Indian Soft Drink Industry
Fruit-based drinks like sharbat and shikanji are part of Indian subcontinent’s past, lifestyle folklore for the time immemorial. Early Indian Hindu religious scripture mentions many of the exciting delicacies of the period. This may have a lot to do with the subtropical climate Indians have throughout. Indian summer is harsh and can be even romanticized as a person with distinct features. Indian summer could be that distinct uncle who visits for a few months in a year brings joy initially but refuses to leave after some time. Initial joy is the redemption from mild or severe chilling cold experienced from most parts of middle and northern India. Slight sunlight escaping from the gloomy cloud of winter and darkness is something to cheer about. Indian states located above the Vindhya range and especially above the tropic of cancer usually find cold as bone-chilling. In high altitude places, the temperature can decrease to a negative zone. The beauty of winter captured by frozen dal lake eclipses the time that is frozen in people’s life due to the harsh cold. To make up for the poetic winter, summer is a harbinger of new life, end of hibernation for animals and plants and blooming season for the newly minted flower. But just like every good thing summer comes with its peril. The joy of march becomes a threat of may and turns into the curse of June. Orientalist and anglophile literature have described summer in their various short stories, dramas, novels and novellas. Indian summers were harder on colonialist sahibs and memsahibs used to the cold weather of England. But to the rescue Indians had some unique solution, native land had to offer against summer. Some of them were based on lifestyle, some architectural and some related to dietary habits. Indian drinks like curd lassi, buttermilk, shikanji or sharbat became part of life. Cultural stereotypes of those times like tea for the masses, coffee for the sophisticated ones, a soft drink for the kids and hard liquor for ‘real men who can handle it’.
Indian industry of soft drink and carbonated beverages has evolved. During the license raj of Nehruvian socialism, Indian manufacturers ventured into manufacturing carbonated soft drinks. In 1952 gold spot was introduced in the Indian market by parle which was quite popular during its time. Gold spot lost its place in the market spot after the entry of coca-cola in India. Parle is still a major player in the soft drink and fruit drink category with mango fruits attaining cult status from rural to urban India. In the height of economic nationalisation and socialism, India banned coca-cola from India in 1972. Resulting in the introduction of campa cola which was seen as a successor by an Indian company. It had its share of glory but soon fizzled out in front of foreign soft drink manufacturers and was later discontinued. Campa cola was the brainchild of Mr Ramesh Chauhan, a successful entrepreneur in the soft drink business. In the late 70s and 80s, he gave MNCs tough competition in the Indian market with brands like Thumbs Up and Campa cola. He started bisleri which became one of the largest bottled water brands in India.
The present market scenario of the soft drink industry
India with a GDP of 2.5 billion dollars is worth 200,000 crores, approximately $300 billion in sales and growing at double-digit growth. Compared to other developing markets Indian soft drink industry is still at a nascent stage of development. Consumption of soft drink in India was 44 bottles per capita in 2016, which pales in comparison to developed countries like the United States with 1496 bottles per capita. Even developing countries like Mexico and Brazil have soft drink consumption of 1496 and 537 bottles respectively. Most of the categories are underpenetrated in the Indian market. Indian soft drink industry has shown double-digit growth in almost all verticals. Bottled software drinks can be broadly categorized into carbonated and non-carbonated ones. Carbonated ones can be further divided into cola and non-cola carbonates. All the fizzy drinks containing fruits come under non-cola carbonated drinks. Biggest growth drivers of the industry are the rise of the growing middle class, brand awareness, social mobility to the upper echelon of the society with rising income levels, urbanisation and disposable incomes. Bottled water category with brands like Aquafina and bisleri, awareness of water-borne diseases is one of the biggest factors. Shortage of drinking water in the urban area is also a contributing factor.
The younger generation and more affluent class of Indian consumers are moving towards more health focussed drinks like oat milk, soya milk or drinks containing less sugar and containing fruit extract or pulp. This is a value-added market that new manufacturers and established ones are looking for new growth. With increased awareness and fear of lifestyle-induced diseases like obesity, higher cholesterol and diabetes, consumers are switching to healthy options. This is visible in the growth of the bottled fruit juice market. Fruit juice and associated products are still costly for a lot of Indians, but with rising income and better competition in health drinks, affordability is meant to be increased. Taxation or GST on healthy beverages are low compared to soft drinks which are taxed as sin products (causing health issues, products like alcohol and tobacco). Ultimately bottled fruit juices will find their way to the breakfast table of the average Indian, a pattern that is seen in countries developing into higher-income countries.
Unlike other countries, India always had a huge difference in consumption level between rural customers and urban customers but the gap is decreasing. Rise of income level in urban areas which is primarily focussed on service and manufacturing is way higher than that of rural India where the bulk of jobs are centred around farming, cultivation and associated industry. This great divide in income level and disposable income had created a wide difference in consumption pattern and spending power. It is observed that rural India generally chooses smaller sachets of the product as they are cheaper and affordable compared to urban where consumers buy from sachets to bigger bottles of their favourite beverages.
It is said that the Indian soft drinks industry is at a growing phase. India is about to achieve a hundred percentage electrification in rural areas. This will increase the availability of cooling infrastructure in rural areas. Resulting in better consumption. India being a tropical country with variations in season from harsh winters to scorching summer, a lot of beverages or and soft drink industries find their peak in summer and see their demand decrease during winters and monsoon. But this has not dampened the industry with leading global FMCG giants like Coca Cola and PepsiCo investing in Indian markets. This is accompanied by the Indian FMCG sector like parle and ITC which offers dozens of choices across different verticals. Indian beverages industry is going through a boom phase with rising urbanisation and broader penetration of packaged beverages in India.
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