India’s Soft-Drinks Market: Changing Landscape, Emerging Opportunities

Published by Sharekhan Education | May 8, 2023

By Amit Pathak | Sharekhan Education

India’s soft-drink market is witnessing significant changes with evolving consumer preferences, innovative product offerings, and growing disposable income. Health-conscious consumers are increasingly seeking out beverages that are high in nutritional value and low in sugar and calories. The highly diverse market has a wide range of beverages including carbonated soft drinks, energy drinks, flavored water, and fruit juices.

India’s per capita data:

Despite being the world’s second-most populous country, India’s per capita consumption of soft drinks is only 12 liters. In comparison to 79 liters in China and 359 liters in the USA. The significant scope for increasing consumption frequency exists due to the low-price points. This trend is expected to drive healthy volume growth for coming years. According to a Global Data Report, India’s soft drinks market is expected to grow at a CAGR of approximately 9.4% over the period 2019-2024.

Non carbonated drinks:

The non-carbonated soft drink segment is growing three times faster than the carbonated soft drink segment. The energy drink market is also expected to witness significant growth. Projected CAGR is 42% and an estimated market size is INR 100 billion by 2027. Both the premium and affordable segments are seeing good growth. The juice market in India estimates to worth INR 243.7 billion. Over the period of 2019-2024 expect a growth double digit.

Packaged drinking water:

Packaged drinking water segment experiences a healthy growth. With a projected compound annual growth rates (CAGRs) of 9% and 13.2% in volume and value terms, respectively, over the period 2019-2024. The key growth drivers include increasing consumer awareness and growing consciousness about water-borne diseases, declining water quality in rural/semi-urban areas, continuous introduction of new flavors, and increasing presence across various retail formats.

Company highlights:

Varun Beverages is a strategic franchisee partner of PepsiCo in India for the past 32 years. Varun Beverages also has franchise rights for various PepsiCo products in Nepal, Sri Lanka, Morocco, Zambia, and Zimbabwe. The company has ventured into new products with lower calories, zero sugar in CSD, and non-seasonal products like juices and sports drinks. Varun Beverages recycles 80% of its plastic waste and aims to reach 100% by CY25. The company has posted an uptick in return ratios over the past years.

Cost efficiencies, leverage benefits, and enhanced asset utilization drive these improvements. Which have impacted the acquired territories to scale up.

Over the period of 2022-2024, the company is estimates to deliver revenue and EBITDA CAGR of 19.5% and 22.1% respectively.

Would you like to enhance your investing skills?

Sharekhan Education offers a free Power Money Workshop and an investing education program called Stock Investor that teaches you how to identify fundamentally sound stocks and invest like a professional. Join now and experience it yourself!

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. For detailed disclaimer and registered office details visit link – https://www.sharekhan.com/disclaimer/Sharekhan_Education.html