The Rs 200-crore Rahul Narang (RN) Group, which imports and distributes some key international brands such as Evian water from Danone, Perrier from Nestle and Swiss chocolate Lindt, is close to signing a distribution deal with the US-based Monster Beverages, which owns the energy drink Monster, one of the fastest growing brands in its space in the US.
The development comes close on the heels of the RN Group parting ways recently with Red Bull, which it distributed for close to a decade in India. Red Bull along with other beverage brands were part of the distribution joint venture that the RN Group had with Danone. This JV was called Narang Danone Access in which the RN Group had a majority stake. There was another JV between Danone and RN called Danone Narang Beverages, where majority control rested with Danone. This JV was largely inked to promote product development between the two companies. Brands of rival companies such as Nestle or Red Bull were not part of this venture.
While Tarun Arora, general manager, India, in charge of both JVs - Narang Danone Access and Danone Narang Beverages - declined to comment on the issue, persons in the know say that the deal is likely to be closed soon. Monster Beverages is the second-largest energy drinks maker in the world after Red Bull. In the US, Monster is the largest seller of energy drinks in convenience stores, and has seen a scorching pace of growth in the last few years. The company, who had sales of $1.7 billion (Rs 8,500 crore) last year, has been eying a presence in India in a bid to tap new markets for growth. While the energy drinks market is small in India, at roughly Rs 250 crore, it is growing at a clip of about 20-25 per cent per annum. Besides Red Bull, other bands operating in the space include Burn (from Coca-Cola), Sobe (from PepsiCo), Cloud9 (from a Mumbai-based company called Goldwin) and Powerhorse among others.
In the last few years, the space has seen the entry of new products such as SJ XXX, with most brands largely promoting energy drinks among party-goers . Overseas, it is not the party-going segment alone that consumes energy drinks. Those wanting a strong stimulant opt for it as well. But energy drink makers have frequently found themselves in the eye of a storm in India over high caffeine content. It is as much as 25 per cent in a 250-ml can. High price is another deterrent. A 250-ml can, for instance, costs nothing less than Rs 75-80. But energy drink makers argue that for the party-goer, the ticket size of Rs 75-80 is hardly anything.“This ticket size is hardly substantial for those with an active night life. He or she is willing to spend this kind of money on the product," says an executive from Goldwin, who declined to be quoted.