Early summer adds fizz to domestic beverage sales

The early onset of a hot summer has brought cheer to beverage players who make most money from quenching the thirst of parched throats. While the share of summer season sales for carbonated soft drinks has shrunk over the years in favour of the non-carbonated portfolio, it still accounts for 55 per cent of the revenues for the cola majors.

The domestic industry has witnessed an over 30 per cent rise in year-on-year sales during the first four months of the year, and the Indian Premier League (IPL) has also added to their glee by giving both beverage majors -- Coca-Cola and PepsiCo -- a platform to create buzz around their brands and in turn push sales.

The growth, note industry observers, is across categories. A fair amount of urbanisation along with convenient ready-to-drink packaging has contributed to sales this year. “While last year, rains had watered down the beverage sales to some extent, this year summer is on track with temperatures averaging over 40 degrees and fuelling demand for hydration products," notes Purnendu Kumar, associate vice-president, Technopak, adding: "However, what needs to be noted is that beverages is an impulse driven category and investing behind marketing helps create the right buzz for actual sales as has been done during the IPL.”

Coca-Cola and PepsiCo, the two giants, together control about 90 per cent of the carbonated beverage market in India. The focus, this year from both the players has been expanding their carbonated soft drinks portfolio by way of flavours and variants. Both these players are investing heavily in capacity building and strengthening distribution channels.

Investment continues apace in both sparkling beverages and non-carbonated drinks. The per-head consumption is still low, at a yearly nine servings of 200 ml.

"We at Coca-Cola in India have been working closely with our bottling partners to drive sustainable business growth. We have grown consecutively for the last eleven quarters with the quarter ending March 2009 registering a 31 per cent growth over the same quarter previous year,” a Coca-Cola India spokesperson said adding: “We believe that this growth has been led by our continued focus on the route-to-market strategy and ongoing investments in technology, infrastructure and consumer marketing.”

PepsiCo’s Executive Director (Marketing) Punita Lal had earlier told Business Standard that while the company saw significant opportunity in the non-carbonated category, it would continue investing in its core brands as they continue to be the revenue generators as new brands establish themselves.

Around 120 billion litres of beverages are consumed by Indians every year, of which only 5 per cent are in the packaged segment. While the Indian carbonated soft drinks market is pegged at Rs 7,500, the juice and juice-based drinks market is said to bet over Rs 1,200 crore. “The opportunity for growing is immense across carbonated and non-carbonated categories,” says an industry expert.