report on indian beverage industry

8/3/2019 Report on Indian Beverage Industry

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REPORT ON INDIAN BEVERAGE INDUSTRY

1.

Beverage Overview------------------------------------------------------3

2.

Indian Beverage Industry---------------------------------------------------------------------------------------------------------

-----------------4

3.

Share of Volume by Beverage Category of India----------------------------------------------------------------------------

---------------------7

4.

Per Capita Consumption In India------------------------------------------------------------------------------------------------

------------------8

5.

Key Figures on Indian Beverage Industry-------------------------------------------------------------------------------------

--------------------9

6.

Factors driving developments in the Indian Beverages Sector----------------------------------------------------------

------------------------107.

Packaging of Beverage Industry-------------------------------------------------------------------------------------------------

------------------11

8

.

Beverages for Health and Wellness in the Indian Market------------12

9.

The beverage industrys response towards Health andWellness------12

10.

Barriers to taking functional beveragesmainstream------------------13

11.Converting Barriers into the Opportunities-----------------------------14

12.

Indian Beverage MarketPerspectives-----------------------------------15

13.

Indian Beverage Distribution & Marketing Network--------------------15

14.

Issues Related to Indian Beverage Market-----------------------------16

15.

SWOT Analysis Of Indian Beverage Industry---------------------------18

16.

The Leading Beverage Companies And Their Competitive Brands----19

y

Coca Cola Company-----------------------------------------------20

2

TABLE OF CONTENTS


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PepsiCOIndia------------------------------------------------------23

y

UBGroup-----------------------------------------------------------28

y

Dabur India Limited-----------------------------------------------30

y

Red Bull------------------------------------------------------------32

y

Caf Coffee Day---------------------------------------------------34

y

Nestle India--------------------------------------------------------35

y

Tata Global Beverages Ltd----------------------------------------37

17.

Major Markets Under Indian BeverageIndsutry------------------------40

y

Indian Non-Alcoholic BeverageMarket---------------------------41y

Indian Soft Drink Market------------------------------------------43

y

Indian Tea Market-------------------------------------------------45

y

Indian Alcoholic Beverage Market--------------------------------47

y

Indian Beer Market------------------------------------------------49

y

Indian WineMarket------------------------------------------------52

18

.

Key risks to the beverageindustry--------------------------------------54

19.

Future Projections Of Indian BeverageIndustry------------------------55

3

Beverage

Non-Alcoholic Beverages Alcoholic BeveragesNon-carbonated Carbonated Fruit Based GrainFruit

Juices,Coffee,Tea,PackagedWater Colas,Soda,Tonic Water Wine,BrandyBeer,

WhiskyA

beverage

is a drink specifically prepared for human consumption.Beverages almost always largely consist of

water. Drinks oftenconsumed include: Water (both flat or carbonated),Juice baseddrinks, Soft drinks,

Sports and Energy drinks,Alcoholic beverages likebeer or spirits ,Coffee, tea ,Dairy products like milk.

Commonly,drinks are filled into containers, like glass or plastic bottles, steel oraluminum cans as well as

cardboard supported packages, like the"TetraPak" or others. Filling of beverages can be done cold, hot,


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ambient andcoldasepticfilling to mention the latest trend of beverage marketing and technology.The

beverage is mainly categorized into two major categories based uponthealcoholic and nonalcoholic

nature of the drink. Non-Alcoholic beverages arefurther otwo types based upon carbon content. These

beverages contain Fruit juices,Coffee,Tea, Soda, Colas. The Alcoholic beverages are based upon the fruit

contentand grain.It may be Wine, Brandy, Whisky or Beer.

Beverage Overview

4

India has a population of more than 1.150 Billions which is just behindChina.According to the estimates,

by 2030 India population will be around 1.450Billion andwill surpass China to become the World largest

in terms of population.BeverageIndustry which is directly related to the population is expected to

maintain arobustgrowth rate. The price stability throughout the year has contributed to theincrease

indomestic liquor sales.The Indian beverage market offers hot options.According to Dabur, the fruit

beverages industry in India now stands at Rs1100crores (approx. Euro 180 million) and the market has

grown at the rate of 30%where Dabur India, through the new launch Real Burrst, is looking

atestablishing amarket share of 4-5% in next 2-3 years.Part of the industry of fast moving consumer

goods is also the beverageindustry. Thetotal beverage industry in India is being estimated to grow at

17% this year,

according to experts. "Food and beverages segment has not suffered despitetheslowdown in the

economy. FMCG in our stores has done very well. In fact,weregistered 10-15% growth in this segment

last year," said a spokesperson atSpencer's Retail Ltd.Beverage majors like Coca Cola India, for example,

again reported growingsales.Coca-Cola in India reported a solid first quarter 2009 results not

onlydespite achallenging economic environment, but also with unit case volumeincreasing by31%. And

eight quarters out of the 11 quarters had a double-digit growth.To foreign observers of the market,

these figures might sound unbelievable,asWestern markets are saturated and have not seen such

figures for long time.But inIndia, various positive factors drive the beverage markets. One is the

risingnumberof people in the middle class with extra money to spend on new beverageslike wine,new

brands of imported whiskey, or the fancy energy drinks, some of whichare reallygood to enable people

to work longer, to listen longer during conferences,and evento party longer and have fun. Leader in this

segment is Red Bull, but someothergood and very effective drinks one even very healthy - are already

or soonenteringthe market.Another factor is the sheer size of the number of people in India. Even

theruralhouseholds, as long as the monsoon is good, get purchasing power and canparticipate in

consumer markets. Where ever the purchasing power is stillnot big

Indian Beverage Industry

5

enough, companies offer smaller packs for Rs. 10 or Rs. 5, especially to beseen inthe snack market. Hot

summers in India also help a bit to sell beverages.The large untapped market potential for store-bought

non-alcoholicbeverages, inparticular carbonated beverages, juice based drinks and energy or

sportsdrinksamong urban/suburban consumers in India.

Approximately 120 billion litres of beverages are consumed by Indians everyyear,but only 5% represent

store-bought packaged beverages. The majority of Indianconsumers (75%) still consume non-alcoholic

store-bought beverages lessthan oncea day, highlighting a large untapped market opportunity,

particularly in thecarbonated drinks and juice or juice-based categories (estimated to be

worth$1.5Billion and $.25 billion respectively). In order to increase consumption andpenetration of such

beverages manufacturers will have to address the twoprimaryreasons why some Indians abstain

entirely, that is, health concerns andundesirabletaste.The study investigates consumption frequency


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and habits, the importance of va ri ousproduct attributes, and brand preferences across age, household

income,city in Indiaand beverage category. This study has implications for

manufacturers,distributors,retailers and investors hoping to capitalize on the growth of these

beveragecategories in India and distinguish themselves in the increasingly crowdedmarketplace.India is

a booming market for the beverage industry as well. It alreadyaccounts forabout ten per cent of global

beverage consumption today. This means thatthecountry has the third-largest beverage consumption

after the USA andChina. Butthat is not the end of the road. Market analyses indicate that beverage

salesin Indiawill be increasing by more than 60 per cent between 2008 and 2012. SinceIndi a is(still) a

country of tea and coffee drinkers, packaged cold drinks haveenormouspotential. Packaged water, beer,

spirits and carbonated drinks are recordingwhatrates are in some cases high double-digit growth. All in

all, annual per capitaconsumption of packaged beverages is supposed to triple from 2.6 litres in2000

to8.7 litres in 2012.Demand for milk and milk-based beverages are also rising. India is theworlds

biggest producer and consumer of milk, since milk plays a major role in theIndiandiet. The consumption

of milk and milk-based beverages has increased byan annualaverage of 2.7 per cent in the last four years

and most of them (65 per cent)are sold loose / unpackaged. The proportion of the market accounted

for bypackaged milk

6and dairy products are increasing, however. In the past four years, forexample,demand for milk filled in

pouches has grown by 4.5 per cent annually, whilethe figure for milk in cartons is about 25 per cent. The

rising consumption ismaking it necessary for appropriate investments to be made by the beverage

industry.The sector is highly fragmented and 95 per cent of these producers havesmall orvery small

operations. Of this, the health beverage industry is valued at$230 million.The Indian beverage industry

faces over supply in segments like coffee andtea.However, more than half of this is available in

unpacked or loose form.Indian hotbeverage market is a tea dominant market. Consumers in different

parts of thecountry have heterogeneous tastes. Dust tea is popular in southern India,while loosetea in

preferred in western India. The urban-rural split of the tea market was51:49 in 2000. Coffee

is consumed largely in the southern states. The size of the totalpackaged coffee market is 19,600 tonnes

or $87 million.The total soft drink (carbonated beverages and juices) market is estimatedat 28 4million

crates a year or $1 billion. The market is highly seasonal in naturewithconsumption varying from 25

million crates per month during peak seasonto 15million during offseason. The market is predominantly

urban with 25 percentcontribution from rural areas. Coca cola and Pepsi dominate the

Indian softdrinksmarket. Mineral water market in India is a 65 million crates ($50 million)industry. On

an average, the monthly consumption is estimated at 4.9 million crates,whichincreases to 5.2 million

during peak season.

7

0.00%

2

.00%4

.00%

6

.00%

8

.00%

1


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0.00%

12

.00%

Share

%

2

00

2 2

003

2

00

4 2

005

2

00

6 2

007

YearsMilkTeaBottled Water CoffeeDistilled SpiritsCarbonated SoftDrinksBeer Fruit BeveragesWine

Share of Volume by Beverage Category of India

8

INDIAN BEVERAGE MARKETSHARE OF VOLUME BY CATEGORYSegment 2

00

2 2

003

2

00

4 2005

2

00

6 2

007

Milk 10.3% 10.4% 10.5% 10.6% 10.8% 11.1%Tea 6.3% 6.4% 6.5% 6.6% 6.4% 6.5%BottledWater0.2% 0.2%

0.3% 0.4% 0.4% 0.4%Coffee 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%DistilledSpirits0.1% 0.1% 0.1% 0.1% 0.1%

0.2%CarbonatedSoft Drinks0.2% 0.2% 0.2% 0.1% 0.2% 0.2%Beer 0.1% 0.1% 0.1% 0.1% 0.1%

0.1%FruitBeverages0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Wine -- 0.0% 0.0% 0.0% 0.0% 0.0%

Subtotal 17.3%

1

7.

6

%

1

7.


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8

%

18

.

1

%

18

.

2

%

18

.7%

All Others* 82.7% 82.4% 82.2% 81.9% 81.8% 81.3%

TOTAL 1

00.0%

1

00.0%1

00.0%

1

00.0%

1

00.0%

1

00.0%

Source: Beverage Marketing Corporation

PER CAPITA CONSUMPTION IN INDIA9

Indian Beverage Market CAGR[2007-2010]:21%

India ranked 3rd in largest beverage consumption after the USA and China

Total Indian Beverage Consumption every year:120 billion liters

Fruit Beverages Market size

:

Rs 1100 crores (approx. Euro 180 million)

Fruit Beverage market growth rate: 30%

Majority of Indian consumers:75% consume Non-alcoholic beverages and25%Alcoholic Beverages

Carbonated Drinks Market size: $1.5 Billion


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Juice or juice-based Drinks Market size: $.25 billion

Health beverage industry is valued at $230 million

Indian Beer Market Growth Rate: 7 - 8 %

Indian Beverage Industry is 10% of Global beverage consumption today.

Milk-based beverages consumption has increased by an annual average of 2.7per cent in the last four

years

Total packaged coffee market size: 19,600 tonnes or $87 million.

The Indian soft drink market is worth Rs. 21,600 million a year with agrowth of around 7%.

The total soft drink (carbonated beverages and juices) market is estimatedat284 million crates a year or

$1 billion.

Peak season soft drink consumption : 25 million

Off-season soft drink consumption: 15 million

The market is predominantly urban with 25 per cent contribution fromruralareas.

Coca cola and Pepsi dominate the Indian soft drinks market.

Indian Mineral water market size : 50 million industry.

Key Figures on Indian Beverage Industry

10India is a growing and developing country which is having a very higheconomicgrowth with the drastic

increase into the population size. Due to thedeveloping

economic condition, there is increase in the competition among themanufacturers,retailers, dealers to

promote their products at competitive prices.The increase in the India population has given a high

demand of beveragemarketproducts. The Indian beverage market is segmented into the two

majorsegments Alcoholic and Non-Alcoholic Beverages.Again these categories of beverages are sub-

divided into the carbonated andfruitbased drinks. Tea and Coffee also contributed majorly into the

BeverageIndustry.Indian Beverage market distribution and marketing channel is highlynetworked

andhas a very approach to the customers. Due to the globalization andtechnologicaldevelopments there

is highly innovative products are coming into the IndianBeverage markets which are appreciated by theIndian population.In India, here are various forms of beverage market get to be seem in theform

of retailers, Restaurants, Coffee shops, Sport events, Hotels etc.

There are certain factors which are driving developments into the IndianBeverage sector

:

y

Economic growth


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Factors driving developments in the Indian Beverages Sector

11

y

Population growth

y

Competition for Raw materials

y

Power of retailers

y

Globalization / Regionalization

y

Research & Development

y

Technological Developments

y

Food safety and regulation

y

Consumer Demands and trendsThe beverage industry is one among the front-liners wheremassiveinvestments arebeing made for expansion and technological up gradation. The packaging

of beverages both carbonated and non-carbonated, is a complex technologicalbranch inthe Food

Processing /Packaging industry. The traditional returnable glassbottle hasgiven way to newer plastic

containers as well as cartons. The current trend isto

improve the conventional containers, extend their share in the large market,extendthe shelf-life of

the products, provide greater consumer convenience andultimately toproduce economic packages. The

changing Indian scenario, withimplementation of various technologies and market promotion activities,

has changed the scopefor thisindustry exponentially.The Indian soft drink market is worth Rs. 21,600

million a year with agrowth of around 7%. The soft drinks segment had grown to Rs. 1,05,000 million

inthe yea r2005. The production of soft drinks has increased from 6230 million bottlesin 1999-2000 to

6560 million bottles during the year 2001-2002.The alcoholic beverages industry, covers Indian Made

Foreign Liquors(IMFL), countryliquor and beer. IMFL includes Carbonated Beverages in PET Bottles

wine,whisky,gin, rum, brandy and other white spirits. IMFL industry in India is roughlyvalued atRs.

28,000 crores, growing at a rate of 9-10% per annum in volume terms.TheIndian beer market estimated

currently at Rs. 7,500 million a year has beengrowingat the rate of 15% per annum.

PACKAGING OF BEVERAGES

12

The packaging requirements for all types of beverages are: Absolutely leak-proof and prevent

contamination Protect the contents against chemical deterioration No pick up of external

flavours Be hygienic and safe Retain carbonation in the case of carbonated beverages

Economical, easy to use and dispose Good aesthetic appearanceThe global health and wellness trends

in the beverage sector are beginningto noticean increasing level of activity in India.

Economic drivers

:

With strong economic drivers of consumer spending,Ind iais a very different market from that of the

1980s or 1990s.With a GDP of USD800 billion and a GDP growth rate in 2005-06 of over 8 percent, India

is


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now the third largest economy in Asia. And this has not been the result of somefreak surge in growth.

Average GDP growth of the last 10 years has been6.5percent per annum. And most significantly, the

stepping up of GDP growth isdriven primarily by domestic demand rather than exports.

Demographic drivers

:

Macro economic factors tell only one part of the story.There are compelling demographic trends in the

country that promise newandsustained opportunities for beverage product suppliers who can read

rightthesignals.The country boasts an expanding middle class that is currently 350 millionstrong

(apopulation larger than the total population of the United States or theEuropeanUnion). Increased

urbanization and rising disposable incomes are creatingnew andlarge target markets for beverage

products that go beyond commoditystatus and

Beverages for Health and Wellness in the Indian Market

13

command higher prices. The rapid growth in the retail sector (over 20percent perannum) is just one

confirmation of the increasing buying power of thismiddle class.There is today a growing health andwellness consciousness amongconsumers andan increasing importance given to fitness and healthy

lifestyle choices.Changingwork and lifestyle habits leave less time for home cooking and therefore

spurdemandfor convenience and complete nutrition from meal replacements. There is

agreaterinclination to self-care rather than medicate, a greater awareness of

the functional benefits of health beverages and a greater willingness to pay a premium

forsuchbeverages.With these strong drivers of growth, it is not surprising that the beverageindustry

inIndia has begun to respond with products that are marketed clearly on ahealth andwellness platform

However, to set the record straight, health and wellness is not a wholly newplatform for the Indian

market. India has, for decades, had a thriving healthfooddrinks market. Market leader,

GlaxoSmithKline Consumer Healthcare

(GSKCH),has had iconic brands Horlicks, Boost, Viva and Maltova create 'top-of-the-

mind'recall across generations of Indians. Other suppliers,

Cadbury

(with Bournvita),

Nestle

(with Milo),

Heinz

(with Complan) and Gujarat Co-operative MilkMarketingFederation (GCMMF) (with Nutramul and

now Amul Shakti) also enjoy aloyalfollowing. In the non-carbonated beverages sector,

Parle Agro's

Frooti remains thelargest brand in the fruit drink segment, while Dabur's Real Fruit Juice

leadsthe juice segment.The fact is that there has all along been a strong multinational presenceinbeveragemarket and more recently this has been witnessing the emergence of

Indian multinationals across this sector.However, much of the marketing for health food drinks in the

past has beengeneralhealth and energy positioning, rather than the focus on specific benefits

oringredients that is characteristic of most mature health food markets. This isnowchanging and the

specific initiatives of some companies are going a long waytocreating a truly dynamic health and

wellness beverage sector in India.Global market leader in

Probiotic fermented milk drinks


10/19

, Yakult, has teamedupwith Danone to start manufacturing its probiotic fermented milk drink inIndia

from2007. Calcium-fortified beverages are a rapidly growing market.

The beverage industrys response towards Health and Wellness

14

Some examples of brands that have introduced calcium-fortified productsare

AmulShakti

, Coca-Cola Indias

Mazza

, and malted drinks such as

Horlicks

(GSKCH),

Milo

(Nestle),

Complan

(Heinz),

Anlene

(Britannia New Zealand Foods)and

Protinex

(EAC Nutrition). GCMMF launched sports drink '

Stamina

' in early2006.

Red Bull

was launched in India in 2003.Carbonated beverage giants Coke and Pepsi have also planned to

widentheir productportfolio with health-based beverages (non-carbonated). Pepsis

Gatorade

isalready on the market. And in what must be among the most significantrecentcommercialization

efforts of a traditional Indian drink,

Amul Masti

SpicedButtermilk was launched (in a 200 ml tetra pack), marketed on the platformof beingfree of colour,

preservatives, acids and sucrose sugar.Despite this flurry of activity, the market is still plagued by low

levels of awarenessand a lack of sophistication in consumer choices. Price remains a

stumblingblock. Public concerns over safety and quality of beverages have been aggravatedbyresearch

findings (and the subsequent controversy) over alarming levels of pesticideresidues in bottled water and

soft drinks. Skepticism from the scientificcommunitycontinues to limit product endorsement.

Furthermore, there is a lack of detail andclarity in food safety regulation regarding nutraceuticals and

functionalbeverages,and regarding health claims.Within the beverage industry there is inadequate

understanding of how totak etraditional ingredients into the modern food processing environment.

Andthen of course, there is competition from other products such as dietarysupplements.Finally, theretail sector, despite its growth, is still mostly unorganized andthis limitsthe ability to differentiate

health and wellness products through theallocation of exclusive shelf space devoted to this category.To

overcome these challenges, beverage suppliers need to approach themarket witha multi-pronged

strategy for increasing penetration. It can be given asfollow


11/19

Price resistance can, to some extent, be overcome by moving from imported to manufactured in

India products. For example, imported Gatorade costINR45 per 200 ml bottle. Now, made in India, it

costs INR25.

Barriers to taking functional beverages mainstreamConverting Barriers into the Opportunities

15

Substitution or modification is in some ways easier to execute thanaddition.(Examples of substitution

would be herbal tea replacing regular tea or soymi lkreplacing regular cows milk. Examples of

modification would be low-fat, nofat, lite variants of established beverage brands).

The growing trend towards on-the-go consumption/out-of-homeconsumption(at the workplace, in

schools, colleges and gyms) presents suppliers withnewplace and form of consumption options (for

example, vending machines fordispensing health drinks at schools).

Abandoning the one-size-fits-all positioning and generic selling points of thepast, in favour of

targeted and specific messaging based on validated healthbenefits is likely to be more effective to the

better informed middle classtoday.

Leveraging the intrinsic appeal of traditional Indian ingredients such asayurvedic, herbal or oleoresin

ingredients, but delivered in a modern, safe,convenient and consistent form, or packaging and branding

traditionalIndianhealth drinks such as buttermilk and lassi, could create whole new marketsthatderive

their strength from known and trusted traditional ingredients ordrinks.

In the end, beverage suppliers who unlearn many of the long-heldmisconceptions about Indian

consumers and respond instead to theirchangingneeds and priorities will be best placed to maximize the

health and wellnessopportunity in this large andgrowing market.With the overwhelming successes of

the Green and White Revolutions, Indiais nowfervently poised for the beverage revolution. The entry of

multinationals,aggressive

rise of commodity branding and low cost of technology is changing theeconomics of the Indian food &

beverage industry. The rise of aggressive regional playersmaki ng forays into categories where entry

barriers are low and a boom in Indianbeveragemarkets and the rising need for these products are the

key reasons for thisgrowth inbeverage business.The soft drinks perspectives the demand is quite high in

the category of carbonateddrinks. The market demand of beer, whisky is also quite high in the

uppermiddlesegment at restaurant and Hotels.The trend of white spirits like Vodka, Bacardi Rum also

preferred over otherdrinks.These drinks are said to hurt less than Indian whiskey, as unlike most

Indianwhisky,

Indian Beverage Market PerspectivesIndian Beverage Distribution & Marketing Network

16

these white spirits are not made out of molasses.When it comes to Energy drinks,the taste of energydrinks are not liked bymany of people, as for some, these taste like cough syrup. And they are also

highlypriced.But there are also people who like to mix it, for example many like Vodkamixes of Vodka

with Red Bull.

Social Issues

For the alcohol industry the social concerns are numerous, ranging fromassociateddisease as well as

health and safety impacts from high levels of alcoholconsumption,to under-age drinking, and in


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developing country contexts the portion of spending onalcohol versus basic needs. Domestic violence

and an exacerbation of poverty have

Issues Related to Indian Beverage Market

17

made alcohol abuse the single most important problem for women in India.Thereport points out that

as prosperity levels increase across Asia, we canexpect to see

increasing levels of alcohol consumption. This presents both an opportunityfor listedcompanies in Asia,

but given the potential negative social impacts, it alsopresentssignificant challenges.Soft drink

companies are advised to anticipate government regulations,particularlyin relation to their marketing

approaches to children. Companies need to beinnovative in creating healthier soft drink products as in

the case of PepsiCoand CocaCola focusing on a low sugar, natural sweetner for their products

andVietnamese andChinese brands tapping into the demand for alternatives to carbonated

softdrinks.Companies should assess their supply chain risks and put in place codes

of conduct,monitoring and capacity building initiatives to prevent these. As consumersbecomemore

aware of supply chain issues, good supply chain management cancreate acompetitive

advantage.Companies that rely on agricultural supply chains, particularly large numbersof smallholdingfarmers, should look to developing partnerships with government,local NGOsand international agencies

to better manage social risks.

Governance Issues

A typical challenge in the Indian beverage sectors fight against corruption isthecomplex

interrelationship between politics and the private sector. Stronggovernanceis clearly vital for companies

to ensure the integrity of their organizations,relationships with consumers and government authorities

to avoid corruptbusinesspractices.Companies should look to providing more transparency and

accountability interms of the selection of board members, remuneration, links between

remunerationandperformance, diversity of the board and decision making processes. Alcoholcompanies

should ensure a high level of transparency in terms of thefinancialsupport provided for industry groups

that in turn lobby national governmentsfor

changes in alcohol policiesCompanies should put in place initiatives and get involved in collective

actionto raisecorporate integrity, especially in relation to corruption and bribery.

Environmental Issues

1

8

Companies need to first assess to what extent they and their suppliersdepend onwater and the

associated risks. This should be done in consultation with keystakeholders.Companies should measuretheir water footprint and look to how they canbestmanage water resources through enhanced

processes and infrastructure.Companiesshould implement rigorous water testing and monitoring

systems and installtreatingequipment. Water pollution and treatment is already a focus of Asian

listedcompanies and with the growing emphasis on regulation and enforcementthis looksset to

increase.Companies need to realize that global commitments to improve waterefficiency canonly be

implemented locally, requiring versatility and local managementsupport.Companies should disclose

water performance and the initiatives that theyareputting in place. Companies need to assess their


13/19

contribution to climatechange, putin place measures to reduce emissions and waste and report

on progress.

19

STRENGTH

y

Renewal and investment

y

Innovation and Technological development

y

Experience in searching for new markets, niches and partners

y

Availability of key raw materials, cheaper labour costs and presence acrosstheentire value chain gives

India a competitive advantage.

WEAKNESS

y

Old technologies and poor work organizationy

Insufficient pace of creation and implementation of innovations

y

Insufficiently effective activities of small and medium-sized businesses

y

Change in household consumption patterns

OPPORTUNITIES

y

Presence of a favorable market

Market globalization

y

Foreign direct investment promoting knowledge and developing exportchannels

y

Transfer of production to the countries with smaller labour costs

y

Well established distribution network

THREATS

y

Unfavorable market trends in energy resources

yIncreasing competition among exporters and decreasing dependency ononemarket

y

Intense competition between the organized and unorganized segments andlowoperational cost.

y

Water scarcity in India

y

Implementation of Goods and Service tax by 2011


14/19

SWOT Analysis Of Indian Beverage Industry

20

There are so many large companies present in India who are leading playersin theIndian Beverages

Industry. The companies are having large annualturnovers withwide range of product portfolios which

include all kinds of beverage drinksfrom sodato energy drinks. These companies are having a large

variety of productslike soda,water, Colas, Fruit based drinks, Lemon based drinks, Milk beverages,

andFruitbased wine, beer, Whisky, Coffee, and Tea etc. with so many health andenergydrinks

portfolio.These companies have a strong distribution and marketing channel whichsupply thebeverages

products to customers through retailers, Coffee shops,Restaurant,Hypermarket and Supermarkets. The

segment is highly distributed all overthecountry through a long chain of retailers and suppliers who are

providingveryefficient service to the company.The leading Indian Beverage sector players are as follows:

1.

Coca-Cola Company

2.

PepsiCo

3.

UB Group

4.Dabur India Ltd

5.

TATA Global Beverages Ltd [TATA Tea]

6.

Nestl India

7.

Caf Coffee Day

8.

Red Bull India Pvt Ltd

The Leading Beverage Companies And Their Competitive Brands

21

Company Overview

Established in 1886, Coca-Cola is the worlds most ubiquitous brand. Thecompanyand its subsidiaries

are present in over 200 countries employing over 49,000individuals and generating revenues to the tune

of US$ 21 billion. The Coca-ColaCompany markets four of the worlds top-five soft drink brands; its

beverageproducts encompass nearly 400 brands, including non-carbonated beveragessuch aswaters,

juices, sports drinks, teas and coffees. The companys net incomeregistereda CAGR of 7.2 per cent over

a 10-year period. Till date, Coca-Cola hasinvested overUS$ 1 billion in India and employs over 5,000

people. The Coca- Colasystem in Indiacomprises 25 wholly owned Bottling operations and another 35

franchisee-ownedbottling operations. A network of 27 contract-packers also manufactures arangeof products for the company.

Latest Update

y

Coca-Cola net revenue up 5%,July 2010

y

India sales jump 22%,July 2010


15/19

y

Net revenue of $8.26 billion July,2010

Business in India

Coca-Cola is a leading player in the Indian beverage market with a 60 percent sharein the carbonated

soft drinks segment, 36 per cent share in fruit drinkssegment and33 per cent share in the packaged

water segment.

Coca Cola Company

22

0

1

0

2

0

30

4

0

50

6

0

Share

%

CarbonatedSoft drinksFruit Drinks PackagedDrinkingWater

Drinks Segment

Coca Cola Business In India

Share

%

Outsourcing distribution and manufacturing

Coca-Cola India minimized its capital needs by meeting new manufacturingcapacityneeds through

external co-packers, outsourcing its distribution and meetingits inmarket-refrigeration and cooling

needs by giving incentives to retailers to self-fundthe same through its Own Your Fridge Scheme.

Today, the company hasanextensive rural and urban distribution network. Coca-Cola adopts a hub

andspokeformat distribution network ensuring that large loads travel longer distancesandshort loads

travel short distances. The company has increased its villagepenetrationfrom 9 per cent in 2000 to 28per cent in 2004 and covers approximately175, 000villages today. Rural India now accounts for 30 per

cent of Coca-Colas salesvolumes.

Factors for success

Coca-Cola has succeeded in spite of an extremely price-sensitive consumerwithentrenched beverage

consumption habits tea, nimbu-paani (lemonade)and afragmented and geographically dispersed retail

market, and a high taxenvironment.


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Diverse product portfolio

In keeping with its goal of emerging as the single largest entity in thebeveragemarket, Coca-Cola has a

presence in multiple segments.

Carbonated soft drinks

(Coke, Diet Coke, Fanta, Thums Up, Sprite andLimca)

y

Fruit juice based drinks

(Maaza)

y

Powdered soft drinks

(Sunfill)

y

Coffee and tea

(Georgia)

23y

Bottled water

(Kinley) and

Bottled soda

(Kinley Soda)The company leverages this comprehensive portfolio, which includes a mixof its

global brands

as well as the locally acquired brands like Thums Up, LimcaandMaaza It sells these beverages in

multiple volumes of 200 ml, 300ml, 500ml, 1.5 lbottles, tetra packs as well as through vendors (fountain

machines) Explores new markets with the introduction of new drinks (Georgia,coffee and tea segment)

and flavours (Vanilla Coke)

BrandsCoca Cola

The worlds favorite drink. The worlds most valuable brand. The mostrecognizable word across the

world after OK. Coca Cola has a trulyremarkable heritage.from a humble beginning in 1886,it is now

the flagshipbrand of the largest manufacturer, marketer and distributor of non- alcoholicbeverages in

theworld.

Availabilty

:

GLASS PET CAN FOUNTAIN200ml,300ml,500ml,1000ml 500ml,1.5l,2l,2.25l,500ml+100ml

330mlVarioussizes

Thumps up

It is a leading sparkling soft drink and most trusted brand in India. Originallyintroduced in 1977, Thumsup was acquired by the Coca Cola Company in1993.Thisbrand known for its strong, fizzy taste and its

confident, mature anduniquelymasculine attitude.

SPRITE

Sprite is global leader in the lemon line category, is the largest parklingbeverage brand in India.

Launched in 1999,Sprite with its cut thruperspective has managed to be a true teen icon.GLASS PET CAN

FOUNTAIN200ml,300ml,500ml,1000ml 500ml,1.5l,2l,2.25l,500ml+100ml 330mlVariousGLASS PET CAN

FOUNTAIN200ml,300ml 500ml,600ml,1250ml,1500ml,2000ml,2250ml 330ml Various sizes


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24

sizes

FANTA

Fanta has entered in Indian market in the year 1993.Fanta stands for itsvibrant color,tempting taste and

tingling bubbles.GLASS PET CAN FOUNTAIN200ml,300ml 500ml,1.5 L, 2L,2.25L,500+100 ml330ml

Various sizes

LIMCA

Born in 1971,Limca has remained unchallenged as the No. 1 sparkiling Drinkin the cloudy lemon

segment.The main point in the brand is the Freshness.GLASS PET CAN FOUNTAIN200ml,300ml

500ml,1.5 L, 2L,2.25L,500+100 ml330ml Various sizes

PULPY ORANGE

The company developed a process that eliminated 80 % of the water inorange juice.forming a frozen

concentrate that when reconsititutedcreated orange juice.

Available

in 400 ml,1 L and 1.25 L and also in PET pack size.

MAAZA

Mango.It is a fruit associated with good times like no other.Apy called theking o fruits.PET 1.2 L PET 600

ml 200mlRGB.250mlRGB250mlPETPocket200mlRs.45 RS.25 Rs.8 Rs.10 Rs.15 Rs.15KINLEY

Kinley water understands the importance and value of the life givingfore.Kinley water comes with the

assurance of safety from the Coca-ColaCompany. Coca-Cola introduced Kinley with reverse osmosis

along withlatest technology.Available in 500ml,100ml in PET.

25

GEORGIA GOLD

Introduced in 2004,the Georgia gold of tea and coffee beverage is perfectsolution for the office and

restaurant needs!It is available at quick servicerestaurant, Cinemas, Airports and in Coporates across all

major matros inIn dia.

Hot Bevarges

:

Espresso, Americano, Cappucino, Caffe Latte,Machaccino , Hot chocolate, Cardamom Tea

Cold Bevarages

:

Iced Teas,Cold Coffee

Company Overview

PepsiCo entered India in 1989 and has grown to become one of thecountrys leadingfood and beverage

companies. One of the largest multinational investors inthecountry, PepsiCo has established a businesswhich aims to serve the longtermdynamic needs of consumers in India. PepsiCo nourishes consumers

with arange of products from treats to healthy eats that deliver joy as well as nutrition andalways,good

taste.PepsiCo Indias expansive portfolio includes iconic refreshment beveragesPepsi, 7UP, Mirinda and

Mountain Dew, in addition to low calorie options such asDiet Pepsi,hydrating and nutritional beverages

such as Aquafina drinking water,isotonic sportsdrinks - Gatorade, Tropicana 100% fruit juices, and juice

based drinks TropicanaNectars, Tropicana Twister and Slice, non-carbonated beverage and a

newinnovation


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PepsiCO India

26

Nimbooz by 7Up. Local brands Lehar Evervess Soda, Dukes Lemonade andMangolaadd to the diverse

range of brands.The group has built an expansive beverage and foods business. To supportitsoperations,

PepsiCo has 36 bottling plants in India, of which 13 are companyownedand 23 are franchisee owned. In

addition to this, PepsiCos Frito Lay foodsdivisionhas 3 state-of-the-art plants. PepsiCos business is

based on itssustainability visionof making tomorrow better than today. PepsiCos commitment to living

bythis vision

having a combined share of about 67 per cent are McDowell & Company,BalajiDistilleries, Shaw Wallace

& Co., Jagatjit Industries, Mohan Breweries & distilleries,Shiva Distilleries, Maharashatra Distilleries,

Pearl Distilleries, Herbert sonsand MohanMeakin. The ten major beer manufacturers in the organised

sector havingthecombined market share of about 75 per cent are United Breweries,

MohanBreweriesand Distilleries, Skol Breweries, Balaji Hotels and Enterprieses, MohanMeakin,Mysore

Breweries, Charminar Breweries, Aurangabad Breweries, HindustanBreweries, And Bottling and MountShivalik Breweries. Hops is another majorrawmaterial in short supply. Most of the hops used for

flavouring beer areimported fromGermany. Indian companies producing IMFL use the molasses route

formanufactureof IMFL as against the international pracouraging the use of non-molassesroute in

57

India. The alcoholic beverages industry is one of the few industries that stillrequiredlicence under the

Industries Act (Development & Regulation). Through theminimumcapacity has been fixed at 50,000

hectoliters, the government in recenttimes hasissued licences to manufacture 150,000 hectoliters to

some units. This hasarousedexpectations of the industry that the minimum economic size may be

hikedto thisnewer level. There is an ample scope for future developments in

themanufacturingtechnology adopted by advance countries since the demand for alcoholicbeverages

isfaster than the existing production capabilities of the alcoholic beveragesindustry.Adequate availability

of raw materials, improvements in processing andmanufacturing technologies, decontrol of liquordistribution, tax concessions,andabove all wide publicity of IMFL and beer brands through the media

wouldnot only

help the industry in enhancing its production but also in competing the worldwith itsproducts of

international standards.

Key Risks To The Beverage Industry

5

8

As water is the essential ingredient in a beverage product, as wellas vital for cooling and cleaning duringthe production process. Sowhen one considers that Indias current water supply isapproximately 740

billion m3, but it has been estimated that by2030 demand for water in India will grow to almost 1.5

trillion m 3,the industry will clearly be facing a major problem there. There willsimply not be enough

water.Yet China, India and Indonesia are all a focus for beverage companies due tothe ir lower market

penetration. There can be little doubt, however, that watersecurityissues will beone of the biggest

threats to developing market potential. Lets first take alook at thealcoholic drinks industry.The market

growth for alcoholic drinks is particularly strong in emergingAsian economies, driven by a range of


19/19

socio-economic factors.These includefavourabledemographics such as the greater proportion of young

people reaching thelegaldrinking age and increased per capita income and urbanization in countriessuch

asIndia and China.The water bottles market is also booming. The market for bottled water

isdevelopingrapidly in Asia. Health concerns of polluted municipal water sources andincreasingwater

shortages are expected to be key drivers of this, but wealth and theincrease inAsian middle classes will

play the most significant role.Consumer demand for purity, hygiene and convenience is on the increase.

InIn di athe market is expected to grow by 100 percent over the next five years andthere arecurrently

more than 2,000 bottled water producers. Whilst there has been abacklashagainst bottled water in

developed countries as the environmental impact of plastic

bottles becomes more apparent, in Asia it looks set to become an increasingtrend.

59

Beverage Industry is projected to have overall growth between8% -8.5 %

Indian non-alcoholic drinks market is expected to at a CAGR of around 15%during 2009-2012.

India Alcoholic Drinks Market to Grow Over 9% CAGR during 2009-2013

The India Alcoholic Drinks Market Is Expected To Reach The 3 Billion LiterMarkBy 2012

The sectors which are projected to achieve excellent growth of 20% fromwine

Fruit/vegetable juice market will grow at a CAGR of around 30 per cent inval ue terms during 2009-2012

The energy drinks segment which will grow at a CAGR of around 29 percentduring the same period.

All in all, annual per capita consumption of packaged beverages issupposed totriple from 2.6 litres in

2000 to 8.7 litres in 2012. Demand for milk andmilkbasedbeverages are also rising.

The estimated INR 340 bn Indian liquor industry is expected to maintainitsCAGR of 15%

report on indian beverage industry

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