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Drink tohealth
With carbonates fast losing their fizz to healthier alternatives, the Indian soft drinks market is certainly one space to look out for.

26 • PROGRESSIVE GROCER • MaRCh 2011

ahEaD OF WhaT’S NEXT

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the accessibility of packaged drinking water has made it a direct competition to any other soft drink. ‘Phat Burn’. both inside and outside the home. and the changing meal patterns of Indians.PROGRESSIVEGROCER. another noteworthy mention here is Qua. among all soft drinks. Given these macro-behavioural changes. carbonates accounted for close to 75 percent of the total market share. bottled water is certainly expected to further eat into the ‘share of throat’ that carbonates currently command. instead of purity – which. categories such as juices and bottled water are becoming significant contenders for a share of the Indian soft drinks market. such fortified and flavoured Over the next five years. rather than health. which have an assurance of quality and nutrition. ‘others’ constitutes functional drinks. pleasure and indulgence. which was worth `174. as of 2010. though. as a result. What would pose a challenge. Given this scenario. in reality. but over the last decade. carbonates as a category play solely on fun. Brands such as Bisleri Vedica and himalayan are already positioning their products on the platforms of enhancing immunity levels. Given that lifestyle-related diseases are increasingly becoming commonplace. with the biggest gainer from this changing market landscape being bottled water. concentrates and smoothies ahEaD OF WhaT’S NEXT MaRCh 2011 • PROGRESSIVE GROCER • 27 . Even for at-home consumption. What is slowly becoming non-typical.COM C By Rahul ashok among consumers to preempt and proactively enter into a disease-management mode when they choose their dietary intake. though. much has changed in the way consumers spend on their food and beverages. it has diminished to just a little over 50 percent. Losing Fizz? With the growth of modern trade outlets over the last few years. Outside the home. With improvements in supply chain and distribution. which is one of the first Indian brands to have launched a range of fortified water. Going forward.ome March. unfortunately. others such as ‘Sparkling’ and ‘Flavoured’ water are also expected to bring a lot of opportunities over the next few years. which have ingredient modifications to provide health benefits on the platforms of energy. and. the market for bubble-top cans and the regular plastic water bottles has grown tremendously over the last five years. SKU sizes and packaging formats) to increase/ change the consumption occasions favourably. owing to the fact that they can be positioned with certain health benefits. among others. Water Everywhere The growth of the packaged water market in India is a rather recent phenomenon. etc.6 bn as of 2010. where people have begun to seek clean and safe drinking water. is poised to increase more sharply then even juices 2014 55% 34% 6% 5% 2010 48% 39% 6% 7% 2006 39% 46% 6% 9% Bottled water Carbonates Juices Others Based on per capita consumption of soft drinks in india. there is a tendency WWW. thus. it is heading downhill. having said that. the contribution of bottled water as a ‘share of throat’. immunity and weight loss. The mercury levels spiral upwards in most parts of the country. is how Indians choose to quench this thirst. although the per capita spend of Indians on carbonates is the highest among all soft drinks. and. at a price point that is potentially competitive to where juices are currently placed. is a category pre-requisite. making it easily adaptable to a wide range of consumption requirements and occasions. diet colas (which claim to be sugar-free and contain no calories) and mixers are the only two segments within the carbonates category which are expected to sustain the growth they have shown over the last five years. Companies such as Coca-Cola and Pepsi have continuously attempted to arrest this downslide by launching variants (in terms of flavours. the affordability. although ‘still unflavoured water’ is the largest segment in the bottled water category. but it has not been able to supersede the rising negative consumer perception regarding the health impacts of excessive consumption of carbonates. With the rising inclination among Indians to ‘take health into their own hands’. bottled water is the only category with SKU sizes ranging from 100-ml bottles to 20-litre cans. more recently. it would not come as a surprise that bottled water. there is a parallel increase in the willingness to spend on packaged beverages. apart from water purification systems. The fact that packaging literature and marketing communication is becoming more health-oriented is aiding this behaviour. so does everyone’s thirst. Moreover. and it’s a typical story across India – welcome. ‘Ninja Kick’. rtd tea and coffee. are the taste and the willingness of consumers to perceive bottled water as sources of considerable nutrition. Even as recent as 2000. accounted for close to 50 percent of Indians’ per capita consumption of soft drinks. the Great Indian Summer season. Water.

in contrast to other beverage options. Concentrated Market. the equation between the form-factor in which the product is available and the perceived value is bound to change significantly. ‘others’ constitutes rtd tea and coffee. with their tagline ‘Snack healthy’. with its recent commercial. Firstly. as they would taste like highly diluted juice/carbonates. Apple. it has helped the category stretch its relevance beyond kids. Despite this optimistic market scenario. So. at a time when the category itself is becoming more relevant as a source of nutrition. lemon and mango – to introduce products with cranberry. each with varying degrees of health benefits and claims. most companies have realised that it is a major challenge to ensure sustainable sourcing of many raw materials and future strategies would largely rely on building the assurance of a robust supply chain system. With this change in product format. targeted at providing specific health benefits. this growth has been a key facet in defining the way the soft drinks market in India has transformed over the last few years. the amount of juice content in fruit juices also increased. Dabur’s range of ‘Real’ fruit juices is one of the brands to leverage this opportunity very well. grew to `24 bn by 2010 – a 60 percent increase in just five years! Undoubtedly. and there evolved three clear sub-segments within fruit juices – fruit drinks. With this evolution. the contribution of bottled water as a ‘share of throat’. Examples include Real activ and Tropicana. and is being positioned for adults who lead an active lifestyle. For instance. there is a high barrier for new brands to enter the fray. but the difficulty would lie in building consumers’ taste towards such products. such as Tang 28 • PROGRESSIVE GROCER • MaRCh 2011 ahEaD OF WhaT’S NEXT WWW. Blackberry and More The juices market in India.Over the next five years. for Sure as Indian consumers begin to look out for more health benefits and convenience from their soft drinks. is poised to increase more sharply then even juices 2014 43% 32% 14% 7% 3% 2010 50% 26% 14% 6% 4% 2006 60% 22% 12% 2 4% % Carbonates Bottled water Juices Functional drinks Others Based on per capita expenditure on soft drinks in india. which was worth around `14 bn in 2006. With Indians more willing. even now most major manufacturers import the fruit pulp for various flavours. what this means is that while 100 percent fruit juices as a category shows promising growth. and usually had a significant amount of added sugar content. and has grown at a CaGR of 19 percent during the 2006-10 period. is positioning its product as helping to ‘make breakfast 100 percent’. owing to the combination of convenience. the flavour innovation is fueling a barrage of ingredientlinked health claims as well. a classic example where this was apparent was the case of Gatorade in India. The company. as being a perfect way to supplement the existing dietary intake.PROGRESSIVEGROCER. and even vegetable-blended flavours. Real activ took the concept of fruitnutrition a step further. than ever before. therefore. Each of their 12 fruit juice variants has a specific combination of vitamins. in contrast to the bottle which was priced at `35. and also compensate for the increasing tendency among Indians to skip their meals or have a light breakfast. launched a sachet with Gatorade in powder form. which was available at `15 per SKU (which could make 500-ml of Gatorade). Gatorade was seemingly brought within direct competition of other powdered concentrates. These drinks were primarily positioned for kids. pineapple. to experiment with tastes and flavours. With the rising health and wellness-seeking behaviour among Indians.COM . concentrates and smoothies water would certainly present a sizeable market potential. fruit juices broadly referred to fruit drinks – containing less than 30 percent of juice content. The product was perceived as being too expensive to become a part of one’s regular exercise regimen. The positive health perception is amply evident in the fact that 100 percent fruit juice (from concentrates) is the fastest growing segment in juices. This has helped shape the market dynamics in two different ways. Tropicana. also. the packaged juices category has gained a lot of acceptance among Indians. when they pitted their juices against what Indians traditionally consumed as snacks. and do not see a situation where these could be sourced locally and at more lucrative price points. Until a few years ago. nectars and 100 percent juice. minerals and nutrients. taste and benefits it offers. companies have gone beyond the mainstay flavours – orange.

albeit having to spend on creating awareness and such category credence. or realise the value of. active on-ground activities and creative marketing efforts have helped in growing the brand through association with various high-energy activities such as sports. Even keeping in mind that the market grew from a very small base. The David among the Goliaths This is a question that has been raised again and again. The company’s powdered and liquid concentrates account for a whopping 83 percent of the total market value. it is going to become more imperative to have frequent and targeted marketing efforts such as those by Gatorade. any brand looking to enter this space has to offer a strong. have a longer shelflife and are quick to prepare. it is rather interesting to note that the growth of the category was rather indirect. it is important for prospective players to note that the concentrates market in India has been dominated by Rasna for the last two decades. do not require any refrigeration. building the energy drinks market. price reductions. the major deterrent to the uptake was the fact that consumers did not quite perceive the need for. although sports and neutraceuticals still remain in their infancy.COM ahEaD OF WhaT’S NEXT MaRCh 2011 • PROGRESSIVE GROCER • 29 . Going forward. the energy drinks market in India was worth `11. with two major mango juice brands – Frooti and Maaza – accounting for a third of the total market 1% 6% 1% 1% 10% 11% 38% 15% 16% Other Activ Frooti Minute Maid Maaza Real Real Twist Slice Tropicana WWW. The reason behind the hegemony of the brand (apart from the category benefits described in the previous paragraph) is the strong value for money it offers. the strength of concentrates as a category would become evident. For that.PROGRESSIVEGROCER. They have the advantage of being easy to stock (both in-store and at home). Quite clearly.The concentrates market in India has been dominated by Rasna for the last two decades. with the introduction of variants with vitamin and mineral fortification. which has been even bettered in the recent past. over the last three years. If one were to think about the rationale behind Gatorade’s different product format. In India. This has ensured that concentrates have maintained a CaGR of seven percent over the last five years – much lower than bottled water or juices. any new entrant into this space. n Rahul Ashok is a consultant. although this has helped build the category. over the last decade – is there really a potential for functional drinks in India as yet? What has lately increased the optimism in answering this in the affirmative is the meteoric rise of energy drinks. as of 2010. as far as the perceived value-volume equation is concerned. but carefully. But. than as a standalone drink. if they are looking at getting even a small share of the pie. this tremendous growth can be attributed to the brand Red Bull. clear and sustainable difference. and Rasna. for having slowly. at Datamonitor. Consumer Markets.2 bn and has grown at a CaGR of 46 percent over the last five years. Red Bull was more commonly used as a mixer. The juices market in India is still highly fragmented. While it is a growing market. at this juncture. but higher compared to carbonates. rock concerts and Formula 1. these products. would greatly benefit from the fact that they would be one of the first in the market. which communicated the fact that the product contained electrolytes and replenished other vital nutrients that are lost during physical exercise. Therefore. an average Indian still does not fully understand the difference between an energy drink and a sports drink. as of 2010.