When the global soft drink market, especially in developed countries is slowing down or contracting, its demand in developing countries like India seems to indicate faster growth. Let’s have a comprehensive look at the global and Indian soft drinks industry.
Crux of the Matter
Global Soft Drinks Industry
In 2019-20, the global revenue from soft drinks was $667.4 bn in 2020 and the US contributed $200.29 bn to it. Moreover, the soft drinks market is expected to grow annually by 6.5% (CAGR) from 2020 to 2025. In relation to the total population, $89.67 per person were generated from soft drinks revenue in 2019-20.
Reasons For Declining Trend
- Nourishment Based Food – Consumers are focusing on nourishment and nutrient-rich food.
- Sugar a slow poison – A big impact on purchasing decisions due to awareness among people about the anti-sugar movement.
- Shift in preference for ‘naturally healthy’ – Consumers preferring natural and organic products for better health. Carbonated beverages are being replaced by Fermented drinks, ready-to-drink teas, and products with natural sweeteners.
- Business model promoting Sustainability – Consumers making more conscious purchasing decisions keeping in mind a business’ values so as to have a positive impact on the world.
- Increasing Prices and Tough Competition – Profit margin on carbonate-sugar contained drinks is shrinking.
Experts estimate that non-carbonated drinks are expected to overtake their carbonated rivals.
Soft Drink Market In India
Experts say that the soft drink market in India seems promising and might continue its “robust growth trajectory”. Carbonated beverages account for 51% of PepsiCo’s sales volumes in India. Demand for lemon-based soft drinks is expected to increase rapidly in the Indian market.
The bottled water category is expected to see a robust volume growth with increasing awareness among consumers about water-borne diseases and shortages in drinking water in the urban areas.Varun Beverages Limited
Indian Beverage Association’s (IBA) preliminary assessments for full 2020 indicate a contraction of ~34% in the soft drink industry, i.e. of ~₹70,000 crores. Due to lockdown, the industry suffered a loss of ~₹1,200 crore as raw material expired. Recently IBA sent a letter to the Finance ministry to reduce GST on beverages.
- Costa Coffee is the second largest coffeehouse chain in the world, and the largest in the UK. Coca-Cola Company acquired Costa Coffee in 2019 for $5.1 billion.
- Coca-Cola sponsored the 1928 Summer Olympics, and has subsequently remained a sponsor to the current time. Coca-Cola Olympic City was an 8-acre plaza in downtown Atlanta, Georgia, built in concurrence with the 1996 Centennial Olympic Games in Atlanta.
- Campa Cola is a soft drink brand in India. It was a market leader in the Indian soft drink market in the 1970s and 80s in most regions of India until the advent of the foreign players Pepsi and Coca-Cola. Campa Cola was created by the Pure Drinks Group in the 1970s.