TRADITIONALLY,
beverages have thrived unbranded and unpacked and was restricted to
scorching summers. Not any more. With the entry of multinational companies,
expanding consumer tastes, introduction of non-refillable PET bottles
and a developing distribution infra-structure, a slew of beverages have
hit the market and the industry has evolved to fulfil a ceaseless demand
for beverages. What is also driving the emergence of new product categories
and offerings within established categories is the linkage between diet
and well-being. A simple example would be the burgeoning industry of
bottled water, which supplies an essential resource like drinking water
to the increasingly hygiene-conscious populace in India.
Beverages
are broadly classified under two categories -- alcoholic and non-alcoholic.
Indian consumers generally prefer artificially flavored, carbonated
or non-carbonated drinks to alcoholic beverages, as they suit the country’s
climate. Although fresh beverages such as coconut water, sugarcane juice,
green mango pulp, cashew apple are commonplace in India, these beverages
have no fixed market size and have not been (and cannot be) marketed
due to their perishable nature, mediocre packaging and lack of quality
standardisation. There is no FPO registration, testing and standardisation
of ingredients, laboratory analysis of the percentage of sugar bricks,
pH or even standard quantities of ingredients. This industry is, therefore,
ephemeral and localized with no mass appeal or quality assurance, though
several products may have established medicinal and therapeutic value.
The availability of these juices is restricted to two or three months
of the year (March to May) and one has to stock up for the whole year,
which is a heavy investment. No single individual or company would like
to risk investing in such an unreliable raw material base to run a beverage
industry.
The obvious
choice, therefore, is artificial flavors and raw materials that can
be produced under the controlled conditions of a factory, maybe with
a small input of natural ingredients.
|
HIGH ON FIZZ
|
Ø
Cola products account for nearly 61-62% of the total soft drinks
market
Ø Two
global majors Pepsi and Coke dominate the soft drinks market
Ø NCAER
survey says 91% of the total consumption of soft drinks in the country
is in the lower, lower middle and upper middle class people.
Ø The
market is worth around Rs 5,000 crore with a growth rate of around
10 to 15% per annum
Ø
The annual per capita consumption in India is only about 6 bottles
vis-à-vis 340 bottles in the US
Ø The production of soft drinks
have increased from 5670 million bottles in 1998-99 to 6230 million
bottles in 1999-2000 Industry source |
MARKET
COMPOSITION AND DYNAMICS
Non-alcoholic
beverages are classified under the following segments:
Aerated
(carbonated) beverages:
Broadly
speaking, carbonated drinks are dominated by artificial flavors based
on cola, orange and lime with Pepsi and Coca-Cola dominating the market.
The entire power of the drink is based on its artificial flavor and
sweetening agent as no natural juice is used. The process of carbonation
also helps enhance preservation and changes the way the tongue perceives
the taste of the drink. Natural essential oils in combination with synthetic
aromatic chemicals (Citral derivatives, d-Lactones, Mandarin Aldehyde,
Allyl Caproate such as pineapple), safe for human consumption, are also
used to provide the aroma of a fruit.
To give
a pulpy effect, emulsifiers such as estergums are used now, which were
earlier represented by Brominated Vegetable Oils (BVOs), which are now
‘banned’. FPO-approved preservatives such as Potassium Benzoate or Sodium
Benzoate are generally used to increase the shelf-life of the drink
to about eight or nine months, given the tropical conditions in India.
The market
is worth around Rs 5,000 crore with a growth rate of around 10-15 per
cent per annum. However, the market for carbonated drinks is stagnating
and not growing as expected. The annual per capita consumption in India
is only about 6 bottles vis-à-vis 340 bottles in the US. The tussle
between the drivers of the cola industry is restricted to the marketing
front rather than evolving the drink to Indian tastes, which currently
is very Continental. No doubt cola has limitations. However, there is
good chance to change not only the flavor but also the composition of
colas to suit middle-aged clients, by reducing its acidity levels or
adding other suitable additives, which may make it popular among a larger
group that is currently averse to cola. This can lead to an increase
in the growth rate of the industry by over 30-40 per cent.
