Blindsided By Early Summer, Beverage Cos Ramp Up Output

With its ‘Rich’ portfolio, Rasna International and its chairman Piruz Khambatta are eyeing a summer romp in the US$ 19.70-billion (Rs 1,71,390 crore) Indian non-alcoholic beverages market. “The ‘Rich’ range highlights our focus on innovation and R&D, a key reason for our growth,” he says.

The timing is apt. Indications are that India’s scorching summer will be particularly merciless this year, with the mercury already flirting with the 35°Celsius mark.

Says Khambatta: “Even we were taken by surprise by this year’s early summer. Demand has risen so fast that it was tough to keep pace. We geared and ramped up, and now have ample stocks in warehouses.”

Other beverage firms have put on their summer overalls too. Bottlers for Coca-Cola, PepsiCo, Thums Up and other carbonated drinks are crowding the shopfloor, while their corporate HQs are brainstorming in sweaty boardrooms. All are working in quick-sprint mode, with the first to-do item to be fast-tracked ahead of schedule being ad campaigns.

How Big Is The Rainbow They Are All Chasing?

If we look at Goldstein Research’s forecasts, the market makes for a colourful rainbow. Already near US$ 20 billion, the packaged non-alcoholic beverages space will grow at 16.2 per cent CAGR, a growth that may accelerate as energy drinks inundate shop-shelves. Without hiccups or further rocket boosts, the market will touch US$ 42.37 billion (Rs 3,68,619 crore) by 2030.

India is not just about quick mixes, juices and carbonated drinks — there’s tea, coffee, shikanji, lassi, jaljeera, aam panna and nariyal paani too. Through summer, desi thirst-quenchers will give global giants a run to the bank.

The market size for (food and) beverages is Rs 5,00,000 crore, says Food Marketing & Technology; that’s 3 per cent of the GDP, generating two-thirds of overall national retail sales.

As a country, India is unique. Dictated by climate and cultural diversity, beverages are motley, influenced by geography and weather. Summers demand refreshing liquids that quench the thirst, while winters see most reach for steaming cups of chai and coffee.

Different regions have their own drink-sets, native concoctions of herbs and spices, with blends created not just for health, but well-being too. Status also determines choice.

More To India’s Market Than International Giants

India may lag in the global race to make hi-tech gadgetry, but beverages are a different story. Here, Indian firms have pulled out the cork — they have hung on to tradition, led in innovation, latched on to market trends and gone uber-creative with packaging. The result is a surge of local brands that have carved a unique niche for themselves in a myriad market.

Brands like BPI Sports, Ghodawat Consumer, Hector Beverages, Ocean Drinks, Radiohead Brands, Hell Energy and Tata Consumer Products are targeting growing health-consciousness, especially in urban areas. They are worthy competitors, many being established as market leaders, chugging down US$ 1 billion in revenues and growing at 5-per cent CAGR.

Local brands jostling for eyeballs in a hyper-competitive sector may be nothing new, but their staying power is causing headaches for global giants.

Today’s above-40 grew up with jingles and TV ads of Rasna, Rooh Afza, Duke’s, Kissan Squashes and Campa Cola. Decades later, these brands are still calling the shots, especially in rural markets. Paper Boat is a new addition.

India Can’t Be India Without Bhaang, Feni & Toddy

We cannot talk of beverages in India without a peg or two of bhaang, feni and toddy. The first, created from buttermilk and cannabis, is popular during Holi, particularly in north India.

Feni from cashews is popular in Goa, while toddy comes from coconuts and is indigenous to India, as are its avatars brewed with the same intent and design.

In variety or potency, Coca-Cola and PepsiCo have no answer to this desi revolution. But soft drinks are no drying revenue stream either, with Thums Up and a rejuvenated Campa further upping the ante. Thums Up was bought by Coca-Cola to be killed, but refused to die. If Campa pulls off a similar magic act, the competition potion will be truly stirred up.

A success determinant is reaching rural markets, which account for a third of the population. Access to rural markets is a challenge, and keeping carbonated drinks chilled and available in the hinterland is a tough ask. That’s where India’s traditional favourites like shikanji, jaljeera, aam panna and khus khus come into auto-play.

But There’s No Writing Off The Top Guns

Let’s accept it. The Indian beverages industry is an oligopoly, with Coca-Cola and PepsiCo the runaway winners; 5 per cent of their global sales come from this critical market.

The world market is massive — IMARC Group estimates soft drink sales at US$ 629.2 billion (Rs 54,72,300 crore) in 2024, set to reach US$ 886.2 billion by 2033, a CAGR of 3.84 per cent.

The Indian market is booming too, and with Coca-Cola and PepsiCo enjoying a 45 per cent and 25 per cent share, respectively, rupee numbers are mind-boggling. Even with local brands taking them on with home-grown alternates, sales and revenues are too much to sigh away.

That keeps investments flowing in, from both global and Indian firms. Coca-Cola CFO John Murphy said last week: “India has a tremendous runway and vibrant business environment.”

He added: “A significant portion of our 2025 capital investment will be in India and Africa.” Incidentally, Coca-Cola’s Maaza fruit drink recently became its 30th billion-dollar brand.

Campa, reintroduced in India by Reliance Consumer Products after decades of hibernation, is also investing heavily, apart from offering a 50-per cent discount. This disruption has spurred Coca-Cola and PepsiCo to “enhance consumer experience”, without any price cuts so far. But lower pricing is not unthinkable, as marketshare may be saved at the altar of profitability.

Then we have Rasna, the company we began this story with. Chairman Piruz Khambatta said he was targeting 30-40 per cent growth.

“We have invested Rs 50 crore on a plant in Patna to make 2 million additional cases. We manufacture in 12 plants now and are looking at overseas expansion too.” Rasna is also planning a slew of launches to shake things up even more.

The market is heating up in a nation switching on air-conditioners and stocking kitchen shelves and refrigerators with cool things.

However, it is how cool people remain, in boardrooms and in sales teams trudging on India’s sweltering streets, which will determine who wins this battle of the summer bottle.

(The writer is a veteran journalist and communications specialist. Views are personal)