According to the report by economic policy think tank ICRIER, India has the prospective to become a non-alcoholic beverage center and its non-alcoholic beverage market is expected to touch a market size of Rs 1.47 lakh crore by 2030.
The size of the market was estimated at Rs. 671 billion (Rs. 67,100 crore) in 2019, which is projected to reach around Rs. 1,472.33 billion (Rs. 1, 47,233 crore) in 2030, in the realistic scenario.
The report said that India has the potential to become a non-alcoholic beverage hub, given its endowments of raw materials, labour, and policy support for encouraging food processing in the country.
The report said bottled water and carbonated soft drinks still account for the bulk of the non-alcoholic beverages sector, adding that the market for juices, energy drinks, tea, milk-based beverages, and organic drinks is expanding.
In India, domestic consumption and exports are low compared to ASEAN countries, and there is enough space to grow for the non-alcoholic beverage industry.
“India’s per capita sales volume was just 21.36 litres in 2018, and exports were worth USD 29.89 million in 2020.” There is scope for increasing both domestic sales volume and diversifying products and export markets. For example, India can develop and export organic fruit-based drinks, “it said.
The study found that the non-alcoholic beverage sector contributes significantly to the Indian economy in terms of value addition and job creation.
The total job creation from this sector is estimated to be 6.91 lakh, which includes employment creation both in the upstream and downstream operations, and the Input-Output model estimates that for every Rs. one crore of output produced in the “nonalcoholic beverage sector”, a total of 8.9 additional jobs are created in the economy due to both the direct as well as indirect impact.
However, in spite of various subsidies and incentives, the non-alcoholic beverage segment is not able to expand due to issues such as the negative perception of the industry and high taxation under GST.
There are other issues, like a fragmented supply chain and high logistics costs, on which the government is already working. “Companies are also working on issues like reducing adverse environmental effects,” the report said.
Besides, the industry is also facing “unfair competition” from the unorganised sector and counterfeit products. Under the GST regime, all carbonated drinks, irrespective of their nutrition content or sugar levels, are classified as “sin goods” and subjected to an additional compensation cess of 12 per cent, as in the case of alcohol and tobacco, while other food products like chocolates and sugar confectionery are not in this category.
Moreover, a rise in the prices of non-alcoholic beverages coupled with the low affordability of a majority of consumers has led to the sale of spurious or counterfeit products on the basis of cost arbitrage, the report said. Consumer Affairs, Food & Public Distribution Secretary Sudhanshu Pandey, who was present at the launch of the report, said the non-alcoholic beverage sector has a crucial role to play in driving overall India’s economic growth.
It’s heartening to see many global and domestic companies, including startups, investing in this sector. Further lowering of taxation will promote greater participation by the organised part of the industry. This will help realise the true potential of the sector, “he said.
While Indian Beverage Association (IBA) Secretary General Jagadish Prasad Meena said that this report by ICRIER attempts to provide a policy roadmap for the government to focus on key levers to help connect the global supply chains of beverage companies with the farmers and food producers in Indi, IBA would closely work with the government and other stakeholders to implement these measures and realise this dream.