A Battle of Bottles : From Sugary Sodas to Healthier Options

There is a great potential for consumption of healthy juices in India but not so many options

Business

News - Biz@India

October 15, 2018

/ By / Delhi

Biz@India

October 2018

Copyright : Photo by Derrick Brutel

Copyright : Photo by Derrick Brutel

The Indian beverage market is seeing a visible shift from sugary sodas to healthier options such as cold-pressed juices and drinks with ingredients such as aloe vera. The potential of the market is enormous, but bottlenecks in distribution remain a challenge.

Long before the Western world woke up to the idea of healthy and natural drinks, these beverages formed part of the Indian kitchens and were consumed equally for their taste as much for their medical properties. Ingredients like aloe vera, bitter gourd, various spices and fruits form part of recipes that have been passed down generations, for the kick of health and deliciousness they are. While a juice made from green veggies may not be everyone’s favourite, it is consumed in homes as heartily as the delicious aam panna (a spicy, raw mango drink). Available only in homes’ kitchens earlier, these drinks have now found a price tag in the market and a space on shelves alongside colas like Pepsi and Coca Cola.

Greening the shelves

“While aerated drinks like Pepsi and Coca Cola have had a good reception in the market for a long time, people now, especially the younger population, want something healthy. Actually what they are seeking is a combination of health and taste, at the same affordable price like the aerated drinks,” says Tarun Kapila, a businessman from New Delhi. Kapila has been trying to enter the segment of healthy drinks as a manufacturer.

“People now understand the ill effects of consuming sugary drinks and that’s why there is a notable shift in demand from aerated drinks to healthy ones,” he says. As declared by beverage and snacks maker PepsiCo India in its filings with the Registrar of Companies, it incurred a loss of INR 1.48 billion in 2016-2017. Analysts have attributed the loss to declining sales of the company’s core soda portfolio with healthier drinks such as teas, juices and flavoured water accounting for a larger part of the pie.

As per its filings, PepsiCo India had previously reported a profit in 2010-11 and now in FY 2017- 2018 with a profit of INR 1.9 billion it has seen a respite only after having expanded its portfolio. The company’s portfolio now also includes products such as Tropicana Juices, Gatorade sports drinks and Quaker Oats but its 2018 profit was fuelled by its salty snacks such as Lay’s, Kurkure, Quaker and Doritos while the sodas saw a downslide.

PepsiCo India’s arch rival Coca-Cola has been witnessing a similar trend. “The beverage market is surely shifting, especially from the consumer end but there is a gap in demand and supply,” says Kapila.

Man and machine

“Having spoken with various importers and manufacturers, I note that although there is a demand for healthy drinks in India, the quality of beverages on the shelf here, especially the ones that are made in India, is not at par with that of beverages abroad,” says Kapila.

“One of the reasons for this is cost of manufacturing. On an average one targets to make a 300 ml bottle within INR 35-40 but it becomes difficult to achieve that, especially if they desire to use only natural products,” he says. At least 600 odd-beverages are launched every summer in India but 90 pc of them do not last beyond one season. This is where big players like PepsiCo and Coco Cola have a clear edge. With their deep pockets, expanded portfolios and distribution network, they can survive these changes.

“Although some big players are having their way around this market shift and are able to cater to the demand, the smaller manufacturers are adding various synthetic ingredients such as colours and flavours. This cuts their cost, makes their products taste and even look better,” Kapila goes on to explain. While pricing may be a challenge that can be overcome, Kapila says what has a company or person in sweats is getting the government to approve its projects.

No water for juices

“For juices, there is a huge requirement of water, the availability of which is scarce, especially in and around Delhi. Groundwater levels in the capital are rather low for the government to permit the setting up of a manufacturing plant. Even the existing units are being shut down,” Kapila tells us. “Another reason for not permitting manufacturing plants in and around Delhi is pollution. In the manufacturing of juices, there is a lot of pollution,” he says.

Water table is in fact depleting across the country. Even PepsiCo and Coco Cola have faced protests from various NGOs and communities due to their excessive use of water. In March 2017, the sale of products by these two companies was banned in the south Indian state of Tamil Nadu following reports that their bottling plants were extracting too much water from the nearby rivers, creating a shortage for the farmers and other users. Another challenge for manufacturers is also to abide by the requirements of the Food Safety and Standards Authority of India (FSSAI). Everything in a bottle has to be in the exact quantity as instructed by the body, making the process complicated for the manufacturers in various ways, especially balancing costs.

“As of now there is a great potential for consumption of healthy juices in India but not so many options. There are aloe vera based drinks and pulpy juices venturing into the market albeit slowly,” he adds.

Aloha, aloe!

Aloe vera, a rather succulent cactus, which up till now has mainly been used for skincare, is now being blended into juices. Indian brands like Yoga pulp, Alo Frut, Patanjali, Manpasand Beverages, which are giving consumers a fresh taste, are some leading newcomers.

Run by Mumbai-based K.G. Functional Beverages and founded by Nitin Gupta, Yoga Pulp, for instance, blends aloe vera with fruits. The brand currently sells nine variants including kharbooja (muskmelon) and strawberry. Yoga Pulp sells 300ml for INR 35 and as per reports, its sales are about 750,000 bottles a month.

With six manufacturing plants across the country, of which three are in Vadodara in Gujarat, fruit juice maker Manpasand Beverages is set to invest INR 15 billion (Eur 190 million) and set up 10 new plants by 2020. As India’s first pure play beverage company, it is also planning to enter new product segments of healthy drinks like milk-based sugar free drinks, glucose drinks and protein based drinks over the next three years. The group has also tied up with Parle Products to cross promote their goods. Parle is dominantly known for its biscuits including the mass market leader Parle-G.

“However, most of these are semi synthetic drinks. Adding artificial flavours and sweeteners becomes necessary as aloe vera lends a bitter taste to the drink. Currently, the only brand manufacturing 100 pc real juice is Raw Pressery but then it is facing a challenge in terms of the taste it is bottling,” Kapila tells us.

After establishing itself as a maker of cold-pressed juices, Raw Pressery maker Rakyan Beverages Pvt. Ltd, now has plans to venture into making other healthy drinks like nut milk, ready-to-consume soups and probiotic dairy drinks, while also expanding distribution domestically and internationally in the Middle East and South East Asia.

Without question, with consumers opting increasingly for the healthier liquids in their bottles, the cola giants are being pushed to rapidly renew their product mix and this has opened up competition that they thought they had left behind long

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