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Fruit juice segment is poised for 30% growth
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Tuesday, 24 February, 2015, 08 : 00 AM [IST]
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Libin Chacko Kurian and Rashmi Nair, Mumbai
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fiogf49gjkf0d With lifestyle diseases and conditions like hypertension and diabetes experiencing an exponential rise in the country, more and more Indians are opting for healthier options such as fruit juices, fruit-based drinks and nectars.
While, traditionally, the market of fruit juice has been dominated by the unorganised sector, and offerings belonging to the branded, organised sector have been very few, the latter has been showing consistent high growth both in terms of volume and market share for the last few years.
Tax concessions
Not only that, government support in the form of tax concessions is buoying growth in the sector compared to other sub-segments of the beverage sector. For instance, concession in tax that is being given to fruit juices is not being given to other non-alcoholic beverages. This could be because these beverages are considered healthy.
While aerated beverage products are taxed at 20%, fruit juices are taxed at a concessional rate of 12.5%. This helps both the producers of fruits and consumers. While it creates better market for farmers growing fruits, consumers are getting nutritionally rich products for consumption. Tax concessions also mean more investments by both big players and regional small players. Thus the sector keeps experiencing consistent growth and in years to come may leave other key beverage sub-segments far behind in business expansion.
Minuscule compared to West
Indian fruit juice segment is poised for 30% growth in next 5 years, according to a study published by International Research Journal of Commerce, Arts and Science titled Consumer Behaviour for Fruit Juice Market in India, published in 2013. The study reads “India produces about 9 million tonne of fruits every year, growing at a rate of 12% per annum. The total market for fruit juices is 230 million litre which includes both packed and freshly made fruit juices. The proportion of packed fruit juices is small at just 3.4 million litre just over 1% of market. But even this huge volume translates to just 20 ml per capital consumption as against 45 litre in Germany, 42.5 litre in Switzerland and 39 litre in USA.”
Prashant Chaturvedi, director, Sunrise Agriland Development (a major exporter of fruit juices), explained, “Fruit juices are fast moving beverages due to convenience and nutritional peculiarities. A health-conscious population growing in both rural and urban parts of India, even when they look for convenience foods to escape long meals, they still go for better nutrition.
He added, “Beverages are the most convenient form of consumption, in which fruit juices are the nutritious and healthy choice for consumers. The medicinal advantage of fruits are the most important driving force in the beverage market. No other beverage can copy that natural nutraceutical specialty of fruits. Different fruits have different nutritional combination and can be used for specific nutrition. The market is expanding into different parts of the country.”
Taste and presentation
Though consumer buying behaviour is highly unpredictable, according to industry sources, Indian consumers want authentic Indian taste but with a Western style packaging. So presenting in a stylish way and providing authentic taste are key to Indian fruit juice market.
Interestingly, two industries namely, packaging and viscosity determiners, are growing along with fruit juice market. While packaging industry provides stylish and innovative packaging methods, viscosity determiners control the consistency and juice feel of fruit content. The market claims a tendency towards natural content instead of artificial flavours or synthetic colours showing a glowing future for fruit juice trade. Quantity, quality, availability, price and seasonality are the other parameters that affect the market of fruit juices.
Immense potential
Vinod Kumar, CEO, A V M Botanics, stated, “Fruits are the fast moving commodity in agri market. With value addition and processing, fruits have immense potential for business. Providing fruits in the most convenient form as beverages allows further exploration and profits in the market. Fruit beverages are rightly placed inside health beverage category due to nutritional and health benefits. Consumption pattern of beverages are different from that of processed food. So the fruit juices should be presented rightly for consumption. Percentage of fruit in the drink can be determined according to the target people and their convenience. People of different age groups also choose different fruit drinks.”
Meanwhile, Kavita Thube, director, Quality Food Products Ltd, informed, “Traditionally, fruit and vegetable juices are part of Indian households. So there is no need to promote or present the segment separately. Commercial exploitation and transforming it into a separate industry require huge investments and processing capabilities. Already the market of fruit juice is growing rapidly and even attracting foreign investments to the market. Every Indian village is having a small business of juice which accounts in the huge unorganised market in India. According to the requirement of consumers and emerging consumption patterns, fruit juice companies can develop new products with better combinations and varieties.”
Amar Desai, proprietor, Desai products Ltd, noted on a concluding note, “Emergence of juice bars, beverages for health improvement, new strategies, new flavours and new variants are the trends in the industry. Fruit juices and crushes are traditionally part of India, commercialisation of such segments have tremendous business opportunities. India as an emerging market holds potential both in terms of resources and consumers.”
Box Item
“We are currently developing a robust distribution channel”
Pradipta Kumar Sahoo, business head, horticulture, Mother Dairy Fruit & Vegetable Pvt. Ltd (maker of Safal brand of fruit juices)
How big is Safal in terms of products and reach?
Safal has a delightful range of fruit juices with nine variants in pet and Tetrapaks. These fruit juices are currently available across 10 states in the northern and eastern parts of India.
Tell us more about your brand.
Safal’s backend integration helps us to procure the best of fruits directly from the farmers. This robust backend integration of F&V sourcing network is coupled with a focussed approach on food safety. This has in-turn helped us to create a value chain synergy to bring the best fruits into juices.
Our fruit juices are made of real fruits and without any preservatives, thus, retaining the goodness of real fruit and natural flavour which gives the consumer a joy of drinking safe, delicious and nutritious juice.
Also, we have an excellent product innovation team working on the ethnic Indian taste. We have rolled out Nimbu Sikanjee, which is very ethnic and traditional in the northern region, in pet bottles of 250 ml which has over time evoked an encouraging response from our consumers.
Safal is also into fruit pulp manufacturing and we supply the same across 40 countries.
How was the performance of your brand last year?
Safal juices recently entered in markets beyond Delhi and we are still in the process of making inroads to strengthen our presence in these new markets. However our products have witnessed a very encouraging response from the consumers.
In our efforts to strengthening our market position, we are currently developing a robust distribution channel for placement and working on various initiatives to enhance or visibility in these regions.
What are the challenges that you have been facing?
The major challenges in this category include lack of consumer awareness as there are many products with varying degree of fruit pulp percentage competing against each other. Hence brand building requires time and marketing expenses to compete with the likes of bigger players.
Secondly major fruits like mango have production related aberrations that create a stress on the raw material costs.
What are your future plans?
We, at Safal, are planning to enhance our market penetration in the existing markets through aggressive appointment of distributors. We also intend to augment our visibility through marketing led initiatives in these markets to help us with secondary sales and customer engagements.
Going forward, we are also planning to expand our market footprint to pan-India along with introduction of new juice variants to strengthen our portfolio and customer offerings.
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