The food and beverage (F&B) industry in India is facing an unexpected slowdown just as the crucial summer season begins. Unseasonal rains across North India, coupled with inflation linked to the West Asia conflict, have disrupted demand patterns and increased cost pressures for beverage companies.
Summer is typically the most important sales period for the beverage segment, driving high volumes of soft drinks, packaged water, and ready-to-drink products. However, the recent spell of rains has reduced consumption, especially for impulse-driven, on-the-go beverages that depend heavily on hot weather.
At the same time, F&B companies are dealing with a sharp rise in packaging costs. Key inputs such as PET (resin), polyolefins, glass bottles, cans, caps, and labels have seen price increases of 40–80% in recent weeks. These spikes are largely attributed to elevated oil prices and supply chain disruptions caused by geopolitical tensions in West Asia.
To manage margins, many beverage brands are cutting back on consumer promotions like discounts, bundling, and buy-one-get-one offers. Instead of immediately passing on costs to consumers, companies are choosing to absorb some of the impact—particularly for low-priced, high-volume SKUs such as ₹10 packs, which remain highly price-sensitive and drive mass consumption.
While larger players have some flexibility to partially absorb costs or selectively increase prices, smaller and mid-sized F&B companies are under significant strain. These businesses often compete primarily on price, making it difficult to raise prices without risking a loss of market share.
Additionally, uncertainty around raw material availability has led some companies to pay steep premiums to secure packaging supplies, further squeezing profitability.
The current situation poses a dual challenge for the F&B sector: weakened demand due to weather disruptions and rising input costs due to global factors. This comes at a time when the industry was expecting a strong rebound after last year’s rain-affected summer season.