SOFT DRINKS IN INDIA - ANALYSIS

Country Report | Mar 2018

EXECUTIVE SUMMARY Market Sizes

Manufacturers focus on cleaner ingredients and naturally healthy Sales of Soft Drinks
products Off-trade Volume - million litres - 2003-2022
The soft drinks industry is witnessing greater use of natural ingredients including
higher juice content and lower sugar content in most beverages. Millennials in India are
13,071 Forecast
more health conscious and monitor what they consume. Though millennials are open 30,000
to experimenting with new flavours they also check the functional benefits of the
products. Beverages have properties including vitamin enhancement, body cleansing, 25,000
meal replacement, hydration and detox. The government has also been proactive in
pursuing companies to increase juice content in beverages for the overall benefits of
horticulture and wellbeing of Indian citizens. The government has also provided tax 20,000
incentives to manufacturers to increase the juice content in beverages. The current
government policy also encourages new start-ups introducing healthy and natural 15,000
beverages by providing seed capital. The current soft drinks industry is becoming more
health conscious, driven by consumer demand and proactive support from the
government. 10,000

GST, a mixed bag for soft drinks 5,000

India has witnessed an overhaul of its tax structure. Products are now taxed based on
necessity and overall benefits the product provides to society. Products with natural 0
2003 2017 2022
ingredients and focused on overall wellbeing of health are taxed lower. Carbonated
soft drinks (CSD) are affected the most in soft drinks as the highest tax rate was
imposed on these products. Additionally, a cess tax has been imposed on CSD. Juice
drinks have benefited from GST attracting a lower tax rate of 5%. Sales Performance of Soft Drinks
% Y-O-Y Off-trade Volume Growth 2003-2022
The overall impact of GST was negative for soft drinks as the confusion and adaption of
GST led to a slowdown in sales of soft drinks. Retailers were not willing to keep new
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stocks leading to a very slow Q3 for most soft drinks companies. However, GST is
expected to have a positive impact on the overall industry in the next two years as the
cost of transportation across the country is expected to fall by 10%. GST also influenced
12.2% Forecast
companies in changing strategies on new products. Some companies introduced a juice 50%
content in beverages to attract a lower tax rate.
40%
Growth of start-ups and regional companies driven by product
innovation and new business model 30%
Consumers in India are more focused on health and overall wellbeing. They are willing
to invest in products that have health benefits. A number of companies have entered 20%
soft drinks with products focused on physical and mental wellbeing. Companies
including Raw Pressery, Fresca and Narang Beverages have focused on products
10%
providing mental and physical wellbeing. Companies also introduced drinks that could
replace meals. These start-ups witnessed the fastest growth and were able to take
share from leading companies. These companies also sell products via a subscription 0%
model to ensure regular demand. Aside from start-ups, regional companies witnessed
strong growth in the carbonates and juice categories. Regional companies focused on
-10%
strengthening their distribution networks. Major companies including Coca-Cola India, 2003 2017 2022
Nestlé and Tata Global Beverages introduced products in RTD coffee and RTD tea.

New products focused on local flavours and healthier drinks

Over 2016-2017, soft drinks witnessed introduction of new products focusing on
functional benefits including hydration, vitamin enhancement, meal replacement and
energy boosting. Narang Beverages introduced Fruit Wave juice enriched with vitamins
and minerals, and Coca-Cola India introduced Aquaris beverage focused on hydration.
Raw Pressery also added new lines of products to its healthy juice portfolio. Coca-Cola
India extended is juice portfolio by introducing Mosambi flavoured Minute Maid.
Similarly, PepsiCo India introduced vegetable-based juice under its Tropicana brand.
Coca-Cola India and Tata Global Beverages introduced RTD tea to extend their
portfolios of natural beverages. Multiple start-ups have introduced coconut water
including Cocofly, PureCoconut, Harmless Harvest and Jax Coco focusing on North India.
Companies also introduced indulgence products; for example PepsiCo India introduced
a new energy drink under the brand name Sting, and Nestlé India introduced the first
RTD coffee in India under the brand name Nescafé. Companies have also focused on
introducing products by adopting local flavours; Coca-Cola India increased the
distribution of its brand Rimzim and introduced Portella (grape-based drinks) for South
India. The company also focused on introducing cumin, orange and grape flavoured
carbonated water in Odisha and Andhra Pradesh under the brand name Kinley. PepsiCo
India and Coca-Cola India extended their lines of mango juice by introducing Tropicana

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Alphonso and Mazza Gold, respectively
Sales of Soft Drinks by Category
Off-trade Volume - million litres - 2017 Growth Performance
Soft drinks industry to register steady growth
India’s soft drinks industry is expected to register steady growth over the forecast Bottled Water
8,019.5
period. Key drivers include the large number of new launches that are focused on
healthy beverage products. Some of the categories including RTD tea, RTD coffee and Carbonates
3,232.2
energy drinks witnessed the entry of new players with demand expected to grow as
consumers become more aware of these new products. Mature categories, including Concentrates
42.8
carbonated soft drinks, are expected to register slow growth as consumers shift
towards healthier beverages and the high GST rate imposed on the industry. However, Juice
1,719.8
the introduction of new traditional flavours by leading companies and fruit-flavoured
carbonated drinks is expected to offset the slowdown in the market. RTD Coffee
-
RTD Tea
APPENDIX 15.5
Sports and Energy Drinks
Fountain sales in India 41.0
Asian Speciality Drinks
Trends -
0% 15% 25%
The presence of fountain on-trade sales of soft drinks is negligible in India. The
availability of fountain soft drinks in the on-trade channel is restricted to first-tier SOFT DRINKS 13,070.7 CURRENT % CAGR % CAGR
YEAR % 2012-2017 2017-2022
cities such as Delhi, Mumbai, Bengaluru and Chennai, and they are almost always GROWTH
present in captive environments such as multiplex cinemas, railway stations and
airports. However, the concept of fountain soft drinks is slowly spreading in the
country and 2017 saw an increase in the number of venues in which fountain sales
were available due to the increase in branded fast food outlets in second- and third-
tier cities. Carbonates is the major soft drinks category sold through fountains in
India, followed by RTD tea. Coca-Cola and PepsiCo continued to compete strongly
with each other in carbonates in 2016, and this competition extended to fountain
sales as well. As carbonates account for the majority of fountain soft drinks sales,
brands such as Pepsi, Coca-Cola, Sprite, Fanta, Mirinda, Mountain Dew and Thums Up
were the most influential in this area in 2017. In addition, Hindustan Unilever’s
Lipton Ice Tea, Nestlé India’s Nestea Ice Tea and Georgia Gold’s RTD Ice Tea are also
sold through fountains.
Fountain sales of soft drinks through convenience stores remained negligible at the
end of the review period and consumer foodservice channels remained the major
contributors to fountain sales in 2017. Over the forecast period, fountain sales of soft
drinks are expected to grow in direct correlation with the increases expected in the
numbers of consumer foodservice outlets, shopping centre food courts and office
complexes, among other possible locations for fountain soft drinks sales. It is thus

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 expected that carbonates and RTD tea will remain the most popular categories for Competitive Landscape
fountain sales of soft drinks in 2017 as fountain sales are yet to be introduced in
other soft drinks categories.
Company Shares of Soft Drinks
% Share (NBO) - Off-trade Volume - 2017
SOURCES
Coca-Cola India Pvt Ltd 23.9%
Sources used during the research included the following:
PepsiCo India Holdings P... 14.4%
Summary 1 Research Sources Parle Bisleri Ltd 5.3%

Official Sources Agricultural & Processed Food Products Export Development Authority (APEDA) Parle Agro Pvt Ltd 3.0%
Agriculture & Agri-Food Ca na da Dhariwal Industries Ltd 1.6%
Federa tion of India n Cha mbers of Commerce & Indus try Dabur India Ltd 1.0%
Minis try of Food Proces s ing India
UB Group 0.9%
Minis try of Food Proces s ing Indus tries
Manpasand Beverages Ltd 0.3%
United Sta tes Depa rtment of Agriculture (USDA) Foreign Agricultura l Service
(FAS) Hindustan Unilever Ltd 0.2%
Trade As ia Bottled Wa ter As s ocia tion Red Bull GmbH 0.1%
Associations
As s ocia ted Cha mbers Of Commerce & Indus try Of India , The ITC Foods Ltd 0.1%
As s ocia tion of Bottled Wa ter Pioma Industries Ltd 0.1%
Coffee Boa rd of India Hamdard Wakf Laboratorie... 0.1%
Confedera tion of India n Food Tra de & Indus try
Tunip Agro Pvt Ltd 0.0%
Confedera tion of India n Indus try (CII)
Mapro Foods Pvt Ltd 0.0%
Federa tion of Bis cuit Ma nufa cturers As s ocia tion of India
Others 49.0%
Federa tion of India n Cha mbers & Commerce of Indus try
India n Soft Drinks Ma nufa cturers As s ocia tion
Interna tiona l Bottled Wa ter As s ocia tion
Interna tiona l Copetence Centre for Orga nic Agriculture
Interna tiona l Council of Bottled Wa ter As s ocia tions (ICBWA)
Interna tiona l Federa tion of Fruit Juice Producers
MOFPI
PHD Cha mber of Commerce & Indus try
UNESDA & CISDA
Trade Press 2point6billion.com
Bevera ge Diges t
Bevera ge Net

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Official Sources Agricultural & Processed Food Products Export Development Authority (APEDA) Brand Shares of Soft Drinks
Bevera ge World
% Share (LBN) - Off-trade Volume - 2017
BeverAs ia Kinley 5.9%
Bus ines s India
Bisleri 5.3%
Bus ines s Line
Sprite 4.5%
Bus ines s Sta nda rd
Thums Up 4.0%
Bus ines s Toda y
Bus ines s World Maaza 3.8%

Ca pita l Ma rket Aquafina 3.1%

Ca ta lys t (Bus ines s Sta nda rd s upplement) Mountain Dew 2.8%
Commodity India Frooti 2.7%
Doma in-b
Coca-Cola 2.0%
Economic Times , The
Pepsi 2.0%
Economics time
Limca 1.8%
Equity Ma s ter
Expres s Hotelier & Ca terer 7-Up 1.7%

Fina ncia l Expres s , The Slice 1.7%

Food & Bevera ge News Oxyrich 1.6%
Food Indus try India Mirinda 1.5%
Fooda ndbevera ges .in
Fanta 1.5%
FoodAs ia
Réal 1.0%
Foodbev.com
Kingfisher 0.9%
Free Pres s Journa l
Hindu Bus ines s Line, The
Tropicana 0.6%

Hindu, The Others 51.4%

Hindus ta n Times
I Love India Increasing share Decreasing share No change
India Bra nd Equity Founda tion
India Buzz info
India Ea rnings
India Infoline
India Reta iling
India Times
India Toda y

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 Official Sources Agricultural & Processed Food Products Export Development Authority (APEDA)
India n Expres s
India n Indus try Tra cker
India nTelevis ion.com
Live Mint
Ma g India
Money Control
NDTV
Outlook Money
Reta il As ia
Reuters India
Soft Drinks Interna tiona l
The Fina ncia l Expres s
The Hindu
This week Ba nga lore
Times Food Proces s ing Journa l
Times of India
Tribune, The

Source: Euromonitor Interna tiona l

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