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Preference for healthy drinks rising in India as caffeine awareness up

Adarsh Raj

The word beverage has been derived from the French word ‘bevrage,’ and can be defined as any potable liquid other than water like tea, coffee, and juice.

Tea is one of the most widely consumed beverages in the world and India is world’s second- largest tea producer after China and the country accounts for 23-24% of global tea production. Indians are known to be traditional tea drinkers. However, globalisation and exposure to Western lifestyle has changed beverages consumption pattern and Indian consumers are showing high preference for varieties of beverages with new flavours.

Post-economic reforms in 1991, India has welcomed an array of global beverages majors like Coca-Cola and PepsiCo, who offer varieties of beverages like carbonated drinks, non-carbonated drinks and fruit juices. There have been many controversies surrounding these carbonated drinks but beverages industry has evolved since then. Over the past two decades, India has been registering strong growth and this has made countrymen financially better off. The country has also witnessed growing literacy and health-consciousness which has started to shift consumers’ preferences from conventional drinks to healthy drinks, like mixed fruit juices and vegetable juices. These beverages are likely to go mainstream in the coming decade.

Modern Indian consumers are looking for healthy beverages as they are becoming increasingly aware of the ill-effects of sugar-based carbonates and caffeine. Besides, there has been an exponential rise in obesity and diabetes, especially in metro cities, over the past few years and this has resulted in change in the consumption habit for beverages and demand for fruit juices, fruit-based drinks and nectars has increased substantially. And companies are offering beverages aligned with this change, for instance, earlier this year, Coca-Cola expanded its beverages portfolio by launching flavoured milk under the brand name Vio. The introduction of Vio followed the launch of Fuze iced tea in 30 cities in 2015 and the launch of Coke Zero in late 2014, both under healthy beverages category. Vio is made from milk sourced from dairy farmers, and the brand has been formulated with a blend of delicious saffron, pistachio and almond flavours in the respective ‘Kesar Treat’ and ‘Almond Delight’ variants. The product contains no preservatives and promises to provide the consumers with wholesome goodness of milk in every drop and made available in convenient 200 ml aseptic packaging at an attractive price point of Rs 25.

At global level, most rich nations saw their sugar consumption increase by 30-40 per cent between 1970 and 2000. A report highlighted that more than 40% US women are obese and experts identified sugar as the prime enemy. There are countries and states that have already declared “War on sugar” like the UK, some states in the US and Scandinavian countries like Denmark, Finland, Sweden, and Norway by levying more taxes on sugar-based drinks. Consumers in developed markets are showing more interest in consuming vegetables, especially ones that are marketed as super foods. Developed markets like Japan, the UK, and USA have already started to witness off-trade sales volume decline in juices due to negative publicity surrounding these juices. In the next decade, the same trend is likely to occur in India.

Companies are finding an opportunity in this crisis and offering healthy beverages. For instance, UK’s Coldpress and Japan’s Kagome Co Ltd have successfully used superfoods like tomatoes, beetroot and spinach to grow its business by offering functionality in a clean label product. This shows how juice companies in developed markets can leverage greater consumer interest in vegetables and use superfood vegetables to strengthen juice’s heath profile.

Indian branded juice market is pegged at Rs 1,000 crore and is dominated by Dabur’s Real brand with a value share of around 54%. PepsiCo’s Tropicana enjoys a share of around 25-30%. In India, most companies offer top flavours like mango, guava, orange and mixed fruit. Consumer concerns about the high sugar content in fruit juices is expected to remain high as health organisations continue to focus on sugar intake. People reckon fruit juice as healthy beverage but that has also started to change as reports have indicated that many juices contain more sugar than carbonated drinks.

Juices like pumpkin, beet, and carrot contain high nutritional content than fruit juices and they are forecast to see more demand in the coming decade. Organic beverages like organic tea and coffee continue to be a niche category but it recorded a whopping growth of 21% on yearly basis and was valued at US$31 million in 2015. These healthy beverages will witness more demand over the next five years owing to rise in health-consciousness and companies will add new ingredients like tomato, beet, and spinach to boost the nutritional content of these beverages.

As far as carbonated drinks are concerned, there has not been much change from both leading players PepsiCo and Coca-Cola. Tropicana, a PepsiCo brand, claiming to be world’s No. 1 juice brand with no added preservatives, has vast array of flavours in its product line such as- pomegranate, orange, guava, litchi, pineapple, mixed fruit, apple, tomato, mango, coconut mixed fruit and coconut litchi. And, this has helped the company to remain key player in the beverages segment in India.

Dabur’s Real has multiple flavours in its product portfolio including apple, grape, mixed fruit, tomato, apricot, cranberry, orange, litchi, mango, pomegranate, guava, plum, pineapple and peach. Moreover, in July 2015, FMCG major Dabur announced entry into ready-to-drink beverages by launching its Hajmola Yoodley. This came as an extension of its digestive Hajmola brand that has enjoyed tremendous brand image among Indian consumers and the company wants to leverage brand identity with its new Yoodley product range. The drink offers the uniqueness of chatpata Indian flavours to the consumers. Yoodley is available in six variants namely Awaara Aam Panna, Nimboora Shikanji, Go Goa Guava, Jhakaas Jaljeera, Golmaal Golgappa and Kabhi Kala Kabhi Khatta. Earlier this year, Dabur also launched fruit-based carbonated drinks to cater to customers wanting fizzy beverages. The new range called Real Volo contains 20-25% juice.

ITC Ltd also forayed into beverages business by acquiring Bangalore-based Balan Natural Foods and launched B Natural Juices in many flavours like blackberry, apple, and peach. The company’s mixed fruit beverage has goodness of eight fruits and its B Natural emphasises on goodness of essential macro and micro nutrients, fresh fruits also provide phytonutrients and fibre which have vital health significance. Other players like Priyagold sell its fruits juices under Fresh Gold brand and offers flavours like guava and apple. Patanjali juices have also grabbed consumers’ attention and they are available in many flavours like mango and orange.

The ready-to-drink segment is another niche category worth Rs 100 crore, wherein Hindustan Unilever’s Lipton ice tea is the key brand. Fuze from Coca-Cola is the new entrant in this category, which is aimed at lightening Coca-Cola’s assortment. Since consumption of tea is not dependent on seasons, therefore this is forecast to reduce dependence from carbonated drinks that see high demand during summers. There have been drastic changes in the beverages segment in India over the past five years and with all these developments, beverages are forecast to get healthier and will contain high nutritional value in the coming years and companies will need to add healthy beverages to succeed in the Indian market.

(The author is research director, Market Monitor Consultancy. He can be contacted at adarsh.raj@nemarketmonitor.com.)