Varun Beverages Ltd (VBL), the largest franchise bottler of PepsiCo, has stated in its annual report that it expects the Indian soft drink market to see significant growth. This growth is expected to be driven by changing demographics, increased spending power of young consumers, urbanization, and higher consumption in rural areas. VBL is expanding its capacities to meet the higher demand expectations.
VBL’s distribution model and on-the-ground end-to-end infrastructure facilities are expected to be key growth drivers, and the company is committed to extending its market presence to newer areas and under-penetrated regions. It is also focusing on new product categories and evolving customer preferences, with the launch of new products such as energy drink ‘Sting’ performing well across various geographical regions, and recent launches in the value-added dairy segment receiving positive consumer response.
VBL is confident in its ability to deliver strong and sustained growth moving forward, owing to exceptional performance during the year, normalisation of the environment, and expanded capacities to meet high demand expectations. In India, VBL has a presence in 27 states and 7 Union Territories and accounts for 90% of PepsiCo India’s beverage sales volume in the country.
VBL is also diversifying its portfolio by periodically launching innovative products in select markets in line with changing consumer preferences. It will focus on non-cola carbonated beverages, non-carbonated beverages, and the bottled water segment, which is expected to present a significant growth opportunity.
Data Points to prove the expected growth
- According to a report by ResearchAndMarkets.com, the Indian soft drink market was valued at $11.5 billion in 2020 and is expected to reach $19.2 billion by 2026, growing at a CAGR of 8.5% during the forecast period.
- The carbonated soft drink segment dominated the Indian soft drink market in 2020, accounting for a market share of over 60%. However, the non-carbonated soft drink segment is expected to grow at a higher CAGR during the forecast period.
- In terms of volume, the Indian soft drink market stood at 23.5 billion liters in 2020, with the carbonated soft drink segment accounting for the majority of the volume.
- The rising urbanization and increasing disposable income of consumers have been identified as the key drivers of growth in the Indian soft drink market. The growth in the organized retail sector and the increasing popularity of e-commerce platforms have also contributed to the growth.
- Coca-Cola and PepsiCo are the leading players in the Indian soft drink market, with a combined market share of around 75%. Other notable players in the market include Parle Agro, Dabur, and Bisleri.
- The Indian government has imposed a sin tax on soft drinks, which has led to a decline in the consumption of sugary drinks. In addition, there has been a growing trend towards healthy and natural beverages, which has led to the emergence of new players in the market offering products such as fruit juices and coconut water.
Overall, the Indian soft drink market is expected to grow significantly in the coming years, and VBL is well-positioned to capture this growth through its distribution model, product innovation, and expanding capacities.