Non-carbonated drinks sales up 10% in South

Fly-by-night brands ride on demand-supply mismatch

The non-carbonated drinks market in South India has reported a growth of around 10 per cent this summer, say industry experts. It may be noted that summer sales make up 40-45 per cent of the year's sales.

Fly-by-night brands that pop up during the beginning of summer and vanish once the rainy season starts, continue to enter the market as there is a supply and demand mismatch.

While there is no official data or statistics on this, major players have estimated that the non-carbonated beverages category grew 7-10 per cent during the 2014 summer season in the four southern states.

Last year, during the March to June season, non-carbonated beverages sales were estimated to be Rs 600-650 crore. Non-carbonated drinks include fruit and vegetable-based juices, milk-based and others.

The fruits and vegetables-based drinks market was estimated to be around Rs 1,300 crore of the around Rs 1,540 crore market in 2012-13. Industry describes these drinks as on-the-go consumption or out-of-home.

While Andhra Pradesh accounts for 30 per cent of the market, Tamil Nadu is the second largest with 28 per cent, followed by Karnataka 22 per cent and the rest is made up by Kerala and Puducherry.

As far as fruit drink is concerned, 92 per cent of the market is estimated to be mango-based. This segment has been classified into three categories based on the pulp percentage.

The less than 20 percentage category, according to industry officials, registered a 4 per cent drop.

For this season, two such new brands have come up in Tamil Nadu alone. These brands mostly sell outside the cities.

The 40 per cent-plus pulp content juice category reported a 30 per cent growth. Some of the major players in this segment are Real and Tropicana.

“A major challenge is bulk category, which constitutes 80 per cent of the fruit drink segment, is not growing. Hence, it is pulling down the overall growth of the segment,” says an industry official.

Balaji Prakash, general manager sales and marketing (dairy & beverage), CavinKare, an FMCG major from the southern part of the country, noted that the potential was now in the Rs 10 price point while the challenge was distribution and, on staying and maintaining the price point, considering the pulp rates had increased substantially.

The cost of pulp too has gone up to Rs 40 a kg as compared with Rs 20-25 a kg.

FMCG players could not increase their prices to offset the increasing costs.

As far as the distribution is concerned, around 600,000 outlets sell beverages across the four southern states. Maaza, which belongs to Coca-Cola, is the largest brand and is available across 400,000 outlets.