Extended rains took a toll on beverage sales in September quarter

Heavy rainfall and an extended monsoon dragged down beverage sales for Coca-Cola, PepsiCo, Varun Beverages, and Dabur during the September quarter as consumer demand softened

An extended monsoon this year has dented the beverages market, leading to a drop in sales for organised players.

 

For Atlanta-based beverages major Coca Cola, inclement weather conditions in India led to a fall in its volumes.

 

“In Asia-Pacific, volumes declined across each operating unit, driven by softer consumer spending, weaker industry performance, and inclement weather in a few markets like India and the Philippines,” Henrique Braun, chief operating officer (COO) told analysts after announcing the company’s third quarter numbers.

 

In the region, the company’s unit case volume declined 1 per cent.

 

Meanwhile, James Quincey, chief executive officer (CEO), said that India has huge potential for growth in volume in the next few years.

 

Rival PepsiCo, too, took a hit on the volumes front due to an extended monsoon in the country. The company also flagged increased competition in the cola market, which further took a toll on volumes.

 

For the 12 weeks ended September 6, unit volume declined 1 per cent in its international beverages category, “primarily reflecting declines in Mexico and India, partially offset by growth in the Middle East,” the company said.

 

“We're seeing growth in India. India was more impacted by weather, and there's some competitive situation in the beverage category that will impact growth, maybe for a few quarters, but we are coming back strong,” Ramon Laguarta, chairman and CEO, PepsiCo, told analysts after the company’s third quarter results in early October.

 

PepsiCo bottler in India, Varun Beverages, agreed.

 

“Domestic volumes remained subdued due to prolonged rainfall across India,” the management said while announcing the third quarter results last week.

 

“The weather still has not been the best, but wherever we've got a break in the weather we are growing double digits, even after having bad weather in certain regions. The weather gods are not in my hand, but as soon as we see a weather break, I think we are looking very positive. There's no reason why we should not look at double-digit growth, going forward,” said Ravi Jaipuria, chairman, Varun Beverages during a post results interaction with analysts.

 

Homegrown fast-moving consumer goods (FMCG) firm Dabur India, too, saw an impact of heavy rainfall on its portfolio. The beverages segment, which includes Real fruit juice, bore the brunt of heavy rain, floods and landslides. “Nectar sales were impacted by heavy monsoon across the country and floods in Jammu and Kashmir, Himachal Pradesh, Punjab and Uttarakhand,” Mohit Malhotra, CEO, had told analysts last week.