June 14, 2021
Non-carbonated drinks see increased uptake this season, as against carbonated ones
Fruit-based non-carbonated alternatives have recently acquired popularity and are growing at a rate of 15-20 percent each year.
In India, the non-carbonated beverage market has grown as customers seek healthier choices, while the carbonated drinks category has lost its lustre during the last two summers. According to a Netscribes analysis, the non-alcoholic beverage industry would rise at a CAGR of 16.68 percent through 2025, driven by increased consumption of health and juice-based beverages.
Due to the countrywide shutdown last summer, leading carbonated beverage companies experienced double-digit de-growth. Packaged juices, water, energy and health drinks increased market share in the months that followed, while carbonated drinks saw demand stagnate.
Dabur’s juices business increased by more than 27 percent in the fourth quarter of FY21. “In the last fiscal year, we expanded our portfolio by entering larger categories like mango-based drinks and milkshakes,” says Monisha Prasher, AGM, marketing (beverages), Dabur India. The company introduced premium health-focused versions, such as low-calorie drinks under the Réal Activ brand and an aloe-kiwi beverage under the Réal Kiwi brand.
This year, PepsiCo introduced Mountain Dew Ice ahead of the summer season. “While early industry statistics in 2020 suggest that household expenditure on FMCG increased during March-May compared to the same period a year ago, there has been a paradigm shift in the business due to altered consumption behaviour,” says a PepsiCo India spokeswoman.
To appeal to budget-conscious customers, the brand recently introduced friendship and celebratory packs. To assure product availability across locations, it has worked with hyper-local delivery services Dunzo and Swiggy, BigBasket, and B2B platform Udaan.
In response to the increased demand for immunity products during the pandemic, ITC’s B Natural launched B Natural+ last year, which is a combination of orange and mixed fruit with a ‘clinically proven component’ to promote immunity. “This range was launched in collaboration with Amway India to guarantee that products reach consumers through a trusted partner,” Sanjay Singhal, COO explained.
According to Crisil Ratings, due to localized limits this year, out-of-home beverage consumption — which accounts for 20-25 percent of total beverage brand sales — will be impacted in the first quarter of FY22.
Fewer opportunities for impulse purchases, as well as a suspension of travel and dining out, for two consecutive summers — particularly around March-July — have particularly harmed the carbonated beverage sector. Analysts predict that carbonated beverage companies will not recoup double-digit growth from pre-pandemic levels this year.
“To regain relevance and ensure growth, carbonated beverage brands must focus on ensuring visibility both offline, such as placing products in nearby chemists, and online, whether through the D2C model, food delivery or e-commerce apps, with last-mile delivery,” says Anand Ramanathan, partner, Deloitte India.
Fruit-based non-carbonated alternatives have recently acquired popularity and are expanding at a rate of 15-20 percent each year, according to Ankur Bisen, senior vice president, Technopak Advisors. While businesses have been experimenting with flavours, such as Dabur’s experiment with different fruit juices or Baidyanath’s recently launched Shunya Fizz, “this cannot compensate for sales that are essentially based on consumer behaviour.”