India thirsts for soft drinks

- Last updated on GMT

An exceptionally hot summer in India last year was good news for
soft drink producers, in particular carbonate manufacturers who saw
sales surge by 20 per cent.

While soft drink producers in western Europe bemoaned yet another cold, wet summer in 2002, their counterparts in India were struggling to keep up with demand, with exceptionally hot weather there driving sales growth.

A new report from beverage industry analysts Canadean​ estimates that consumption in India leapt by 13 per cent as a result of the heat wave, and producers will clearly try to capitalise on this rapid advance in years to come.

Still drinks remain the largest single sector, according to Canadean, and while sales of packaged still drinks grew strongly, the sector as a whole was held back by almost flat consumption of unpackaged or loose alternatives. Helped by strong sales through roadside vendors, loose or unpackaged still drinks account for over 90 per cent of total still drinks consumption, the report shows.

Carbonates, on the other hand, gained considerable ground in 2002, with a 20 per cent increase in consumption helping fizzy drinks narrow the gap with their still counterparts. This performance is even more impressive given the fact that Indians do not tend to consume carbonates with meals and home consumption is low.

The major carbonate producers reverted back to offering 20cl refillable glass - a move that enabled affordable pricing to be implemented and one that resulted in sales of the pack size more than doubling. This has also helped the major brands compete more effectively with their traditionally less expensive local rivals.

PET is the fastest-growing type of packaging, its use increasing by some 36 per cent in 2002 alone. PET's share of total soft drinks packaging also increased from 20 per cent to 24 per cent with further inroads expected in 2003.

Enjoying a share of almost 60 per cent, cola dominates the carbonates market and continues to extend its lead, with a 20 per cent rise in consumption last year. Water is the third most popular sector in India with both the packaged and bulk/HOD sub-sectors increasing sharply.

Canadean predicts that India's soft drinks market will continue to grow apace in 2003, overcoming the obstacles presented by the difficulty in marketing to such a large and diverse population and the relatively high cost of packaging as a proportion of selling price. Much of this continued growth is likely to come from bulk/HOD water with demand for carbonates and packaged water remaining strong but increasing a little more slowly.

Imported brands in general are becoming more readily available on store shelves offering consumers greater choice. There is also considerable scope for the introduction of new flavours in response to ethnic preferences.

In addition, the success of smaller pack sizes in the carbonates sector is likely to provide fresh impetus for low cost packaging particularly as the major producers look for ways of competing with lower priced local suppliers.

Weather permitting, the overall market is expected to continue growing in 2003, but with a predicted increase of around 8 per cent, this will be far less frenetic than in 2002.

For details on how to buy Canadean's reports, click here​.

Related topics: Markets, Soft Drinks & Water