New Delhi: Carbonated beverages that form the largest chunk of the beverages market in the country are set to report decent growth in the March quarter helped by an early summer, improved mobility and increased in-home consumption of these drinks, according to data collected by Bizom.
Bizom is a retail intelligence platform that works with fast moving consumer goods companies and millions of kiranas to track sales of end goods to consumers.
“The overall January-March’21 performance for beverages is looking very positive driven by a solid build-up of carbonated drinks in kiranas which is expected to hit 9-10% growth in this quarter," said data from Bizom.
Packaged fruit and health juices have shown a contraction of 6% between January and March. But this is expected to turn around quickly as there is an increase in kirana universe direct coverage in first quarter. Packaged water too is showing a turnaround in this quarter and is expected to grow in low single digits or 1.6%, revealed the data. To be sure, carbonated soft drinks are the largest category within beverages in India.
The beverages category that sees strong sales during peak summer season was disrupted as India moved to a prolonged lockdown last year. In the aftermath of the restrictions, consumers took to drinking more fizzy drinks at home, while sales of bottled water and juices that rely on out-of-home consumption were impacted significantly.
Akshay D'Souza, chief marketing officer at Bizom said that carbonated drinks which were out of favour in the years prior to the pandemic have found resonance as consumers drank these to ‘feel good’, and this reflected in the growth for the category. “The other beverage categories just seem slightly behind carbonated drinks right now but it's just a matter of time before their consumption starts to soar. With schools, colleges and businesses increasingly returning to in-person, there are some strong tailwinds ahead for this sector to drive consumption even higher in the upcoming quarter & we can expect a stellar quarter ahead," said D’Souza.
Coca-Cola India said its core brands of sparkling drinks, are gaining strength in the market. “Presently, core sparkling leadership brands are gaining strength. Juices (both indulgence and functional) and hydration categories are meeting consumer demands for refreshment and energy successfully. We have garnered good momentum in H2 2020 and believe credible differentiation is key to win in the long term," said Sanket Ray, president, Coca-Cola India and South West Asia.
In its fourth quarter global earnings, The Coca-Cola Company reported “solid growth" in sparkling soft drinks volumes in China and India and said that in-home trends in India were strong with signs of recovery in out-of-home sales.
Another senior industry executive said that carbonates were leading recovery for the beverages category on the back of early summer. While the overall industry is still not back to pre-covid levels, “but we are not too far away from it", the person said, declining to be named. As people sat at home and cooked their own food, consumption of carbonates went up, he added.
“Broadly in the last few months—carbonates has not de-grown too much and the larger packs are selling more as they are fit for in-home consumption, smaller on-the-go immediate consumption packs are not selling as much," said Neeraj Kakkar, co-founder and CEO, Hector Beverages, the maker of Paper Boat brand of drinks.
In its December quarter earnings call, Varun Beverages-- that manufactures and distributes PepsiCo’s carbonated soft drinks such as Pepsi, Diet Pepsi, Seven-Up, Mirinda and non-carbonates in India and Nepal, Sri-Lanka, Morrocco -- said that a shift of beverages to in-home consumption helped carbonates grow at a better clip compared to water and juices. Water has, however, shown significant recovery in the December quarter as hotels and restaurants opened up.
“When the market was completely shut, in-home consumption increased and people were consuming only Carbonated Soft Drinks (CSD), not water. So, water sales went down much more than CSD sales. That is what made a big change in the sales mix. Sales mix in the last quarter is back to close-to-normal and juices are also coming back to normal now," Ravi Jaipuria, chairman, Varun Beverages Limited said in a post earnings call.
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