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Beverages in India - Something creative beyond the colas
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Saturday, 14 December, 2019, 16 : 00 PM [IST]
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Ankur Gattani
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The beverage industry in India has seen modest action over the last few years. While the soft drink segment has massive headroom for growth when being compared to the per capita consumption levels across markets, it's also said often that India's a food country than a drink country culturally.
Cola majors have struggled owing to a few key factors. News floating on obesity woes in the West has reached the remote corners in India painting colas as the villains and while one might contest the contribution of colas to the country's waistline, given the low per capita consumption overall, there seems to be no coming back for them.
Another challenge facing the cola majors is the plethora of small regional brands nibbling at the fringes, offering similar products with better channel margins eating away market share in their own pockets, specially during peak consumption season when anything sells and the consumer is not as brand conscious.
Paper Boat showed promise with their nostalgia pitch and was everywhere rather quickly perhaps that's what hurt them - their price point was not as mass-market as their distribution reach. Now they are doing everything from apple to santra and that seems to have helped their topline growth. Would be interesting to see how their Rs 10 play with Swing pans out, given the competitive nature of that price point and the plethora of local brands in the 10 rupee segment.
Increase in competition
Juice drinks and nectars have been under stress due to increase in competition within the category.
Real's attempt with mocktails didn't take off and was withdrawn in favour of a couple of masala drinks, which are still to prove themselves worthy of advertising exposure.
ITC sought to differentiate itself with an NFC based pitch to consumers, but the majority of the beverages contain 15-25% fruit pulp and their "100% Indian fruits" is borderline misleading - the fruits are 100% Indian, but the drink is not 100% juice. Yet to really dent the space.
Coolberg, a startup in the non-alcoholic beer space is expanding distribution reach and has been creating the category aggressively. It will have an interesting time as Heineken and Budweiser are wanting to take the 0% alcohol market in India seriously along with coke's Barbican.
Kingfisher sought to aggressively build out a non-alcoholic play with Radler, which has been advertised heavily and distributed widely, but has so far got a muted response from the consumers. while the packaging and price point are attractive and Kingfisher has all the cool-brand attributes, the product taste missed the mark with respect to consumer appeal.
Parle Agro experimented with Frooti Fizz, painting the town yellow with Alia as the brand ambassador, but was as quick to disappear after just one season. Of all the products it could launch - it decided to do a jeera masala in cans to place in premium retail at airports and the vodka + Appy Fizz campaign to mimic the hit vodka + Red Bull, while ingenious, would struggle to drive up the Appy Fizz can, with its price bumped up to Rs 75 from the earlier 25.
Energy drinks with lower margins
Coke is now distributing Monster and it remains to be seen if the Red Bull loyalists are willing to pay the same price for a different drink - while tens of other lesser known brands have attempted and failed in the energy drink segment. Factories from Poland are willing to offer cans in India for as low as Rs 15, but it' a tricky affair to market energy drinks with lower margins, as Hell would know. The Hungarian brand, while being close to the Red Bull taste profile has had its challenges in ensuring shelf availability owing to the lower absolute margin its 45 rupee can offers compared to Red Bull's 99 rupee can.
Future Group, with its share of experiments with mocktails under the Sunkist brand, is yet to find a long-lasting winner as the sales plateau while the novelty wears off.
Alo Fruit and Yoga Pulp, the flagbearers of the 'better-for-you' world with their range of aloe vera juice based drinks, have seen moderate success, inspiring competition in the sub-category affecting margins in a world of low channel and consumer loyalty.
Baidyanath Group has tried to recreate a new brand image, entering the popular culture with their zero calorie drink, aptly named 'Shunya' - but whether the Indian consumer likes the taste of stevia + erythritol or is willing to pay 70 rupees for a bottle of a herb infusion - remains to be seen, given that the vitamin water category saturated rather early, below a 100 crore despite massive marketing exposure via the Times Brand Capital engagement with Ocean.
While the pink papers would have us believe that all the Indians are turning health- conscious and sugary drinks are doomed, what most companies seem to be doing is pushing the consumer towards a 'better-for-you' promise, while retaining the sugar-content. An experiment with taste reducing sugar, could be fatal in a market where taste is the primary criteria for consumption. No wonder Diet Coke in India has a tiny market share and no wonder the Sprite Zero experiment never got through to a commercial scale.
Modern trade players might be better off allowing shelf space without entry barriers to innovative products that struggle to just find an interface with consumers - to discover the winners of the future instead of trying to monetise every square inch of space upfront.
There is always a need to find something creative to drink, beyond the colas. A fizzy drink still appeals and refreshes more than juice, reflecting in the 10X market size of carbonates vs. non-mango juices/drinks. The consumer seeks variety, it reflects in the dozens of flavours of salty snacks that are introduced every season and yet the casual recreational beverage segment remains devoid of worthwhile options.
(The author is co-founder of Frooters.
He can be contacted at ankur@frooters.in)
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