in 1992, Nestlé Waters has grown into one of the world’s largest bottled water
manufacturers that own and operates 100 production facilities spread across 33 countries with sales and
distribution in more than 130 countries across the globe. Today, the company’s portfolio includes more than 51

29
exclusive Non-alcoholic brands including Aquarel, Aqua Panna, Pure Life, Buxton, Perrier, Vittel, Sao
Lourenco San Pellegrino, and many others. The company offers three types of water such as natural minerals,
prepared water, and spring waters. Nestlé Waters has acquired some of the leading brands since its inception
including the acquisition of Sources Minerals Henniez in 2007 and Vale do Sol in 2013.

PepsiCo

PepsiCo is a world leading manufacturer of food and beverages that sells its products in more than 200 countries
with a portfolio of iconic and prestigious Non-alcoholic brands like Pepsi-Cola, Frito-Lay, Gatorade, Naked
Juice, Quaker, Lipton, Miranda, Kero Coco, and many others. PepsiCo is one of the world’s largest Non-
alcoholic companies that offers products on categories including juice and smoothies, carbonates, and bottled
water. The company is involved in sustainable growth by building and expanding its performance with purpose
motto. It mainly focuses on three main goal sections: People, Products, and Planet. PepsiCo’s recent acquisitions
include Soda Stream and Bare foods.

Red Bull

Dietrich Mateschitz started Red Bull in the mid-1980 with a unique formula of energy drinks and its exclusive
marketing strategy. Today, the company has grown into one of the leading and most-recognized Non-alcoholic
brands in the global beverage industry. The brand that gives you wings is now available in more than 171
countries across the world, with more than 6.3 billion cans sold and consumed in 2017. Since its inception, Red
Bull has sold more than 68 billion cans through its unique marketing campaigns made around exciting events.
The company’s core markets are Western Europe and the Americas. Red Bull launched a new line of organic
sodas this year with three of the four new drinks containing no caffeine.

The Coca-Cola Company

The Coca-Cola Company, one of the world’s largest Non-alcoholic companies, is the home to some of the top
Non-alcoholic brands including Coca-Cola, Fanta, Sprite, and Diet Coke. Other most-recognized brands include
vitamin water, Minute Maid, and PowerAde. The Coco-Cola company owns and sells more than 500 beverage
brands with products sold under several categories including waters, energy and sports drinks, juice drinks,
ready-to-drink teas and coffees, and mainly sparkling drinks. The company’s products are sold to customers
across 200 countries worldwide. The non-alcoholic beverage brand acquired a 16.7 % stake in one of the leading
energy drink companies, Monster Beverage Corp.

Arizona Beverages

Arizona Beverages is best-known for its ready-to-drink teas, produced and distributed in several regions
including the US, Africa, Europe, South America, the Caribbean, Central America, the Middle East, and APAC.
The company also manufactures a wide range of non-alcoholic beverages including juice blends, energy drinks,
waters, coconut water, teas, diet teas, tea bags, fast shots, organic teas, and much more. The New York-based
Arizona Beverages hold a unique position in the worldwide beverage market and is also most-recognized for its
big can drink sold at a price of 99 cents in the US.

Bai

Bai is touted as one of the world’s most innovative Non-alcoholic companies that offers antioxidant infusion
drinks and fresh fruit flavoured Non-alcoholics which contain no artificial sweeteners under its product lines
Bai and Bai Bubbles. Bai is also a maker of Antiwater, an antioxidant-infused purified bottled water. Founded

30
in 2009 and headquartered in New-Jersey, Bai grew into one of the world’s largest Non-alcoholic companies
within a span of a decade. Bai brands were acquired by Dr. Pepper Snapple Group, a manufacturer of non-
alcoholic beverages in 2017 for $1.7 billion.

Britvic

Founded as British Vitamin Products in the 1930s, the UK-based producer of Non-alcoholics; Britvic made a
strong portfolio of its own prestigious brands including Tango, DaFruta, Teisseire, Maguary, MiWadi, J2O,
drench, Fruit, Ballygowan, and Robinsons. Britvic also manufactures and markets a number of PepsiCo’s Non-
alcoholics brands such as Mountain Dew, 7UP, SoBe, and Pepsi in Great Britain and Ireland under special
agreements with PepsiCo. Britvic primarily sells its wide range of products to shops, supermarkets, pubs,
restaurants, cinemas, and hotels. In 2017, Britvic acquired Bela Ischia Alimentos Ltd, which produces liquid
and powder concentrates, and juices.

Dabur

Dabur is India’s largest FMCG companies that produce and sells fruit juices under its popular brand; Real Fruit
juice. With an experience of more than 130 years, the company has grown into a most trusted and well-
established name across the world with a revenue of more than Rs 8000 crores and a market capitalization of
more than Rs. 50000 crores. Today, Dabur India produces more than 381 products across 21 categories and the
company has its presence in more than 100 countries. The other categories that Dabur operates in include oral
care, health care, hair care, skin care, home care, and foods and beverages.

Hydro One Beverages

Founded in 2006, Hydro One Beverages is one of the fastest growing companies in the global Non-alcoholic
market that produces advanced nutritional supplements. The company offers a wide range of products under
various brands including BÖDE Sport, a low sodium sports drink; Revd. A healthy Non-alcoholic that supports
diabetic health and sugar-free green tea. Hydro One Beverages offer their products through stores in South
Carolina, and Georgia as well as online.

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 DEMAND DETERMINANTS

Price Changes
As with most goods, demand for Non-alcoholics moves aNon Alcoholic Beveragesording to price. The higher
the price, the lower the demand and vice versa. When Non-alcoholic companies face higher prices for their
ingredients, such as sugar, high-fructose corn syrup or flavouring agents, they may choose to raise their prices
to maintain their profit margins. However, the higher prices may force consumers to reduce their demand for
those Non-alcoholics. If the companies choose to hold steady on their prices, they must sell higher quantities
to maintain the same profit margins.

INCOME

Interpretation:

This chart represents the income of the consumer who drinks non- alcoholic beverages .Here we see that which
costumer earn less than 10,000 Rs. P.e that people are highly consume beverages.

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Health Issues

The increased awareness of health-related issues, such as high blood pressure, obesity and diabetes, has raised
concerns among consumers about the ingredients in many Non-alcoholics. Non-alcoholic manufacturers have
adapted to these changes by introducing healthier options, such as sugar-free drinks, caffeine-free drinks, fruit
juice-based drinks, sports drinks and bottled water. These options allow Non-alcoholic manufacturers to
maintain and increase their market shares, while presenting an image of providing more than just "fizzy sugar
water" to their customers.

Other Factors

While these three factors are among the most obvious influences on the demand for Non-alcoholics, several
other events can also sway customer demand. Government regulations, such as the ban in New York City on
Non-alcoholic servings larger than 16 ounces -- a law that was later ruled unconstitutional -- can curb customer
demand. Manufacturers can also suffer damage to their reputations, based on news about product defects or
corporate malfeasance, which can harm the demand for their products. Companies can increase demand for
their drinks by introducing them into overseas markets or targeting different demographic groups

Consumer Preferences

Consumer preferences can change due to a wide range of reasons, including the average age of the consumer
population, changes in societal trends, seasonal cycles or economic fluctuations. The suNon Alcoholic
Beveragesess of any Non-alcoholic manufacturer hinges on that company's capability to anticipate these
consumer tendencies and plan aNon Alcoholic Beveragesordingly. Companies that fail to adapt to these
changes can see reduced profits, lower market share and increased probability of crippling business failure.

33
 PESTLE ANALYSIS
Political Factor:
Political factors play a significant role in determining the factors that can impact National Beverage Corp.'s long
term profitability in a certain country or market. National Beverage Corp. is operating in Beverages - Non-
alcoholics in more than dozen countries and expose itself to different types of political environment and political
system risks. The achieve suNon Alcoholic Beveragesess in such a dynamic Beverages - Non-alcoholics
industry across various countries is to diversify the systematic risks of political environment. National Beverage
Corp. can closely analyze the following factors before entering or investing in a certain market-

 Political stability and importance of Beverages - Non-alcoholics sector in the country's economy.
 Risk of military invasion
 Level of corruption - especially levels of regulation in Consumer Goods sector.
 Bureaucracy and interference in Beverages - Non-alcoholics industry by government.
 Legal framework for contract enforcement
 Intellectual property protection
 Trade regulations & tariffs related to Consumer Goods
 Favoured trading partners
 Anti-trust laws related to Beverages - Non-alcoholics
 Pricing regulations – Are there any pricing regulatory mechanism for Consumer Goods
 Taxation - tax rates and incentives
 Wage legislation - minimum wage and overtime
 Work week regulations in Beverages - Non-alcoholics
 Mandatory employee benefits
 Industrial safety regulations in the Consumer Goods sector.
 Product labelling and other requirements in Beverages - Non-alcoholics

Economic Factors

The Macro environment factors such as – inflation rate, savings rate, interest rate, foreign exchange rate and
economic cycle determine the aggregate demand and aggregate investment in an economy. While micro
environment factors such as competition norms impact the competitive advantage of the firm. National Beverage
Corp. can use country’s economic factor such as growth rate, inflation & industry’s economic indicators such
as Beverages - Non-alcoholics industry growth rate, consumer spending etc. to forecast the growth trajectory of
not only --sector name-- sector but also that of the organization. Economic factors that National Beverage Corp.
should consider while conducting PESTEL analysis are -

 Type of economic system in countries of operation – what type of economic system there is and how
stable it is.
 Government intervention in the free market and related Consumer Goods
 Exchange rates & stability of host country currency.
 Efficiency of financial markets – Does National Beverage Corp. needs to raise capital in local market?
 Infrastructure quality in Beverages - Non-alcoholics industry
 Comparative advantages of host country and Consumer Goods sector in the particular country.
 Skill level of workforce in Beverages - Non-alcoholics industry.
 Education level in the economy

34
  Labour costs and productivity in the economy
 Business cycle stage (e.g. prosperity, recession, recovery)
 Economic growth rate
 Discretionary income
 Unemployment rate
 Inflation rate
 Interest rates

Social factors

Society’s culture and way of doing things impact the culture of an organization in an environment. Shared
beliefs and attitudes of the population play a great role in how marketers at National Beverage Corp. will
understand the customers of a given market and how they design the marketing message for Beverages - Non-
alcoholics industry consumers. Social factors that leadership of National Beverage Corp. should analyze for
PESTEL analysis are -

 Demographics and skill level of the population

 Class structure, hierarchy and power structure in the society.
 Education level as well as education standard in the National Beverage Corp. ’s industry
 Culture (gender roles, social conventions etc.)
 Entrepreneurial spirit and broader nature of the society. Some societies encourage entrepreneurship while
some don’t.
 Attitudes (health, environmental consciousness, etc.)
 Leisure interests

Technological Factors

Technology is fast disrupting various industries across the board. Transportation industry is a good case to
illustrate this point. Over the last 5 years the industry has been transforming really fast, not even giving chance
to the established players to cope with the changes. Taxi industry is now dominated by players like Uber and
Lyft. Car industry is fast moving toward automation led by technology firm such as Google & manufacturing
is disrupted by Tesla, which has stated an electronic car revolution.

A firm should not only do technological analysis of the industry but also the speed at which technology disrupts
that industry. Slow speed will give more time while fast speed of technological disruption may give a firm little
time to cope and be profitable. Technology analysis involves understanding the following impacts -

 Recent technological developments by National Beverage Corp. competitors

 Technology's impact on product offering
 Impact on cost structure in Beverages - Non-alcoholics industry
 Impact on value chain structure in Consumer Goods sector
 Rate of technological diffusion

Environmental Factors

Different markets have different norms or environmental standards which can impact the profitability of an
organization in those markets. Even within a country often states can have different environmental laws and
liability laws. For example in United States – Texas and Florida have different liability clauses in case of
mishaps or environmental disaster. Similarly a lot of European countries give healthy tax breaks to companies
that operate in the renewable sector.

Before entering new markets or starting a new business in existing market the firm should carefully evaluate

35
the environmental standards that are required to operate in those markets. Some of the environmental factors
that a firm should consider beforehand are -

 Weather
 Climate change
 Laws regulating environment pollution
 Air and water pollution regulations in Beverages - Non-alcoholics industry
 Recycling
 Waste management in Consumer Goods sector
 Attitudes toward “green” or ecological products
 Endangered species
 Attitudes toward and support for renewable energy

Legal Factors
In number of countries, the legal framework and institutions are not robust enough to protect the intellectual
property rights of an organization. A firm should carefully evaluate before entering such markets as it can lead
to theft of organization’s secret sauce thus the overall competitive edge. Some of the legal factors that National
Beverage Corp. leadership should consider while entering a new market are -

 Anti-trust law in Beverages - Non-alcoholics industry and overall in the country.

 Discrimination law
 Copyright, patents / Intellectual property law
 Consumer protection and e-commerce
 Employment law
 Health and safety law
 Data Protection

36
PORTER’S FIVE FORCES ANALYSIS

Rivalry among Existing Players

o The industry is not growing rapidly. The growth rate for the industry is not rapid; it is in fact relatively
small. This makes it very difficult for new entrants to compete with the already thriving firms in the
industry.
o The industry does not necessarily have overcapacity at the moment. However, if a newcomer were to try
and enter the industry, its current players would make it very challenging because of brand loyalty and
recognition amongst customers.
o The fixed costs are a high proportion of total costs for a firm in the Non-alcoholic industry. Fixed costs
act as a firm barrier to entry and can include costs for warehouses, trucks, labour, etc.
o There are significant brand identities among the firms in the industry, which is why brand names are an
important competitive edge amongst new businesses.
o It actually would be difficult to get out of business because of money lost from fixed costs and
advertisements, as well as binding contracts with set distribution channels.
o Customers would not incur high costs from switching from one player to another. The most they may
incur would be a few cents because the prices in the industry do not fluctuate much among the firms.
o Since the products in this industry are simple carbonated beverages, there is no need for significant
customer-producer interaction because customers purchase the products mainly based on taste.
o Market shares in the industry are not more-or-less equally distributed among competitors. This is evident
because there are three main firms that own approximately 90% of the industry, yet there are over 100
companies in the industry.

37
Bargaining Power of Buyers

o The Non-alcoholic market is the largest group in the larger beverage industry. The Non-alcoholic industry
is worth $60 billion dollars. Three firms control 89% of the United States Non-alcoholic sales. To say the
least there is plenty of the pie to go around but it is hard to gain market share.
o There are a large number of customers with the average American consuming over 56 gallons of soda a
year. The average Non-alcoholic costs under $2 which makes each individual purchase relatively
insignificant.
o Because the Non-alcoholic industry is very competitive, switching suppliers is relatively easy and the
price difference is rather small. Difference can Non Alcoholic Beverages based on geographic location
and how far the products need to travel.
o There is no need for information on how to use the product it is a simple task.
o The buyer is not aware of the need for additional information because all the information that is needed
is provided. There are no steps to using the product and all nutrition facts and ingredients are listed on
the label.
o Because a Non-alcoholic is a hard thing to duplicate in your house and takes a considerable amount of
time, manufacturing your own Non-alcoholic is inconvenient especially when you take into consideration
how low of a cost the product is.
o Customers are highly sensitive to the price of Non-alcoholics and are willing to change brands if one
becomes much more expensive than the other. Non-alcoholics are not a need and people won’t pay any
price for it.
o Products are very unique in the Non-alcoholic industry and people are very brand loyal to the drink of
their choose. Though many of the sodas are rather similar in type they have distinct tastes.
o Firms often provide incentives to customers on the buyer side. These incentivizes are often done in the
form of contests such as win tickets to the super bowl or deals such as get 20% off admission to a local
theme park. These deals can often sway customers to choose a particular brand.

Bargaining Power of Suppliers

o The inputs specifically the materials are extremely differentiated as every firm is trying to create the best
product. Each firm has a different formula, colour, and flavour for their beverage. No two products are
typically exactly alike. Product innovation is necessary to fill the buyers need for a variety of tastes.
o Firms can switch between suppliers very quickly and easily. Suppliers for the Non-alcoholic industry do
not hold much competitive pressure. Suppliers to the industry are bottling equipment manufacturers and
secondary packaging suppliers. In terms of equipment manufacturers, the suppliers are generally
providing the same products. The number of equipment suppliers is not in short supply, so it is fairly
easy for a company to switch suppliers. This takes away much of suppliers’ bargaining power.
o It is fairly easy to become a supplier within the industry and thus they would not find it difficult if they
wanted to enter. The companies will choose the suppliers that do the best job and have the best price. If
another supplier does the same job but is cheaper, the firm can switch without much issue.
o There are many current and potential suppliers in this industry. Non-alcoholic companies own a portion
of their own supply companies. For current and potential suppliers it is fairly easy to enter or suNon
Alcoholic Beverage seed in the industry as supplying the Non-alcoholics is not a difficult task. All about
price and how efficient of a delivery job they do. Companies are willing to switch suppliers whenever is
necessary.
o Business is extremely important to the suppliers as the Non-alcoholic industry is an enormously profitable
market. The main revenue for these supply companies comes from delivering the Non-alcoholic
beverages and equipment for the firms to the customers.

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Threat of New Entrants

o Existing firms have cost and performance advantage in this industry. This is because existing firms have
already purchased large capital expenditures and have economies of scale. They also have direct supply
and distribution channels setup
o Non-alcoholics are not proprietary products because anyone can make Non-alcoholics. The only
proprietorship is on patented flavours and brands.
o The majority of Non-alcoholics have well-known brand identities, with the exception of generic brands.
Brand identities define Non-alcoholic flavours (i.e. Sprite means lemon-lime, or Coke means cola)
o There are no significant costs in switching suppliers. The Non-alcoholic industry is very competitive, so
prices only fluctuate slightly depending on geographical location (transportation) or short-run sale
discounts.
o A lot of capital is needed to enter this industry because there are large capital costs needed for
manufacturing. Bottling, distribution, and storage could be contracted out, but it would likely increase
costs in the long run and weaken the supply chain.
o A new comer to the industry would face difficulty in assessing distribution channels. The major brands
already control the main distribution channels, such as big supermarkets, gas stations, and restaurants.
They have low costs, competitive pricing, and strong business relationships.
o Experience in this industry does help firms to lower costs and improve performance. The major brands
run on economies of scale, and have experienced the highs and low of the industry and overcome them.
New entrants can learn from the first entrant’s history but do not have first-hand experience.
o There are licenses, insurances, and other difficult qualifications required in this industry. Companies must
get FDA approval to sell their product, have licenses to produce and distribute internationally, and
insurance to cover potential lawsuits, aNon Alcoholic Beverages dents, or faulty product.
o A new comer in this industry can expect retaliation from current companies. The Non-alcoholic industry
is an oligopoly with existing firms having strong distribution channels, relationships with suppliers,
retailers, and brand value to customers. The industry leaders have the tools necessary to force out new
competitors.

Threat of Substitutes

o Available substitutes do not have performance limitations or high prices that would justify their use over
the products in the Non-alcoholic industry because substitutes are not priced at a high enough cost where
it would affect their use as a mainland product.
o Customers would not incur costs in switching to substitutes. The choice of switching to a substitute for a
customer would in most cases be the difference of cents.
o There are substitutes for carbonated beverages, like water, tea, sports drinks, etc.
o Customers are not likely to go for substitutes because brand name loyalty is a very strong competitive
pressure in this industry.

39
 SWOT ANALYSIS
Strengths

 Basic Consumer Need.

 Large and Growing Market.
 Many Different Flavours and Packages Available.
 Low Cost of Production.
 Non-alcoholics are Dominant in the Non Alcoholic Market.
 Excellent Branding and Advertising by the Market Leaders in the Industry.
 Addictive Nature of Non-alcoholics.
 Distribution Channels.
 The domination of brand established products such as Coca-Cola is a persistent effect in creating
consumer demand for Non-alcoholics
 The slow but steady growth of marketing channels such as retailers, has opened up new markets for Non-
alcoholics.
 The strong support of brands with advertising and marketing techniques which generate a demand from
retailers thus consumers
 Scales of economies are possible through the introduction of environmentally concerned production for
example packaging, reducing transport costs, which was influenced by key market trends that concern
the health conscious consumer of today

Weaknesses

 Health Issues associated with Drinking Non Alcoholic Beverages.

 Oral Health: Effect on Teeth.
 Obesity and Weight Gain due to High Levels of Sugar.
 Type 2 Diabetes.
 Metabolic Syndrome- Umbrella term used to group risk factors of Heart Disease, Stroke and
Diabetes.

 Dominant of Big Brands makes it hard for new entrants to gain market share.
 Environment effect of Packing.
 Many Non-alcoholics face the challenge of naturally fitting in with healthy living or environmental
concerns
 Some well-established Non-alcoholics have gained brand loyalty by consumers
 The majority of Non-alcoholics is easily imitable
 There are not high barriers of entry within the industry due to the availability of ingredients and packaging

Opportunities

 Reduce Environmental Impacts of Packing.

 Reduce the amount of packed used.
 Increasing Recycling content.
 Promote Recycling.
 Reduce Amount of Water used.
 Diversify more into Health Conscious drinks.
 Continue to Dominate the Non Alcoholic Drinks Market and Tea and Coffee.
 Establish Facts and Uses as Potential PR.
 More Partnerships with Alcohol Brands

40
  The growing expectations of the consumer’s need for new products or flavours provides a continues
opportunity for innovation
 The easy adaptation of most products to versatile consumer tastes

Threats

 Threat of Substitutes.

 Tea, Coffees, Juices put pressure on Carbonated Beverages.

 Health Issues associated with Non-alcoholic Industry.

 Due to recession consumer buying power in this market has reduced.
 Changing attitude and demand of consumers- more health conscious society.
 Introduction of “Own Brands” from major retailers with cheaper price.
 Increase in Government taxes against Non-alcoholics already 23 % VAT on cold drinks. E.g. 10%
sugar tax.
 Distribution cost rise in cost associated
 Negative Press.
 The low-cost production of own label brands and other cheap brands
 A Non Alcoholic Beveragesusations of Non-alcoholics being a cause to the obesity problem
 Threats from other internal products gaining market share. For example, sparkling water may take share
from carbonates

41
 BCG MATRIX

THUMPS UP- It is in star position. To maintain a large market share heavy investment is needed.
Also, popular among youth and largely produce by Coca-Cola company to keep up with the demand. It has the
potential to hold the position. Thus, the market share and growth are high.
Limca- Lemon flavoured Limce, once one of the market leaders, now low in growth in the market. Having
enough market share to put the product on stores, Limca is in the position of Cash cows. Growth is low and
share is high.
Diet Cock- Coca-Cola has launched Diet Cock for health-conscious consumers of Coca-Cola. The drink
has received favourable responses in the past but the latest data suggests it is dwindling in popularity. Many
health aware customer can see the potential of Diet Cock in future, but the growth among other Diet health
drinks is impossible. Thus, I mark it as Dogs.
Sprite- Question marks products have small relative market share but high market growth rate. Sprite as a
Non-alcoholic is highly popular and has the potential to become star product.

42
 VALUE CHAIN ANAYSIS

Bottling and distribution network

Companies in the Non-alcoholic industry reach the end market in two ways. One way is by selling finished
products, made at company-owned bottling facilities, to distributors and retailers.

Another, is by selling beverage concentrates and syrups to authorized bottling partners, who then make the
final product by combining the concentrates with still or carbonated water, sweeteners, and other ingredients.
The bottlers then package the product in containers and sell these beverages to distributors or directly to
retailers.

Also, both bottling partners and companies manufacture fountain syrups and sell them to fountain retailers.
Fountain retailers include restaurants and convenience stores, which produce beverages for immediate
consumption.

43
Distribution: Third-party products

The extensive reach of The Coca-Cola Company (KO) and PepsiCo, Inc. (PEP) allows them to produce or
distribute third-party brands. For instance, Coca-Cola is licensed to produce and distribute certain brands of
Dr Pepper Snapple Group, Inc. (DPS) and Monster Beverage Corporation (MNST). PepsiCo sells Lipton and
Starbucks brands under partnerships with Unilever and Starbucks, respectively.

Pricing power

Coca-Cola and PepsiCo’s wide distribution network gives them significant pricing power. Carbonated Non-
alcoholics have similar prices due to the intense competition in the industry. Often, Non-alcoholic companies
extend lower prices under promotional offers. In recent times, such promotional offers have been used to
boost volumes of the carbonated Non-alcoholics. That’s because they’re under pressure due to rising health
concerns and competition from healthy substitutes such as tea, energy drinks, and water.

The non-alcoholic beverage industry is part of the consumer staples sector. You can invest in this sector
through the Consumer Staples Select Sector SPDR ETF (XLP), which has notable holdings in Coca-Cola and
PepsiCo.

44
MCKINSEY 7S MODEL

45
 Strategy:

Business strategy integrates the following six principles:

1. Achieving growth through mergers and acquisitions (M&A)
2. Forming strategic alliances in global scale
3. Focusing on emerging markets
4. Focusing on organizational culture
5. Developing and promoting the idea.
6. Innovation in marketing initiative.

Effectively analysed the market in terms of the spending habits of the customers, state, and
government regulations.
Gathered information on various data sets, analyse the information and break down the information
into various sub-segments
Gained aNon Alcoholic Beveragesurate information relevant to company’s markets and make
informed business decisions
Gathered information on the competitors and better understand the customer needs.
Helped enter new markets and minimize the risk of investment decision
Robustly tailor products and marketing efforts around customer needs.

46
Structure

47
Key challenges in structural alignment (noting Cooperation vs Coordination Problems)

Cooperation Problems:

Agency problems

Global Integration

Organizational Culture

Solutions (in combination):

Control mechanisms

Institute HR policies including incentivizing to encourage teamwork.

Reinforce Shared Values (Culture)

Coordination Problems:

Functional silos – given the structural setup of NON ALCOHOLIC BEVERAGES, silos may result.

Communication Channel – integration of information

Solutions (in combination)

Rules and directives.

Routinize work. Implication: mechanistic approach can result in higher staff turnover.

48
Reliance on ERP, SAP, and staff channels.

Systems

Directional systems: to monitor 6Ps with following objectives to align to vision 2020

Process systems: each sub-division to break these into manageable tasks and provide milestones for initiatives
to achieve the 6Ps.

Day to day management systems: at the managerial level, procedural measures to be set in place along with
frequent feedback and reports given at the subordinate level to provide knowledge of results. Along with
rewards and incentives to tie in performance to alignment to objectives.

Style
Culture of Coke – forward looking and driven, emphasizing oneness. One Company. One Team. One Passion.

As One Company, meaningful and aNon Alcoholic Beverageselerated learning opportunities are provided to
staff to contribute to the greater good of NON ALCOHOLIC BEVERAGES.

One Team, NON ALCOHOLIC BEVERAGES ties in relationships built to career suNon Alcoholic
Beveragesess.

One Passion goes farther than the portfolio of brands, to sustainability, and supporting the communities and
preserving and protecting the planet.

Staff

Benchmarked attraction and retention policies against industry. Providing Career development pathways.

49
Performance management systems to be better managed in order to lower the turnover rate of 19.1%.

Given the silo nature of some staff functions, EIP practices have to be incorporated to tap on innovation and to
also engage staff. This provides recognition.

Financial rewards of stock ownership at NON ALCOHOLIC BEVERAGES. Encourages employee to build
along with the company.

Skill

Applied to all the other 6Ss.

In terms of Shared Vision, Vision 2020 requires innovative approaches in reaching the goal, particularly to do
with product content (new tastes, riding the health-wellness trend), volume, and efficiency innovation.
Targets clearly set as to what primary actions for NON ALCOHOLIC BEVERAGES to take and what needs
to be achieved for each level.

In terms of Strategy, resource commitment towards innovation in product content (R&D centres to be set up),
volume (new packaging to incorporate at least 10% more volume), and efficiency (lighter weight packaging
to encourage more take-up rate, clearer health information).

In terms of Structure, R&D division is to be closely linked with all other geographical divisions to incorporate
feedback on tastes, packaging, etc. based on real time information provided by the ERP and SAP systems in
the backdrop.

In terms of Systems, allocation of staff and technological resources to provide innovative ideas is required.

In terms of Staff, the recruitment and using staff to spinoff creative ideas, and to work closely with the R&D
centres.

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51
TRENDS IN THE NON-ALCOHOLIC
INDUSTRY

Continuous product innovations constitute one of the primary growth drivers for the global Non-alcoholics
market. Players are continuously innovating their products in terms of ingredients, formulation, and packaging
to increase sales. Realizing the potential of the growing health and wellness trend among consumers, players
are introducing products with added benefits. In April 2018, Sprite launched a reformulated product in the
UK market. The new product uses a combination of sugar, acesulfame K, and aspartame, which claims to
reduce the sugar content in the product by about 50%. Thus, continuous product innovations will help in the
growth of the global Non-alcoholics market during the forecast period.

Apart from product innovations, various innovative marketing campaigns adopted by players to attract
consumers will help in driving market growth. Players such as THE COCA-COLA COMPANY and PepsiCo
are revamping their marketing strategies to counter the global decrease in the sale of carbonated Non-
52
alcoholics. In April 2018, THE COCA-COLA COMPANY launched a new marketing campaign under the
banner “We Do" in the UK. This campaign included billboard advertisements and social media campaigns as
well. The campaign included images of Elvis Presley in the advertisements and was carried out to celebrate
132 years of Coca-Cola Classic. Such new marketing and advertising campaigns will help in the growth of
the global Non-alcoholics market during the forecast period.

Non-alcoholic Beverages market research, provides actionable insights that supplement the growth strategies
of market players. This market research report provides growth estimates, forecasts, and an in-depth analysis
of all key factors at play in the global Non-alcoholic Beverages market. Non-alcoholic Beverages Market is
predicted to grow at +7% CAGR throughout the forecast period 2019-2025.

Non-alcoholic beverages are thought of because the non-alcoholic version of alcoholic beverages. Non-
alcoholic beverages include drinks that contains less than 0.5°/0 alcohol. Such beverages are common in
countries that enforce alcohol prohibition laws like Kuwait, Saudi Arabia, and Iran. changing tastes and

53
preferences of customers and inclination toward consumption of food and beverages have junction rectifier to
the increase in demand for non-alcoholic beverages within the last few years. makers are targeted on
developing new merchandise so as to satisfy the dynamic tastes and preferences of customers. The ethanol
distillation technique is used to separate non-alcoholic beverages from alcoholic beverages. the worldwide
non-alcoholic beverage market has witnessed fast changes thanks to factors like rising getting power,
improvement within the living standard of the population, and rapid urbanization.

Global Non-alcoholic Beverages Market segment by Regions, regional analysis covers:

North America (United States, North American country and Mexico)
Europe (Germany, France, UK, Russia and Italy)
Asia-Pacific (China, Japan, Korea, Asian country and Southeast Asia)
South America (Brazil, Argentina, Colombia)
Middle East and continent (Saudi peninsula, UAE, Egypt, African nation and South Africa)

The Non-alcoholic Beverages market research report includes an in-depth assessment of the global market.
In addition to this, it covers the selling approaches of the industries to enlarge the businesses in the
forthcoming years. It summarizes on the well-developed framework of the market to aNon Alcoholic
Beverages accomplish the risk factors obstacles that stand in front of the businesses.

54
 CHALLENGES FACED BY
INDUSTRY

1. The ‘Plastic ban’

The enforcement of the ‘plastic ban’ is rooted in an ideology that has lasted several years amid discussions on
international platforms and has now come to fruition. The consistent growth pace of industrialization, of which
the F&B sector is a major arm, has had a disastrous impact on the environment, and has led to eco-friendliness
becoming the next big mantra out there. Knowingly or unknowingly, the excess consumption and improper
disposal of plastic has come up as one of the major challenges faced by food and beverage managers today.

In this scenario, a product that is tagged as ‘eco-friendly’, quite naturally, has more of a consumer connection
and is likely to accrue lucrative sales than a product that is popularized to harm the environment. Food and
beverage manufacturers and retailers are now striving toward making the food manufacturing process highly
conducive to the environment through the adoption of numerous recycling practices. The deployment of green
business practices – right from the production to the packaging and supply chain management is a crucial
solution to tackling the current issues in the food industry.

55
Another environment-related constituent that forms a part of the present challenges of food and beverage
industry is the issue of waste management. Undeniably, the food industry generates a considerable amount of
waste, right from sourcing the raw material to food retailing and distribution. The negative impact of the same
has been identified as one of the most crucial environmental issues in food and beverage industry that needs
to be dealt with as soon as possible. In response, manufacturers have been striving to bring about eco-friendly
manufacturing practices, waste management programs, recycling techniques, and more.

A major example of how F&B industry contenders have been complying with the plastic ban is that of Nestle.
Last year, Nestle declared its decision to use 100% recyclable/reusable packaging by 2025. Additionally,
retailers such as Asda, Café Coffee Day, and McDonald’s have also announced their commitment to go
plastic-free and bring about sustainable practices in production and packaging.

2. The rise of health-consciousness among consumers

The increasing incidences of food-related disorders have prompted consumers to bring about vital changes in
their diet and lifestyle, making them more health-conscious than ever. Automatically, the train of thought is
diverted towards purchasing foods without added preservatives that might hamper one’s health. The demand
for products that do not carry the ‘healthy’ label is then bound to reduce, and to stay at the top, the need to
eliminate artificial constituents from products has come to the fore as one of the major challenges faced by
food and beverage managers.

One of the major factors that has led to increased diabetes prevalence is obesity, linked to a major intake of
sugar via processed foods and cereals. This realization has, since the last half a decade, led to consumers
shying away from products containing artificial sweeteners and other added preservatives.

Thus, one of the biggest challenges of food and beverage industry is for manufacturers to come up with healthy
products that provide ample nutrients; yet, at the same time, do not take away from the aesthetics of the brand.
This has led to a variety of nutrient-rich foods making it to supermarket aisles, labelled ‘gluten-free’, ‘dairy-
free’, ‘sugar-free’, and the like. The widespread expansion of food supplement ingredients market is an apt
example justifying the aforesaid.

As consumers tend to purchase products with value addition, food products reinforced with proteins, vitamins,
and other nutrients have better chances of a massive sale, fueling food additives market, which is slated to
56
register revenues over USD 115 billion by 2024. Adding value to food products without diminishing their
quality or compromising on taste, and yet maintaining the cost-effectiveness, adds to the long list of current
issues in the food industry.

Yet another trend that forms the crux of the challenges faced by food and beverage managers is the rising
demand for organic food. The drastic reduction in the demand for processed foods has fuelled the organic
food market, increasing awareness levels regarding natural foods and their positive health impact. This has
favoured the demand for natural, healthy, food products, pushing organic rice protein market trends.

The dramatic no-show of consumers from the ‘centre of store’ aisle products also demonstrates that consumers
prefer to stay away from packaged goods, which is why brainstorming strategies to combat the increasing
demand for organic products is one of the major challenges faced by food and beverage managers today. A
recent example of how beverage manufacturers have been tackling this challenge is that of Coca Cola, which
has recently launched the first sugar-free flavoured water in Japan, under the brand “I LOHAS”.

3. The rising concerns about product traceability

Traceability is one of the pivotal challenges in food and beverage industry, not just for record management
but also to fulfil the bottom line – generating revenue for every sector. Of late, consumers have been taking
increasing interest to know what goes into their food that has led ‘ingredient labelling’ forming a major part
of the packaging process. With public trust in food supply chains reducing drastically and awareness
pertaining to glitches in the F&B supply chain since the last decade or so, end-to-end traceability has emerged
as one of the latest trends in food and beverage industry.

Having recognized the significance of maintaining precise data records, food processing companies are now
on their way to deploy advanced technology, such as IoT, AI, and the block chain, for tasks such as supply
chain analysis, weight measurement, temperature monitoring, etc. Say for example, global retail giant Auchan,
toward the end of 2018, planned to expand TE-FOOD’s block chain solution in a bid to improve food
transparency.

57
4. The ascent of meat-free & veganism trend

The growing concern toward animals is ushering in a change in the food patterns of the masses. With more
and more consumers vying for vegetarian and vegan products, the demand for meat and other products has
observed a significant decline, posing as one of the major challenges in food and beverage industry. Social
platforms and online information portals have paved the way for animal abuse awareness, and people prefer
purchasing products with labels such as “humane-certified” and “cage-free”.

Last year, in August, nine Japanese companies vowed to end testing on animals, post discussions with the
PETA U.S. Manufacturing products that vouch for animal safety has become one of the prime challenges for
food and beverage industry, as food manufacturers must maintain their reputation with regards to ethical
treatment of animal concern. On this note, companies have come up with meat-free alternatives to keep the
retail chains running. Say for example, Sainsbury, Aldi, and Nestle have recently come up with the idea of
launching meat-free products at retail outlets.

5. The optimum level of stringency in the regulatory landscape

While it may be construed as stating the obvious – the fact is, that the F&B space is very stringently governed
by regulations. Organizations such as the FDA, EPA, OSHA, and FTC have been rather diligent in enforcing
norms pertaining to the launch of healthy products, regulating food labels, maintaining a clean, hygienic
environment, and the like.

While most companies are known to perfunctorily adhere to the norms, the periodic changes subject to waste
disposal, food quality, raw material, surplus production, documentation, etc., have cropped up to be one of
the major challenges faced by food and beverage managers. Often, the continuously changing reforms have
led to companies recalling food products from their stores.

Say for instance, Tyson Foods recently recalled over 190,000 pounds of ready-to-eat chicken fritters post
order from the U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS), while grocery
store chain Kroger recalled three frozen berry varieties after the FDA discovered that some of them tested
positive for hepatitis A. In order to deal with the same, companies are required to bring about utmost accuracy
and precision in their business operations – right from the manufacturing to the distribution processes.

58
6. The increasing complications of inventory management

Given the limited shelf life of food products, inventory management has come up to be one of the current
issues in the food industry. The perishability factor is responsible for fact that F&B inventory is highly
susceptible to foodborne pathogens and more, if not stored hygienically. This has prompted manufacturers to
adopt new software to alleviate these issues, given that the presence of foodborne bacteria may have a
disastrous impact on the company’s reputation. Amid this backdrop, food pathogen testing market will stand
tall as one of the most profitable arms of the global F&B industry.

The F&B space is also highly machine-controlled, given its expanding growth pace, and is likely to continue
adopting advanced technology to keep up with consumer trends and latest innovations. The demand for
enhanced inventory management software in food processing, canning goods, and packaging products forms
a vital part of the challenges of food and beverage market, and numerous companies are making efforts to
help the F&B sector deal with the crisis. Say for example, toward the end of 2018, United Overseas Bank
declared that it has upsized UOB BizSmart – its cloud-based, integrated digital solution to help small business
in the F&B industry.

7. The pervasive presence of ecommerce

59
An online presence is one of the major challenges of food and beverage industry, considering that consumers
are more tech-savvy and socially informed, thanks to the Internet. While core industries, like appliances,
electronics, textiles, and other domestic products have already established their presence in the commerce
domain, this sector has been relatively slow on the upkeep.

Of late though, wholesalers and retail companies have already begun to invest in grocery e-commerce,
however, it is important that most manufacturers have a presence on the World Wide Web, in order to tackle
what seems to be one of the most crucial challenges of food and beverage industry. Citing an instance of the
same, Reliance Industries’ retail arm, Reliance Retail Ltd., has made it to the headlines for planning to test its food
and grocery app prior to the venture’s commercial launch.

8. The current impact & forecast aftermath of the COVID-19 pandemic

The F&B sector has faced the worst brunt of the coronavirus so far. Right from the manufacturing and supply
chain and restaurant sector to food service companies and food delivery firms, the F&B industry has been
wearily coping up with the pandemic. Countrywide lockdowns have prevented employees from working in
factories, severely impacting the supply chain. With farming and agricultural activities taking a hit, the fear
of food shortage looms large. Petrified with the extended lockdowns, it has been observed the masses resorted
to panic buying, creating further food shortage and a major disparity between the ones who can afford to
stockpile on items and the ones who cannot.

While the general consensus is that this grim scenario might last until a treatment/vaccine for COVID-19 is
found, analysts know better. It has been speculated that the aftermath of the pandemic is likely to remain for
quite a period. This holds true for the F&B industry as well, seeing that people are likely to practice social
distancing for a while now, in lieu of what is considered the ‘new normal’. Restaurant businesses are thus
anticipated to take a hit, while the meat industry is also expected to experience a downturn, given the change
in consumer eating habits. Food & beverage managers will need to keep these issues in mind and chalk out
strategic initiatives to keep their business afloat.

Undeniably, the challenges faced by food and beverage managers are dime a dozen, owing to the ridiculously
fierce competition and the fact that a single change is bound to affect the entire supply chain. Newer markets,
changing consumer spending, increasing food prices, global appetite, and advanced technology are slated to
bring about extensive changes in this sector in the next few years. Despite the consistent challenges of food
and beverage industry, it is predicted to show healthy gains in the future. It remains to be seen how the global
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F&B market will fare in the forthcoming years, driven by disposable income levels, changing lifestyles, and
favourable government reforms.

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 FUTURE OUTLOOK

Non-alcoholics are losing their fizz.

According to IBIS World’s recent report, the Non-alcoholic manufacturing industry has grown at a modest
annual rate of 1.7 percent over the last five years. Products like energy drinks have supplemented growth but
falling Non-alcoholic consumption has limited revenue.

Consumer health trends have shaken things up, shifting demand away from sugar-filled carbonated products
and towards alternative ‘health drinks’ (it's safe to say that Australia is officially kombucha-crazy!).

As price competition increases from supermarket own brands and profit margins dip, high value
alternatives (particularly low and no sugar options) are having their time to shine. In the near future, non-
carbonated drinks are expected to overtake their carbonated rivals.

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Changing the face of fizz.

There are four key drivers influencing the shifting focus in the Non-alcoholics category towards a healthier,
natural approach:

1. Finding nourishment.

Many consumers are moving away from calorie reduction, restriction or exclusion and towards nourishment,
nutrient density and inclusion.
We spoke to our community of Australian shoppers on the explosion of “naturals”. We found that 61
percent of respondents expressed that they care less about counting calories and more about the nutrient
content of food and drink products.

2. The war on sugar.

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The anti-sugar movement has had a big impact on purchasing decisions. Although the sugar tax hasn’t been
introduced here, Australians are already making changes based on greater awareness and education on the
matter.
51 percent of our respondents expressed that they always look for sugar-free food and drink products.

(Jenny Zegler, Trend and Innovation Consultant at Mintel)

3. Looking for 'naturally healthy'.

Consumers are turning to more natural products to boost their health over 'fake-tasting' conventional
options. Fermented drinks, ready-to-drink teas and products with natural sweeteners are all picking up
the slack for traditional carbonated beverages.

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“Australian consumers are switching to perceived healthier alternatives at an accelerated rate. For
example while carbonated Non-alcoholics sales are declining, healthier options in the drinks
category are all seeing growth with Kombucha drinks growing seven times in the last two years.”
(Nielsen)

4. Focus on sustainability.

Today’s consumers care about a business’ integrity and values. They want to leave a positive impact on the
world and as a result, they are making more conscious purchasing decisions.

83 percent of our respondents expressed a preference for brands that are honest about how they process food
and drink products. 61 percent are paying more attention to local brands and small manufacturers than
before.

Global innovation.

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Trends in the UK.

In the UK, where we see many trends later mirrored in Australia, the sugar tax has had a big impact on
consumer purchase decisions.

In 2017, for example, Fanta Zero grew 46 per cent whilst classic Fanta grew a much more modest 5 per
cent. The industry in the UK has started adapting by introducing reduced sugar Non-alcoholics that boast
functional benefits.

Plain old water and coconut water have also been turned into something of a marketing miracle! Alkalising,
hydrating, electrolyte-filled and flavoured options have led to bottled water becoming the largest volume
segment in the UK.

Trends in the USA.

In the US, people's individual Non-alcoholic consumption has been declining since 2016. However,
growth has been coming from ready-to-drink coffee, particularly cold brew coffee.

Cold brew coffee is perceived as a healthier alternative to energy drinks and traditional soda in America.
It also has the appeal of bearing a cheaper price tag than that of speciality coffee.

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Trends in Japan.

Want to talk future? Clear drinks are the current craze in Japan, a country which may be a looking glass into
the future of Australian Non-alcoholics:

“Japan is often a testing ground for new products and is widely recognised as a leader in beverage
innovation. If you want to peer into Coca-Cola’s future, Japan is a great place to look”

This year Coca-Cola launched a clear, zero-calorie, lemon-flavoured version in Japan. Suntory also sell
products like transparent yogurt drinks and milk teas there.

Adapting to the shift.

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Focus on NPD.

The influence of these evolving consumer trends actually provides a great deal of white space opportunity
for the industry. Instead of hammering down prices and tweaking packaging formats, brands can play with
everything from creating eco-friendly naturalness to functional indulgence.

Consumers have demonstrated that they’re willing to pay more and are looking for healthier, lower sugar
alternatives in Non-alcoholics.

Whilst the growth in categories like craft RTDs, bottled water and kombucha make success and innovation
seem like an uphill battle for traditional carbonated Non-alcoholic manufacturers, it seems that we just need
to think outside of the box. Much as innovative and exotic flavours breathed new life into cider, flavour
innovation could do the same for carbonated Non-alcoholics.

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Take a stand.

There is a significant lack of consumer trust in the industry today. This matters now more than ever because
people are making increasingly conscious, mindful purchase decisions which require a certain level of
trust in your brand, products and processes.

Coca-Cola and Pepsi recently vowed to reduce their use of sugar by 20 per cent over the next seven years in
a bid to address Australia’s obesity epidemic.

Looking at the bigger picture than just product, many manufacturers are also making statements around
sustainability. Unilever, for example, has committed to running its Australian manufacturing plants entirely
on clean energy within the next two years and having 100 per cent recyclable plastic packaging by 2025.

Consumers are asking the industry to step up and give them a helping hand to be healthy - why not try
taking a stand and see how it impacts perceptions (and profits)?

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 MARKET ATTRACTIVENESS
Non-alcoholic drinks market size was valued at $1,548 billion in 2015, and is estimated to grow at a CAGR
of 4.4% to reach $2,090 billion by 2022.

Ongoing advancements in the non-alcoholic drinks market with innovative efforts have further enhanced their
demand. The competitive advantages of the market are also described in the report. To understand the market,
drivers, restraints, and opportunities are explained. Moreover, the key strategies adopted by potential market
leaders to facilitate the effective planning are also discussed.

The market holds a substantial scope for growth globally. The market is in its maturity stage; however, its
contribution to the global market is projected to increase significantly within the next six years. Furthermore,
seasonal demand and campaigns like Dry athlete are escalating the demand of non-alcoholic drinks market.
However, health concerns and government taxes are major limitation for purchasing them; whereas, recent
innovations, which embed functional benefits and natural or organic ingredients in manufacturing of alcoholic
drinks is anticipated to enable the market to reach to a wider segment of audiences.

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 Breakdown of Primary Respondents

The global non-alcoholic drinks market encompasses product type and geography. The product type segment,
namely, Non-alcoholics, dairy drinks, tea & coffee, bottled water, juice, and others are covered under the
scope of the report. By geography, the market is segmented into North America, Europe, Asia-Pacific, and
LAMEA. Furthermore, the report also covers the strategies adopted by key market players to sustain
competitive environment and increase their market share.
Non-alcoholic Drinks Market Segmentation

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The winning strategies are a result of the analysis performed on company profiles of key market players. They
are gathered and analysed in reference to their recent developments. The data obtained through press releases
by the companies has limited scope to publicly available information.
The key strategies tracked from the recent developments of the companies in non-alcoholic drinks market
include:

Product launch: It is a marketing strategy adopted by companies to develop new product and make as much
sales as possible in a short time span.

Mergers & Acquisition: To strengthen their reach to customers or enhance technical capabilities, market
leaders implement merger & acquisition.

Partnership: The leading players sign supply & sales agreements and plant manufacturing partnerships to
capture major market share and compete with other players.

Business Expansion: In this, business entities enlarge their product portfolio by entering into entirely new
business or expanding their global presence.

Top Investment Pockets

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At present, Non-alcoholics segment has witnessed large-scale adoption of non-alcoholic drinks market.
However, this segment is anticipated to witness decline in market share due to growth in health concerns such
as obesity and diabetics. Moreover, government regulations related to sugary drinks and increase in import
duties have further hindered the market growth of Non-alcoholics. Juice and dairy drinks are some of the other
segments in market. The rapid growth of these segment markets is expected in subsequent years mainly due
to rise in health and wellness demand. These products have the potential to generate high returns due to its
natural and organic contents.
Adoption of tea & coffee is expected to rise with highest rate and is identified as one of the lucrative targets
for investment. As compared to the other segments, this segment is expected to show huge potential due to
their functional benefits like antioxidant properties and rise in cafe culture. However, these applications
currently possess small market size in terms of value. Others (energy drinks, sport drinks, and hot drinks) are
expected to witness good growth in the near future.

Health and wellness have significantly posed positive impact on the food and beverages industry. Increase in
awareness of various health problems associated with alcohol has shifted the consumer preference from
alcoholic drinks toward non-alcoholic drinks.
According to the World Health Organization (WHO), around 3.3 million deaths are reported every year due
to the increase in consumption of alcohol. This corresponds to around one in twenty deaths or 5.9% of deaths
worldwide.

Moreover, according to the Organization for Economic Cooperation and Development (OECD), Europe is the
largest region for the alcohol consumption among the developed regions, which leads to escalating threat of
alcoholic diseases. Furthermore, growth in prevalence of risk of obesity, anxiety, and addiction due to alcohol
has boosted the rate of non-alcoholic drinks.
Europe Non-alcoholic Drinks Market
The year-on-year growth rate of European market is increasing from 2015 to 2022, which shows the product
is in the growth stage. Europe is currently facing a major health problem of obesity. The manufactures
introduced calorie free or less calorie products such as zero sugar and diet drinks. Such drinks are anticipated
to augment non-alcoholic drinks market.
European market is anticipated to propel in the revenue as consequences of propelling incidence such as
harmful alcohol consumption and metabolic syndromes related to overweight and obesity. In addition,
lifestyle shift toward health benefit drinks such as probiotics or kombucha is projected to fuel the market
growth during the forecast period

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 Hungary Non-alcoholic Drinks Market Size, 2014-2022

Key players profiled in the report include A.G. Barr, Dr. Pepper Snapple Group, Dydo Drinco, Attitude
Drinks, Co., Livewire Energy; Calcol, Inc., DANONE, Nestle S.A., PepsiCo, Inc., and the Coca-Cola
Company.
Other major players (not profiled in report) in the industry are Kraft Foods Group, Inc., Suja Life, LLC,
FreshBev, Pressed Juicery, Suntory Beverage & Food, Unilever, Asahi Group, Jacobs Douwe Egberts, and
Kirin Holdings Co.
KEY MARKET BENEFITS:

 This report provides an extensive analysis of the current and emerging market trends in the global non-
alcoholic drinks industry.
 In-depth analysis is conducted by constructing market estimations for key market segments between
2014 and 2022.

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 Comprehensive analysis of all regions is provided that determines the prevailing opportunities in these
geographies.
 This study evaluates competitive landscape and value chain to interpret the competitive environment
across various geographies.
 Comprehensive analysis of factors that drive and restrict the growth of the global non-alcoholic drinks
industry is provided.
 Exhaustive analysis by type predicts the non-alcoholic drinks market share by major product type used
currently along with the ones that are expected to gain prominence in the future.
 Extensive analysis of the market is conducted by following key product positioning and monitoring the
top competitors within the framework.

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