Beverages

TABLE OF CONTENTS
List of Figures ............................................................................................................................ 6 List of Tables ............................................................................................................................. 9 1. 2. 3. 4. Indian Non Alcoholic Beverages Market Introduction .................................................... 10 Indian Non-Alcoholic Beverages Market Size, FY2005 FY2010 .............................. 11 Indian Non-Alcoholic Beverages Market Segmentation by Product, FY2005 FY2010 12 Indian Bottled Water Industry Market Introduction ......................................................... 13 4.1. Indian Bottled Water Market Size, FY2005-FY2010 ............................................ 14 Indian Bottled Water Market Consumption in Volume, FY2005-FY2010 .... 14 Indian Bottled Water Market Sales in Value, FY2006-FY2010 ..................... 15
4.1.1. 4.1.2. 4.2.
Indian Bottled Water Market Segmentation.............................................................. 16 By Packaged Drinking and Natural Drinking Water, FY2010 ......................... 16 By Geography, FY2010 .................................................................................... 17
4.2.1. 4.2.2. 4.3. 4.4.
Indian Bottled Water Market Trends and Developments.......................................... 18 Indian Bottled Water Market Competitive Landscape.............................................. 19 Indian Packaged Drinking Water Market Competitive Landscape ................... 19
4.4.1.
4.4.2. Market Share of Major Players In Indian Packaged Water Market by Brands, FY2010 20 4.4.3. Indian Natural Mineral Water Market Competitive Landscape ........................ 22
4.4.4. Market Share of Major Players in Indian Natural Mineral Water Market by Brands, FY2010 .............................................................................................................. 23 4.5. Indian Bottled Water Market Future Outlook and Projections, FY2011-FY2015 . 24
4.5.1. Cause and Effect Relationship between Dependent and independent factors prevailing in Indian Bottled Water Industry ..................................................................... 25 5. Indian Carbonated Soft Drinks Industry Market Introduction ......................................... 27 5.1. Indian Carbonated Soft Drinks Industry Market Size, FY2005-FY2010 ............... 28
5.1.1. Indian Carbonated Soft Drinks Market Consumption in Volume, FY2005FY2010 28 2
5.1.2. 5.2.
Indian Carbonated Soft Drinks Market Sales in Value, FY2005-FY2010 ......... 29 Indian Carbonated Soft Drinks Market Segmentation, FY2010 .............................. 30 By Cola and Non-Cola Drinks ........................................................................... 30 By Geography .................................................................................................... 31 By Rural and Urban Consumption..................................................................... 32
5.2.1. 5.2.2. 5.2.3. 5.3. 5.4.
Indian Carbonated Soft Drinks Trends and Developments ....................................... 33 Indian Carbonated Soft Drinks Market Competitive Landscape .............................. 34 Market Share of the Major Players of the Indian Soft Drinks Market............... 35
5.4.1.
5.5. Indian Carbonated Soft Drinks Market Future Outlook and Projections, FY2011FY2015 ............................................................................................................................... 36 5.5.1. Cause and Effect Relationship between Dependent and independent factors prevailing in Indian Carbonated Soft Drinks Industry ..................................................... 37 6. Indian Tea Market Introduction........................................................................................ 39 6.1. 6.2. 6.3. 6.4. Indian Tea Market Size, FY2005-FY2010 ............................................................. 40 Indian Tea Market Segmentation by Geography, FY2010 ...................................... 41 Indian Tea Trends and Developments ....................................................................... 42 Indian Tea Market Competitive Landscape .............................................................. 43 Market Share of the Major Brands of Indian Tea Market, FY2010 ................. 45
6.4.1. 6.5.
Indian Tea Market Future Outlook and Projections, FY2011-FY2015 ................. 46
6.5.1. Cause and Effect Relationship between Dependent and Independent Factors Prevailing in Indian Tea Industry ..................................................................................... 48 7. Indian Juice Market Introduction ..................................................................................... 49 7.1. Indian Juice Market Size, FY2005-FY2010 ........................................................... 50 Indian Juice Market Consumption in Volume, FY2005-FY2010 ................... 50 Indian Juice Market Sales in Value, FY2006-FY2010 ................................... 51
7.1.1. 7.1.2. 7.2.
Indian Juice Market Segmentation on the Basis of Packaging, FY2005-FY2010 . 52 Indian Packaged Juice Market Size, FY2005-FY2010 ................................... 53 Indian Packaged Juice Market Segmentation ............................................. 54
7.2.1.
7.2.1.1.
By Fruit Drinks, Fruit Juices and Nectar Category, FY2010 .................................. 54 3
By Geography, FY2010 ........................................................................................... 55 7.2.2. 7.3. 7.4. Indian Fresh Juice/ Unpackaged Juice Market Size, FY2005-FY2010 .......... 56
Indian Juice Trends and Developments .................................................................... 57 Indian Juice Market Competitive Landscape ............................................................ 58 Market Share of the Major players of the Indian Juice market.......................... 60
7.4.1. 7.5.
Indian Juice Market Future Outlook and Projections, FY2011-2015 ...................... 61
7.5.1. Cause and Effect Relationship between Dependent and independent factors prevailing in Indian Juice Industry ................................................................................... 64 8. Indian Coffee Industry Market Introduction .................................................................... 66 8.1. 8.2. Indian Coffee Market Size, FY2005-FY2010 ........................................................ 67 Indian Coffee Market Segmentation, FY2010 ......................................................... 68 By Geography, FY2010 .................................................................................... 68 By Instant and Conventional Coffee, FY2010 ................................................. 68
8.2.1. 8.2.2. 8.3. 8.4.
Indian Coffee Market Trends and Developments ..................................................... 69 Indian Coffee Manufacturers Competitive Landscape.............................................. 71 Market Share of the Major Brands of Indian Coffee Market, FY2010 ............ 73
8.4.1. 8.5.
Indian Coffee Retail Market Competitive Landscape ............................................... 74 Market Share of Major Coffee Retail Chains in India, FY2010 ...................... 75
8.5.1. 8.6.
Indian Coffee Market Future Outlook and Projections, FY2011 FY2015 .......... 77
8.6.1. Cause and Effect Relationship between Dependent and Independent Factors Prevailing in Indian Coffee Industry ................................................................................ 78 9. Indian Energy Drinks Industry Market Introduction ........................................................ 80 9.1. 9.2. 9.3. Indian Energy Drinks Market Size, FY2005-FY2010............................................ 80 Indian Energy Drinks Market Trends and Developments ......................................... 81 Indian Energy Drinks Market Competitive Landscape ............................................. 82 Market Share of Major Brands of the Indian Energy Drinks Market, FY2010 84
9.3.1. 9.4.
Indian Energy Drinks Market Future Outlook and Projections, FY2011-FY2015 85
9.4.1. Cause and Effect Relationship between Dependent and Independent Factors Prevailing in Indian Energy Drinks Industry.................................................................... 86 10. Indian Non Alcoholic Beverages Industry SWOT Analysis ........................................ 87 Strengths .................................................................................................................... 87 Weakenesses.............................................................................................................. 87 Opportunities ............................................................................................................. 88 Threats ....................................................................................................................... 88 11. Indian Non Alcoholic Beverages Industry Future Outlook and Projections, FY2011FY2015 ................................................................................................................................... 88 12. Macro Economic Indicators: Current and Projections .................................................. 90 Population, FY2005-FY2015 .............................................................................. 90 Consumer Expenditure on Food and Beverages, FY2007-FY2015 ................... 91 FDI Inflows in Food Processing Industry, FY2006-FY2015 ............................. 92 Ad Spend on Food and Beverages Industry, FY2005-FY2015 .......................... 93 Commodity Food Price Index, FY2005-FY2015 ............................................... 94
12.1. 12.2. 12.3. 12.4. 12.5. 13.
Appendix ....................................................................................................................... 95 Market Definition .................................................................................................. 95 Abbreviations......................................................................................................... 96 Research Methodology .......................................................................................... 97 Data Collection Methods ........................................................................................... 97 Approach ................................................................................................................... 98 Variables (Dependent and Independent) ................................................................... 98 Multi Factor Based Sensitivity Model ...................................................................... 99 Final Conclusion ..................................................................................................... 102
13.1. 13.2. 13.3.
13.4.
Disclaimer ............................................................................................................ 103
LIST OF FIGURES
Figure 1: Indian Non Alcoholic Beverage Market Size in terms of Consumption in Million Litres and Per Capita Consumption in Litres, FY2005-FY2010 .......................................... 11 Figure 2: Indian Bottled Water Market Size in Terms of Consumption in Million Liters and Per Capita Consumption in Liters, FY2005-FY2010............................................................ 15 Figure 3: Indian Bottled Water Market Sales in USD Million, FY2006-2010 ...................... 16 Figure 4: Indian Bottled Water Market Segmentation by Product, in Percentage, FY2010 .. 17 Figure 5: Indian Bottled Water Market Segmentation by Geography, in Percentage, FY2010 .................................................................................................................................................. 17 Figure 6: Indian Packaged Water Market Share, in Percentage, FY2010 .............................. 21 Figure 7: Indian Natural Mineral Water Market Share, in Percentage, FY2010.................... 23 Figure 8: Indian Bottled Water Projections by Consumption in Million Litres and Per Capita Consumption in Litres, FY2011-FY2015 ............................................................................. 25 Figure 9: Indian Soft Drinks Market Consumption in Volume in Million Litres and Per Capita Consumption in Litres, FY2005-FY2010 ............................................................................. 28 Figure 10: Indian Carbonated Soft Drinks Market Sales in USD Million, FY2006- FY2010 .................................................................................................................................................. 29 Figure 11: Indian Carbonated Soft drinks Market Segmentation by Product, in Percentage, FY2010 ................................................................................................................................... 30 Figure 12: Indian Carbonated Soft Drinks Market Segmentation by Geography, in Percentage, FY2010................................................................................................................ 31 Figure 13: Indian Carbonated Soft Drinks Market Segmentation by Rural and Urban Consumption, in Percentage, FY2010 .................................................................................... 32 Figure 14: Market share of the Major Players of the Indian Soft Drinks Market, in Percentage, FY 2010............................................................................................................... 35 Figure 15: Indian Carbonated Soft drinks Industry projections by Consumption in Million Litres and Per Capita Consumption in Litres, FY2011-FY2015 .......................................... 37 Figure 16: Cause and Effect Relationship Analysis between Industry Factors and Expected Carbonated Soft Drinks Market Prospects ............................................................................... 37 Figure 17: Indian Tea Market Size in terms of Consumption in Million Kilograms and Per Capita Consumption in Grams, FY2005-FY2010................................................................. 40
Figure 18: Indian Tea Market Segmentation in terms of Production by Geography, in Percentage, FY2005-FY2010 ................................................................................................ 41 Figure 19: Indian Tea Market Share of Major Brands, in Percentage, FY2010..................... 45 Figure 20 Indian Tea Industry projections by Consumption in Million Kilograms and Per Capita Consumption in Grams, FY2011-FY2015................................................................. 47 Figure 21: Indian Juice Market Consumption in Million Liters and Consumption Per Capita in Milliliters, FY2005-FY2010 ............................................................................................. 51 Figure 22: Indian Juice Market sales in USD Million, FY2006-FY2010 ............................. 52 Figure 23: Indian Juice Segment on the Basis of Packaging, in Percentage, FY2005-FY2010 .................................................................................................................................................. 53 Figure 24: Indian Packaged Juice Market Size in terms of Consumption in Million Liters and Per Capita Consumption in Milliliters, FY2005-FY2010 ..................................................... 54 Figure 25: Indian Packaged Juice Market Segmentation on Basis of Fruit Drinks, Fruit Juices and Nectar Category, in Percentage, FY2010 ........................................................................ 55 Figure 26: Indian Packaged Juice Market Segmentation by Geography, in Percentage, FY2010 ................................................................................................................................... 55 Figure 27: Indian Unpackaged Juice Market Size by Consumption in Million Liters and Per Capita Consumption in Milliliters, FY2005-FY2010 ........................................................... 56 Figure 28: Market Share of the Major Players of the Indian Juice Market, in Percentage, FY2010 ................................................................................................................................... 60 Figure 29: Indian Juice Industry Projections by Consumption in Million Litres and Per Capita Consumption in Milliliters, FY2011-FY2015 ....................................................................... 62 Figure 30: Indian Packaged Juice Industry Projections by Consumption in Million Litres and Per Capita Consumption in Milliliters, FY2011-FY2015 ..................................................... 63 Figure 31: Indian Unpackaged Juice Industry Projections by Consumption in Million Litres and Per Capita Consumption in Milliliters, FY2011-2015..................................................... 64 Figure 32: Indian Coffee Market Size by Consumption in Million Kilograms and Per Capita Consumption in Grams, FY2005-FY2010 ............................................................................ 67 Figure 33: Indian Coffee Market Segmentation by Products, in Percentage, FY2010 .......... 69 Figure 34: Market Share of the Major Brands of the Indian Coffee Market on the Basis of Sales, in Percentage, FY2010 ................................................................................................. 73
Figure 35: Market Share of the Major Brands of the Indian Coffee Retail Market, in Percentage, FY2010................................................................................................................ 76 Figure 36: Indian Coffee Industry projections by Consumption in Million Kilograms and Per Capita Consumption in Grams, FY2011-FY2015................................................................. 78 Figure 37: Indian Energy Drinks Market Size by Consumption in Terms of Million Liters and Consumption Per Capita in Milliliters, FY2005-FY2010 ..................................................... 81 Figure 38: Market Share of Major Brands of the Indian Energy Drinks Market, in Percentage, FY2010 ................................................................................................................................... 84 Figure 39: Indian Energy Industry Projections by Consumption in Million Litres and Per Capita Consumption in Milliliters, FY2011-FY2015 ........................................................... 86 Figure 40: Cause and Effect Relationship Analysis between Industry Factors and Expected Energy Drinks Market Prospects ............................................................................................. 86 Figure 41: Indian Non Alcoholic Beverage Industry Projections by Consumption in Million Liters and Per capita Consumption in Litres, FY2011-FY2015 ........................................... 89 Figure 42: Population of India in Million, FY2005-FY2015 ................................................ 90 Figure 43: Consumer Expenditure on Food and Beverages in USD Million, FY2007FY2015 ................................................................................................................................... 91 Figure 44: FDI Inflows in Food Processing Industry in USD Million, FY2006-FY2015 .... 92 Figure 45: Ad Spend on Food and Beverages Industry in USD Million, FY2005-FY2015 . 93 Figure 46: Commodity Food Price Index, FY2005-FY2015 ................................................ 94
LIST OF TABLES
Table 1: Indian Non-Alcoholic Beverage Market Segmentation by Product, FY2005FY2010 ................................................................................................................................... 13 Table 2: Indian Packaged Drinking Water Market Competitive Landscape ........................... 19 Table 3: Indian Natural Mineral Water Competitive Landscape ............................................. 22 Table 4: Cause and Effect Relationship Analysis between Industry Factors and Expected Bottled Water Market Prospects .............................................................................................. 25 Table 5: Indian Carbonated Soft Drinks Market Competitive Landscape ............................... 34 Table 6: Indian Tea Market Competitive Landscape ............................................................... 43 Table 8: Cause and Effect Relationship Analysis between Industry Factors and Expected Tea Market Prospects ...................................................................................................................... 48 Table 9: Indian Juice Market Competitive Landscape ............................................................ 58 Table 10: Cause and Effect Relationship Analysis between Industry Factors and Expected Juice Market Prospects ............................................................................................................ 64 Table 11: Indian Coffee Market Segmentation by Geography in Metric Tonnes, FY2007FY2010 ................................................................................................................................... 68 Table 12: Indian Coffee Manufacturers Competitive Landscape ............................................ 71 Table 13: Indian Coffee Retail Market Competitive Landscape ............................................. 74 Table 14: No. of Outlets the Major Brands of the Indian Coffee Retail Market, FY2010 .... 76 Table 15: Cause and Effect Relationship Analysis between Industry Factors and Expected Coffee Market Prospects .......................................................................................................... 78 Table 16: Indian Energy Drinks Competitive Landscape ........................................................ 82 Table 17: Correlation Matrix ................................................................................................. 100 Table 18: Regression Coefficients Output ............................................................................. 102
1. INDIAN NON ALCOHOLIC BEVERAGES MARKET INTRODUCTION
The Indian non-alcoholic beverage has experienced robust growth in the past few years. The industry is broadly classified into carbonated soft drinks, fruit juices, fruit drinks, nectars, fresh juice, energy and sports drinks, distilled bottled water, tea and coffee beverages which have no alcohol content. The non-alcoholic drinks market has grown at a healthy CAGR of 11.3% during the period from FY2005-FY2010 to the consumption level of 11,558.5 million litres in FY2010 backed by emerging wellness trends, higher income level, changing life style and rising expenditure for healthy diet by middle class and higher income group. The industry has allured heavy foreign investments with the liberalization in trade policies which has increased the consumption of non alcoholic beverages in the country. The major contributor to this growth rate was the increase in the per capita consumption of bottled water and energy drinks in India. The consumption of energy drinks has more than trebled from the level of 13.1 million litres in FY2005 to 48.0 million litres in The non-alcoholic drinks market has FY2010 while bottled water consumption has more grown at a healthy CAGR of 11.3% than doubled in the last 5 years to 6,493.1 million during the period from FY2005litres in FY2010. FY2010 to the consumption level of Indian lifestyle has evolved over time with a predilection for healthy non-alcoholic beverages especially fruit and vegetable juices. Fast expanding middle class population, increased urbanization and health conscious diet has brought a revolution in the branding, promotion and innovation strategies of many players. Even Pepsi and Coca-cola which are market leaders in carbonated soft drinks market are introducing new products for health conscious population. Overall, India is poised with a compelling growth potential for non alcoholic beverage sales. Rising GDP, favorable growth in the demographics with a growing urban middle class population, growth of modern retail formats and rising health consciousness, age preferences are positively acting in paving way for promising and bright future for the market.
11,558.5 million litres in FY2010
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2. INDIAN NON-ALCOHOLIC BEVERAGES MARKET SIZE, FY2005 FY2010
The non-alcoholic beverage market in India has witnessed a mixed growth in the recent past. The industry has registered a growth rate of 11.3% in 2010. The total consumption for FY2010 stood at 11,559 million liters with the per capita consumption of 9.5 liters as compared to 10,381 million liters of total consumption and 8.7 liters of per capita consumption in FY2009. The growth of the Indian non-alcoholic beverage industry from FY2005- FY2010 has largely been due to the increasing inflow of FDIs. After the liberalization of trade policies, foreign investments have started to flow into the market. MNCs like Coca-Cola, PepsiCo and Nestle started to penetrate the market with varied range of products, providing several options to the consumers which brought about a change in the consumption pattern of the Indian consumers. For instance, a decade ago Indian consumers were unaware about ready to drink (RTD) Tea or Coffee but today India is one of the highest consumers of instant/ ready to drink beverages. Moreover, the increasing disposable income and growing urbanization has played their role as a catalyst to the growth of the Indian non-alcoholic beverage industry. Moreover, the increasing disposable income and movement of individuals from rural to urban areas has shifted the taste of people to healthier and tastier beverages propelling the demand for non-alcoholic beverages. Figure 1: Indian Non Alcoholic Beverage Market Size in terms of Consumption in Million Litres and Per Capita Consumption in Litres, FY2005-FY2010
Per Capita Consumption (Litres) 14,000 Consumption (Million Litres) 12,000 10,000 8,000 6,000 4,000 2,000 FY'2005 FY'2006 Consumption
Source: AM Mindpower Solutions
9.5 8.7 7.8 7.2 6.6 6.0
10.0 9.0 8.0 7.0 6.0 5.0
6,774
7,534
8,413
9,273
10,381
11,559
4.0 3.0 2.0 1.0 0.0
FY'2007
FY'2008
FY'2009
FY'2010
Per Capita Consumption
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3. INDIAN NON-ALCOHOLIC BEVERAGES MARKET SEGMENTATION BY PRODUCT, FY2005 FY2010

The Indian non-alcoholic beverage market has been dominated by the bottled water segment with a market share of 56.2% in FY2010 followed by soft drinks with 31.4% and tea with 6.9%. The market for bottled water in India has increased over the years and is one of the emerging markets. The growing insufficiency of pure and safe water and rising water borne diseases has influenced the demand for packaged water. The soft drinks market is the second largest market in the Indian non-alcoholic beverage industry with a share of 31.4% in FY2010. The market share of this segment has showcased a downward trend since FY2005. This was largely due to the pesticide controversy in 2006 which had a strong effect on this segment of the market resulting in a fall in the market share by 1.8%. The controversy had actually led consumers to switch on to healthy drinks over soft drinks. However, changes in lifestyle, increasing disposable income and changes in consumers tastes and preference with soft drinks becoming a complementary drink with food are driving the market growth. Indian tea market is the third largest market in the Indian non-alcoholic beverage industry with a share of 6.9%. The segment has been losing its share over the years in the industry. This is largely due to the slow growth in the consumer base for tea with several consumers switching to other substitutes in the market. Additionally, the rapid increase in the consumer base of other non-alcoholic beverages has outpaced the market for tea in India. The changes in consumers preference towards healthy and fresh beverages have resulted in an increase in the growth rate of Juice segment. The busy lifestyle in the urban areas has created a situation in which the intake of nutritional contents has decreased from the daily diet. Hence, in order to compensate for this decreased intake of nutritional foods, individuals have increased the consumption of juices which complements the nutritional value. Although, the inclusion of juices in the daily diet plan increases the expenditure on food, individuals are willing to pay a premium in order to stay healthy with the rise in the propensity to spend. The Juice segment though currently enjoys less share of the Indian non-alcoholic beverage industry is expected to emerge in the near term. Coffee is one of the largest foreign exchange earners for India. A major chunk of coffee produced in India is exported, thus leaving a very less share for domestic consumption. As a result, a large amount of coffee is imported every year by India to meet the gap between the demand and supply of coffee, which in turn is responsible for the trade deficit of the coffee industry in India. Moreover, migration of labor to the urban areas in search of better living 12
The Indian non-alcoholic beverage market has been dominated by the bottled water segment with a market share of 56.2% in FY2010 followed by soft drinks with 31.4% and tea with 6.9%
and high wage rate have also affected the production of Coffee due to unavailability of labors. The energy drinks market on the other side has managed to post an impressive growth rate of 39% in FY2010. The market share of energy drinks has been increasing over the period with strong brand positioning and preference amongst the young adults. Unlike soft drinks market, this market has been pacing up and is one of the preferred market segments for the players in the Indian non-alcoholic beverage industry. With strong positioning in the minds of the young adults, this segment is estimated to race up to the top with a CAGR of 32.1% in the next 5 years. Table 1: Indian Non-Alcoholic Beverage Market Segmentation by Product, FY2005FY2010
Market Share (%) Bottled Water Soft Drinks Tea Juices Coffee Energy Drinks Total
FY'2005 42.7% 41.2% 11.2% 3.5% 1.2% 0.2% 100%
FY'2006 45.4% 39.4% 10.2% 3.6% 1.1% 0.2% 100%
FY'2007 47.2% 38.4% 9.3% 3.7% 1.1% 0.2% 100%
FY'2008 50.0% 36.2% 8.6% 3.9% 1.0% 0.3% 100%
FY'2009 53.2% 33.6% 7.7% 4.1% 1.0% 0.3% 100%
FY'2010 56.2% 31.4% 6.9% 4.2% 0.9% 0.4% 100%
4. INDIAN BOTTLED WATER INDUSTRY MARKET INTRODUCTION
Water is one of the basic necessities of our life and has captured a major chunk of our growing economy in the form of packaged or bottled drinking water. The packaged drinking water is experiencing growth because of the growing economy, rising disposable income, poor public water distribution system and infrastructure, increasing level of water pollution and urbanization. The market has witnessed an increased use of packaged water for household activities such as cooking and washing which has also resulted in a rapid growth of this segment in the recent past.
13
The bottled water market is estimated to have more than 200 brands, of which a major portion is held by the local players (inclusive of the cottage industry). Even, the big players which dominated this market segment are facing the pressure of maintaining their position in the market. Bisleri, which once has a monopoly in the bottled water market, is now facing stiff competition from all domestic and international brands such as Nestle, Coca-cola, PepsiCo, Manikchand, UB, Britannia and Mount India is the tenth largest consumer Everest. Currently, India is the tenth largest consumer of bottled water in the world with the consumption level of 6,493.1 million litres growing at a CAGR of 17.5% in the last 5 years. With an exceptional growth rate, this market has become the choice of all marketers and players of the industry.
of bottled water in the world with the consumption level of 6,493.1 million litres growing at a CAGR of 17.5% in the last 5 years
4.1. INDIAN BOTTLED WATER MARKET SIZE, FY2005FY2010
4.1.1. INDIAN BOTTLED WATER MARKET CONSUMPTION IN VOLUME, FY2005-FY2010
The Indian bottled water market is one of the fastest growing and emerging markets in India. With a growth rate of 17.5% in the FY2010, this market tends to impress all the marketers and players of the industry. With a per capita consumption of 5.3 liters in 2010, this market segment leads the Indian non-alcoholic beverage industry. The drive of consumers towards safe and pure drinking water due to inadequate supply of pure and safe drinking water and growing water borne diseases such as cholera, jaundice and others have influenced the growth of this segment. Moreover, the growing urbanization and rising propensity of consumers to spend on safe drinking water has resulted into high per capita consumption of bottled water. In other words, its the desire of people to consume healthy drinks and stay fit.
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Figure 2: Indian Bottled Water Market Size in Terms of Consumption in Million Liters and Per Capita Consumption in Liters, FY2005-FY2010
7000.0 6000.0 Consumption(in Million Liters) 5000.0 3.4 4000.0 2.6 3000.0 2000.0 2,894 1000.0 0.0 2005 2006 Consumption 2007 2008 2009 2010 Per Capita Consumption 3,972 4,634 5,528 2.0 1.0 0.0 3,420 3.0 6,493 3.0 3.9 4.0 4.6 5.3 6.0 5.0 Per capita Consumption (in Liters)
4.1.2. INDIAN BOTTLED WATER MARKET SALES IN VALUE, FY2006-FY2010
The sales of bottled water in India have clocked up to USD 903.2 million in 2010 from USD 703.1 million in 2009 registering a growth rate of 28.4%. However, the Indian market is expected to double this figure in the years to come with growing preference towards safe and pure drinking water. This growth and attitude of the market has been attributed by the increasing disposable income together with the lack of pure and safe drinking water.
15
Figure 3: Indian Bottled Water Market Sales in USD Million, FY2006-2010

1000.0 900.0 800.0 USD Millions 700.0 600.0 500.0 400.0 300.0 200.0 100.0 0.0 2006 2007 2008 2009 2010 436.2 510.2 602.0 703.1 903.2
4.2. INDIAN BOTTLED WATER MARKET SEGMENTATION
4.2.1. BY PACKAGED DRINKING AND NATURAL DRINKING WATER, FY2010
The Indian bottled water market has further been classified into two categories such as packaged drinking water market and natural mineral water market. The packaged drinking water continue to dominate the bottled water market with a share of around 89.6% followed by natural mineral water market with a share of 10.6% in FY2010. The significant growth achieved by packaged water over natural mineral water has been due to certain factors such as availability and affordability. Packaged drinking water is very easily available and affordable than natural mineral water. For an The packaged drinking water continue instance, Bisleri (packaged drinking water) is to dominate the bottled water market easily available at any of the retail or small stores with a share of around 89.6% followed at a price of INR (12-15) for a litre, whereas, Aqua by natural mineral water market with (Natural Mineral Water) is not easily available at a share of 10.6% in FY2010 the local stores and is much more costly (INR 75) than a liter bottle of Bisleri. Moreover, a major chunk of Indian consumers are unaware of natural mineral water due to poor brand positioning. 16
Figure 4: Indian Bottled Water Market Segmentation by Product, in Percentage, FY2010

10.4%
Packaged Drinking Water
Natural Mineral Water
89.6%
4.2.2. BY GEOGRAPHY, FY2010
The bottled water consumption is highest in southern parts of India with 39.6% followed by northern India with 26.3%, western India with 24.4% and eastern India with 9.7% in 2010. However, the lower consumption rate in Eastern India shows the potential of the market. Figure 5: Indian Bottled Water Market Segmentation by Geography, in Percentage, FY2010
24.4%
26.3% North East West 9.7% South
39.6%
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4.3. INDIAN BOTTLED WATER MARKET TRENDS AND DEVELOPMENTS
The industry has been witnessing a plethora of activities in the form of new product development, wide spread marketing and packaging and emergence of new players demanding a share in the market. Increasing Per Capita Consumption in Search of Pure and Safe Water The inadequate supply of pure and safe water clubbed with the rising water borne diseases in India has made people switch to bottled water in the recent past. On the verge of such growing complexities of drinking water, the per capita consumption has increased from 4.6 litres in FY2009 to 5.3 litres in FY2010. Expansion in the product line of the bottled water category: The most visible trend to tap this market has been the expansion in the product line of the bottled water category. The marketers of the bottled water industry have been adapting innovative strategies in the product category by adding new variants or flavors to their existing products. For example, PepsiCo in the recent past has come up with flavored water. Intensifying competition in the local markets The potential of the bottled water market has attracted many small players into the market leading to an increased level of competition in the Indian bottled water market. With more than 200 brands operating in the market, a major chunk of the niche market is tapped by the local or small players. It has been observed that the low production cost of bottled water have made small players enter into the market which in turn is intensifying the level of competition in the local market. Focus on institutional sales The marketers of the bottled water market with a major focus on institutional sales have been trying to increase their market share in India. Brands such as Bisleri, Himalayan, Qua, Acquafina and others are continuously adapting push strategy in the institutional sales. For example, Bisleri is one of the major brands which are streaming its products through offices and colleges for bulk sales Innovative Packaging and Marketing The bottled water market in India is majorly driven by innovative marketing and packaging strategies to appeal to the tastes and preference of the consumers. Marketers today are adapting new packaging style and pack sizes to cater to the need of every section of the 18
market. With pack sizes of 20 litre jars, 1 litre and 500 ml bottles, marketers are trying to cater to the households as well as individual requirements. For example, Bisleri introduced the 20 litre jar to position its product in the mind of the housewives and become a part of the daily household need. Moreover, Kinley, a brand of Coca-Cola have been planning to launch water pouches to tap the local market or the rural market.
4.4. INDIAN BOTTLED WATER MARKET COMPETITIVE LANDSCAPE
4.4.1. INDIAN PACKAGED DRINKING WATER MARKET COMPETITIVE LANDSCAPE
Table 2: Indian Packaged Drinking Water Market Competitive Landscape Major Players
Major Products and Positioning Bisleri under its flagship brand has new variant Vedica Mountain water: Positioned as pure and sweet water
Business Overview
In 1969, Bisleri pioneered the concept of bottled water in India #1 in the bottled water market with 17 owned plants, 33 co-packers, 11 franchisees and wide distribution channel Company provides the brand in 8 pack sizes of 250ml cups, 250ml bottles, 500ml, 1 litre, 1.5 litre, 2 litre, 5 litre, and 20 litre; Has launched 20 litre jars for household consumption especially for housewives The company is headquartered in Mumbai Launched in 2000 by Coca-Cola India, Kinley holds 24.6% of the
Geographical Reach
Company has captured markets in major cities such as Ahmedabad, Bangalore, Chandigarh, , Chennai, Delhi, Goa, Himachal Pradesh, Hyderabad, Indore, Jaipur and Kolkata
Kinley: Positioned as a pure and safe
The company marks its footfalls in some of the
19
market. Coca-Cola has been planning to launch Kinley drinking water in 200 ml pouches to tap the rural areas in the near future Headquartered in Gurgaon, Haryana Acquafina was launched in Mumbai in 1999 and moved Pan India in 2000 The product is bottled across 19 plants across India Acquafina with a new innovative product, flavored mineral water is aimed to capture the youth and the young adults segments of the market
packaged drinking water
major states and cities such as Bangalore, Gurgaon, Delhi, Mumbai, Hyderabad and many others across India After a launch in Mumbai, the company measure the market for bottled water by setting up offices in Delhi, Bangalore, Maharashtra and Gurgaon
Acquafina: Positioned as a safe and healthy drinking water Acquafina Flavor Splash: Markets in various flavors such as grapes, wild Berry, strawberry, Rasberry, Lemon and Peach Mango, positioned to the range of consumers who prefer to have something different.
4.4.2. MARKET SHARE OF MAJOR PLAYERS IN INDIAN PACKAGED WATER MARKET BY BRANDS, FY2010
The Indian Packaged water market is dominated by Parles Bisleri with a market share of 39.8% followed by Coca-Cola Indias Kinley with 24.6% and PepsiCos Acquafina with 14.4% and the rest 21.2% of the market is served by the small and the local players. Bisleris strong brand positioning and consumer preference has been gaining the market share for the brand. Bisleri with a focus on market expansion has launched various sizes of bottled water to cater to the household as well as individual needs with a strong positioning in the mind of the housewifes and the out-of-home consumers. Kinley, on the other hand is trying to retain the customers by building mass marketing campaign emphasizing on the purity and quality of the packaged drinking water. The 20
company has even designed a new packaging and campaign involving outdoor and television advertisments based on consumer needs to offer a convenient grip and reaffirm companys commitment to purity. Figure 6: Indian Packaged Water Market Share, in Percentage, FY2010
21.2%
39.8%
Bisleri Kinley Acquafina
14.4% Others
24.6%
Source: AM Mindpower Solutions Note: Others include small and local players
21
4.4.3. INDIAN NATURAL MINERAL WATER MARKET COMPETITIVE LANDSCAPE
Table 3: Indian Natural Mineral Water Competitive Landscape Major Players
Business Overview
Qua natural mineral water has been launched by the Narang Group in 2007. The company headquartered in Mumbai serves the need across India It is available in pack sizes of 1 litre and 500 milliliter. Himalayan natural mineral water is a brand of Mount Everest Mineral Water, a public limited company incorporated in 1991, partly acquired by TATA Group in August 2007 Available in pack sizes of 2 litre, 1.5 litre, 1 litre, 750 milliliter, 500 milliliter and 250 milliliter The brand is authorized by HACCP, BIS and ISI in India Internationally recognized by the US FDA, the Health Ministers of Japan and France , the European Union and the institute de Fresenius, Germany The company is headquartered in Mumbai
Products Qua: Positioned as a natural and pristine mineral water from the valleys of Himalaya for health conscious consumers in urban areas Qua +: Positioned as vitamin enriched water Himalayan: Natural mineral water positioned as packed directly from the natural resource for urban youth and health conscious customers
Geographical Reach
The company markets in major cities such as Gujarat, Maharashtra, New Delhi, Kolkata, and Bangalore
Company operates across few of the major states in India such as Bangalore, Kolkata and New Delhi
Source: Company Reports and AM Mindpower Solutions
22
4.4.4. MARKET SHARE OF MAJOR PLAYERS IN INDIAN NATURAL MINERAL WATER MARKET BY BRANDS, FY2010
The natural mineral water market is dominated by two players Himalayan and Aqua with a market share of 39.1% and 38.7% respectively in FY2010. Other players such as Catch, Natural Springs, Mulshi Springs and local players share rest 22.2% of the natural mineral water market. As compared to the packaged drinking water market in India, the market for natural mineral water is niche and upcoming which offers compelling business opportunities. Currently, there are only few players such as Mount Everest Mineral who serve the market with their strong brand positioning, wide distribution channel and commands high share in the market through increased exports.
Figure 7: Indian Natural Mineral Water Market Share, in Percentage, FY2010
22.2%
39.1%
Mount Everest
Aqua
Others
38.7%
Source: AM Mindpower Solutions Note: Others include small and local players
23
4.5. INDIAN BOTTLED WATER MARKET FUTURE OUTLOOK AND PROJECTIONS, FY2011-FY2015
Indian bottled future outlook looks bright with several opportunities working in favour of the industry. The industry has witnessed astounding double digit growth of 17.5% in the past 5 years and has achieved several milestones during the period. Several private players have entered in this unorganized industry to tap the yet to be explored potential of increasing per capita consumption in India. Due to the rising scarcity of water in the industrial and domestic household sectors, commercial businesses around the water industry is expected to register robust growth in the near future. Several drivers such as increasing health consciousness among the masses, surging propensity to spend and deteriorating quality of water will continue to impel the industry performance. The bottled water consumption is expected to increase by 15.6% to 7,506.0 million litres in FY2011. With the market size projected to almost double itself in the next 5 years, India is been considered as one of the fastest growing bottled water markets in the world. Rising water industry is expected to With the market size projected to allure private investments of around USD 11 billion almost double itself to 13,456 from domestic and international players. million litres in the next 5 years, Indian bottled water is also expected to face the impact of several challenges affecting the industry such as low entry barriers and threat from inferior quality products, public campaigns, litigation threats and ineffective transportation supply chain in the near term. Government regulation which has mandated for all the bottled water producers to secure Indian Standard Institution (ISI) mark from Bureau of Indian Standards (BIS) is also anticipated to become stricter with the increase in the water borne disease such as diarrhea, jaundice, typhoid, cholera, polio and gastroenteritis. In such circumstances, Indian bottled water industry is expected to face the pressure of sustaining the growth rate in the short run. However, positive changes such as improved purification process, attractive packaging and brand differentiation strategies, rising investment in transportation infrastructure and new player entrance from other industries especially retail and healthcare will aid the market to resolve these challenges and threats in the long run. The market is forecasted to register an expected CAGR of 15.7% in the coming 5 years. The market is expected to increase its consumption to 7,506 million litres at a growth rate of 6.1% in FY2011. The market is estimated to maintain the double digit growth rate in the next 5 years registering consumption as high as 13,456 million litres by FY2015.
India is been considered as one of the fastest growing bottled water markets in the world
24
Figure 8: Indian Bottled Water Projections by Consumption in Million Litres and Per Capita Consumption in Litres, FY2011-FY2015
16,000 10.4 14,000 Consumption(In Million Litres) 8.9 12,000 10,000 6.1 8,000 6,000 4,000 2,000 0 2011 2012 Consumption
12.0 10.0 8.0 6.0 13,456 11,442 7,506 8,474 9,796 4.0 2.0 0.0 2013 2014 Per Capita Consumption 2015 Per Capita Consumpiton(In Litres)
7.7 6.8
4.5.1. CAUSE AND EFFECT RELATIONSHIP BETWEEN DEPENDENT AND INDEPENDENT FACTORS PREVAILING IN INDIAN BOTTLED WATER INDUSTRY
Table 4: Cause and Effect Relationship Analysis between Industry Factors and Expected Bottled Water Market Prospects
Industry Factors Scarcity of pure and safe water Market Impact Positive; Comments Cause: Mounting population together with pollution has resulted into the inadequate supply of pure and safe drinking water across India Effect: Shift of demand towards safe packaged drinking water
25
Growing Heath Concern
Positive;
Cause: Supply of impure and contaminated water due to pathogenic micro-organisms has resulted into water borne diseases such as cholera, diarrhea, Jaundice and others Effect: Increased per capita consumption of packaged drinking water
Changing consumer tastes and preferences
Positive; Negative;
Cause: Rising living standard and disposable income leading to switch towards natural mineral water Rising consumer preference towards water purifier as a permanent solution to water borne diseases. Positive Effect: Rising consumer base for natural mineral water Negative Effect: Expected to pose a threat to the bottled water market by providing the consumers a permanent solution to the water borne diseases
Rising Personal Disposable Income
Positive;
Cause: Increasing employment and saving is yielding the higher budget allocation to spend on safe and pure drinking water Effect: Robust growth in the Consumer Expenditure on bottled water
Increasing private investments from domestic and international players
Positive;
Cause: Exceptional ROI and growth prospects of the bottled water market have attracted investments from many domestic and international players Effect: Infrastructure development, better technology for processing and purifying the normal water.
Public Campaigns and litigations against the use of inferior quality products
Negative;
Cause: Increasing number of small and local players with unbranded inferior quality products has led to several public litigations Effect: Expected to pose a threat to the positioning and the growth of the bottled water market
Source: AM Mindpower Solutions Note: Shaded region represents the degree of impact on the market
26
5. INDIAN CARBONATED SOFT DRINKS INDUSTRY MARKET INTRODUCTION
The concept of soft drinks originated in the effort to change the hard-drinking habits of early Americans. However, over the period, soft drinks business was mass commercialized as players designed natural ingredients products with low calorie and sodium content. The Indian carbonated soft drinks industry stands second largest in the packaged food industry in India in terms of consumption. The consumption of carbonated soft drinks market has increased at a CAGR of 3.8% to 3,627 million litres in FY2010 from 2,790 million litres in FY2005. This has been the result of rapid expansion of the market in India and increasing disposable income of the people. The in-house consumption of soft drinks has increased to 20% underscoring the gaining popularity of soft drinks in the households beverages consumption. Additionally, changing life style of people and increasing number of fast food joints have added to the gaining popularity of soft drinks in India. Soft drinks are now positioned as a drink complementary with all the meal and for all the occasions. The strong growth in on-premise demand has also been witnessed The Indian carbonated soft drinks in the recent times through which marketers industry stands second largest in channelized their distribution across India. The carbonated soft drinks market has been majorly held by two soft drinks giant Coca-Cola and PepsiCo, of which the former dominates the market with 56.8% of the market followed by PepsiCo with 36.3% in FY2010. Both the players serve the Indian carbonated soft drinks market with their strong brand positioning and distribution channel. Coca-Colas performance in the Indian market has been attributed by its widespread popularity amongst the youth and innovative packaging styles. For example, Coca-Cola with the desire to tap the rural areas of India had launched the Chotta Coke. Today because of the dynamic attitude of the market, marketers are adapting varied strategies to promote their offering as a youthful and harmless Soft drink. For example, after the controversy of soft drinks being injurious to health, CocaCola and PepsiCo has launched Diet Coke and Pepsi Max with minimum calories and fizz. The market for Indian carbonated soft drinks though matured, is comparatively younger than other developed markets such as the US in terms of per capita consumption. As compared to the 216 litres of per capita consumption of carbonated soft drinks in the US, Indias per capita consumption is recorded way below 3 litres in FY2010. This underscores the scope for the growth in the market in the future. It is expected that the carbonated soft drinks consumption will increase to 3,761 million litres at a rate of 3.7% in FY2011, with strong preference amongst the age group of 18-35 years . 27
the packaged food industry in India in terms of consumption of 3,627 million litres in FY2010
5.1. INDIAN CARBONATED SOFT DRINKS INDUSTRY MARKET SIZE, FY2005-FY2010
5.1.1. INDIAN CARBONATED SOFT DRINKS MARKET CONSUMPTION IN VOLUME, FY2005-FY2010
The soft drinks market is one of the matured markets in India. With more than two decades of experience in the Indian non alcoholic beverage industry, this market has maintained a consistency in its growth and is the second largest market in the Indian non-alcoholic beverage industry. In 2010, the per capita consumption stands to 3 liters in comparison to 2.5 liters in 2005. This underscores that market has compelling opportunities in the future, even though the industry is in mature stage. It has been observed that the increase in the fast food joints have increased the popularity of carbonated soft drinks, which as a result has increased the consumption of carbonated soft drinks in India. A strong growth in the in-house consumption has also been witnessed in the recent past. Figure 9: Indian Soft Drinks Market Consumption in Volume in Million Litres and Per Capita Consumption in Litres, FY2005-FY2010
4000 Consumption (In Million Liters) 3500 3000 2500 2.5 2.6 2.8 2.8 2.9 3.0
3.5 3.0 2.5 2.0 Per capita Consumption(In Liters)
2000 1500 1000 500 0 2005 2006 Consumption 2007 2008 2009 2010 Per Capita Consumption 2,790 2,970 3,231 3,357 3,492 3,627 1.5 1.0 0.5 0.0
28
5.1.2.INDIAN CARBONATED SOFT DRINKS MARKET SALES IN VALUE, FY2005-FY2010
After the offset by the pesticide controversy in the year 2006, the Indian soft drinks market managed to register a positive swing in 2007 and since then the growth has been consistent for this segment of the market. In the year 2010, the market has registered value sales of USD 2,501.5 million with a growth rate of 16.6% in comparison to USD 2,146 million in 2009. This growth has been the result of the rising disposable income and rapidly rising preference amongst the youth. The soft drinks industry has been influenced by the rapidly rising demand in the households and fast food joints. Moreover, the branding and positioning strategies adapted by the soft drink giants such as Coca-Cola and PepsiCo have driven the sales of the soft drinks market to a great extent.
Figure 10: Indian Carbonated Soft Drinks Market Sales in USD Million, FY2006FY2010
3000.0 2,501.5 2500.0 Sales(in USD Million) 2,146.2 1,985.9 2000.0 1,687.9 1500.0 1,827.7
1000.0
500.0
0.0 2006
2007
2008
2009
2010
29
5.2. INDIAN CARBONATED SOFT DRINKS MARKET SEGMENTATION, FY2010
5.2.1. BY COLA AND NON-COLA DRINKS
The Indian soft drinks market by products has been segmented into two broad categories, colas and the non-cola drinks. It has been observed that the non-cola drinks segment dominates the market of soft drinks with a share of 70.8% in FY2010 followed by cola drinks segment with 29.2%. This has been due to the shift in the consumers preference towards non-cola drinks such as Limca, Fanta and others.
Figure 11: Indian Carbonated Soft drinks Market Segmentation by Product, in Percentage, FY2010
29.2% Cola Drinks
Non- Cola Drinks
70.8%
30
5.2.2. BY GEOGRAPHY
The soft drinks market has been dominated by Western part of India with a market share of 31.6% followed by Northern India with 25.6% and Southern and Eastern India with 25.3% and 17.5% respectively in FY2010. The low market share of the eastern part of India presents the potential of the market and provides marketers an opportunity to explore the under-penetrated market. Meanwhile, as a result of higher income levels of the people in the southern and northern India, the nonalcoholic drinks market has been stimulated in these regions. Figure 12: Indian Carbonated Soft Drinks Market Segmentation by Geography, in Percentage, FY2010
25.3%
25.6%
North
East
West 17.5% South 31.6%
31
5.2.3. BY RURAL AND URBAN CONSUMPTION
The soft drinks market has largely been influenced by the growing urbanization in the recent times. The urban consumption accounted for 67.6% of the total soft drinks consumption in India as compared to 32.4% consumption by rural India. This may be due to low income level and less brand awareness in the rural areas of India. The rural markets are the yet under-penetrated and are driving the attention of marketers these days. It has been forecasted that in near term, the rural market will boost up the sales of the carbonated soft drinks industry.
Figure 13: Indian Carbonated Soft Drinks Market Segmentation by Rural and Urban Consumption, in Percentage, FY2010
32.4% Rural
Urban
67.6%
32
5.3. INDIAN CARBONATED SOFT DRINKS TRENDS AND DEVELOPMENTS
Increasing Preference for Healthy and Nutritious Drinks Rising awareness among youth and young adults related to problems associated with drinking carbonated soft drinks such as bone and tooth decaying have led them to switch to healthy and nutritious fruit drinks, nectars and fruit juices. This preference is becoming stronger with higher bargaining power of buyers due to lower switching cost. Innovative Packaging Strategies There has been a major shift in the packaging of soft drinks from traditional glass bottles to tetra packs, cans and pet bottles. The soft drinks giants, Coca-Cola and PepsiCo have been incurring huge capital expenditure towards designing innovative packaging to appeal to the youth and cater to the need based market. For example, Coca-Cola launched Chota Coke to cater to the rural market for the customers who wish to consume small quantity of soft drinks at a cheaper price. Moreover, cans and pet bottles provided additional scalability to the soft drinks as this made the product easy to carry. Coca-Cola and PepsiCo are trying to tap youth and young adults segment by providing innovative products packaging such as PepsiCo has introduced Mountain Dew in limited edition innovative Neon pack to reaffirm the product positioning in the minds of the target customers. Marketers are constantly trying to capitalize the market with varied packaging styles and sizes. Rising Distribution Channel The marketers are focusing to push their sales through innovative distribution strategies across India. Players are constantly building wide distribution network by installing several vending machines in malls, food courts, railway stations, restaurants, schools, colleges, theatres, airport and stadiums to reach to masses
33
5.4. INDIAN CARBONATED SOFT DRINKS MARKET COMPETITIVE LANDSCAPE
Table 5: Indian Carbonated Soft Drinks Market Competitive Landscape Major Brands
Major Products and Positioning Cola drinks: Coca-cola: Positioned as a generic cold drink for all occasions marketed to rural and urban population Thumps Up: Positioned as a strong fizzy drink for masculine young adults Diet Coke: Positioned as less calorie drink for health conscious consumers Non-Cola drinks: Sprite: Positioned as a light lemon-lime flavored soft drink for quenching thirst Fanta: Positioned as a fun filled orange drink Limca: Positioned as a lemon and lime flavored refreshing carbonated soft drink PepsiCo entered India in 1989 and since then it has proved to be one of the largest carbonated soft drinks player #2 player in carbonated soft drink market with 36.3% share Recently the company has launched Mountain Dew in Neon bottle to Cola drinks: Pepsi: Positioned as a drink for young India. Pepsi Max: Positioned as a less calories content soft drink for health conscious consumers Non Cola drinks: 7UP:Positioned as a lemon flavored carbonated drink Major markets include Delhi, Noida, Bangalore, Chandigarh, Kolkata, Chennai and Mumbai.
Business Overview
Coca-Cola India operates as a wholly owned subsidiary of the Coca-Cola Company which manufactures and sells concentrates and beverages #1 carbonated soft drinks company with a market share of 56% as on FY2010 Headquartered in Gurgaon, Haryana, the Company employs more than 1, 50,000 people across India
Geographical Reach
The Company has presence in all the 4 metros and states across India Company owned bottling plants in some of major cities including Jaipur, Varanasi, Patna, Guwahati, Bhopal, Hyderabad, Bhubaneshwar, Vishakhapatanam and others across India
34
appeal to the mass. Headquartered in Gurgaon, Haryana, the Company employs 1, 50,000 people across India
Mountain Dew: Positioned as a citrusflavored carbonated soft drink for young and active people who indulge in extreme sports and adventurous activities
5.4.1. MARKET SHARE OF THE MAJOR PLAYERS OF THE INDIAN SOFT DRINKS MARKET
The Indian soft drinks market has been dominated by the two soft drinks giants, Coca-Cola India and PepsiCo with a market share of 56.8% and 36.3% respectively in FY2010. The two giants with their strong brand positioning and distribution channel have acquired the major chunk of the market. With an aim to position their brands in the minds of the target market, Coca-Cola and PepsiCo have been adapting innovative packaging style and sizes. The market leader, Coca-Cola with its rising popularity amongst the age group of 15-25 has dominated the market of the carbonated soft drinks in India. Figure 14: Market share of the Major Players of the Indian Soft Drinks Market, in Percentage, FY 2010
6.9%
Coca-Cola India
36.3% 56.8%
Pepsica India
Others
35
5.5. INDIAN CARBONATED SOFT DRINKS MARKET FUTURE OUTLOOK AND PROJECTIONS, FY2011-FY2015
The Indian soft drinks market is evolving over the period with dynamic consumption pattern and target market positioning in the duopoly market system. Soft drinks which were considered as drinks in summers have now become beverages complementary with daily meals. This was largely driven by the influx in the number of fast food joints such as pizza and burger chains which have increased the popularity of the soft drink as a part of everyday meal. This has even resulted in a surge in the in-house purchase and consumption of soft drinks. In-house consumption accounts for over 20% of the sales of the soft drinks in India. The soft drink is expected to stay on its convex growth curve with several opportunities thriving in favor of the industry such as under-penetrated rural market. Rural areas currently account for over 75% sales of Pet bottles of 200 ml and 300 ml. In the short run, market leaders such as Pepsi and Coca-Cola are expected to devise innovative distribution and packaging system which will aid in operational efficiency in reaching to small kirana stores in far-stretching villages. Moreover, the The carbonated soft drinks market in India is marketers are expected to increase the estimated to grow at a CAGR of 5.1 % in the investment in infrastructure for distribution next 5 years with growing distribution channel and marketing of soft drinks. Robust growth and innovative brand building strategies. The in demand is expected to continue in the onmarket consumption is estimated to touch premise stores as well such as stores in the 4,659 million litres by FY2015 railway stations, multiplexes, shopping malls and others which underscore the budding potential in the market. The soft drinks industry is also facing many challenges in the form of growing health issues such as obesity, weight related diseases, tooth decay and decreasing bone density which is affecting the market growth momentum. The growing health issues may result into a ban of sales of soft drinks in schools and colleges in many states posing a threat to future potential of the industry. However, soft drinks giants like Coca-Cola and PepsiCo have been adapting various strategies in the form of new product development such as Diet cokes, Diet Pepsi, Pepsi Max which contains less sweetness and questionable ingredients to reduce the problems of dental decay and declining bone density. The soft drink industry is also expected to face constraints due to high bargaining power of suppliers because of high dependence on the bottling partners affecting the industry value chain. Carbonated soft drinks manufacturers are anticipated to devise strategies to increase the number of bottling partners in order to improve efficiency in reaching to the end users. Overall, the Indian soft drinks market has compelling potential to penetrate the large Indian population in the future since per capita consumption of soft drinks in India is low as compared to other developed markets of Europe and the US. The market is expected to 36
register an incline in the consumption in the next 5 years as popularity of the soft drinks will incline across all states and villages in India. The carbonated soft drinks market in India is estimated to grow at a CAGR of 5.1 % in the next 5 years with growing distribution channel and innovative brand building strategies. The market consumption is estimated to touch 4,659 million litres by FY2015. Figure 15: Indian Carbonated Soft drinks Industry projections by Consumption in Million Litres and Per Capita Consumption in Litres, FY2011-FY2015
5,000.0 4,500.0 4,000.0 3,500.0 3,000.0 2,500.0 2,000.0 1,500.0 1,000.0 500.0 2011 2012 Consumption
Consumption(In Million Litres)
3.6 3.4 3.3 3.2 3.1 3,761 3,968 4,155 4,383 4,659
3.7 3.6 3.5 3.4 3.3 3.2 3.1 3.0 2.9 2.8 2.7
2013
2014 Per Capita Consumption
2015
5.5.1. CAUSE AND EFFECT RELATIONSHIP BETWEEN DEPENDENT AND INDEPENDENT FACTORS PREVAILING IN INDIAN CARBONATED SOFT DRINKS INDUSTRY
Figure 16: Cause and Effect Relationship Analysis between Industry Factors and Expected Carbonated Soft Drinks Market Prospects
Industry Factors Rising Health issues Market Impact Negative; Comments Cause: The consumption of carbonated soft drinks have increased health related issues such as tooth decay, reducing bone density, weight problems and others amongst youths. Effect: People are expected to prefer healthier drinks such as juices; many schools and colleges may ban the
37
Per Capita Consumpiton(In Litres)
sales of carbonated soft drinks in many states in long run Influx in the number of fast food joints Positive; Cause: Increased tendency of people to eat fast foods have led to a rise in the number of fast food and quick service chains Effect: Mounting popularity of soft drinks as a complementary drink with fast food; expected to increase the per capita consumption Innovative distribution and packaging strategy Positive; Cause: The underpenetrated rural market has led marketers adapt to innovative distribution and packaging system Effect: Easy accessibility of soft drinks in several villages with streamlined distribution channel; expected increase in the per capita consumption of Pet bottles in rural areas Dependency on the bottling partners Rising propensity to spend Negative; Cause: Suppliers have high bargaining power in the industry due to higher dependency on bottling partners Effect: Expected to adversely affect the value chain Positive; Cause: Increasing employment opportunities have increased the propensity of consumers to spend on nonalcoholic beverages Effect: Expected to increase the consumers demand for soft drinks Environmental Concern Negative; Cause: Several packaging strategies use non biodegradable plastic; wastage of water in manufacturing carbonated soft drinks Effect: Expected to increase the government regulations in the industry; Switch to eco-friendly packaging will lead to a rise in cost of production in the short run
38
6. INDIAN TEA MARKET INTRODUCTION
Since the inception of the Indian non-alcoholic beverages market, tea has been an area where the country has registered supernormal growth in generating foreign exchange and in its contribution to the GNP. Ever since the independence, tea production has registered a growth rate of 250% with an increase in the land area by 35%-40%. India has maintained its strong foothold in tea industry with its production, exports, imports and consumption across the world. Around 30% of the global tea production is contributed by India. With the increase in production, the tea exports have increased considerably and are estimated at around USD 22.41 million in 2010. However the net foreign exchange earned stands to USD 4.14 million in 2010. The Industry provides employment to approximately 1.2 million workers of which 50% are women. The quality of tea produced in India remains unmatched to the other tea producing countries in the world, irrespective of the original Orthodox, CTC and the Green Tea or the Darjeeling or Assam and Nilgiri Tea. In the recent past, the tea industry has suffered a huge loss because of the damage caused by pests and excessive rains. Despite this damage the industry has managed to increase the production in some markets and their exports to some extent. The Indian Tea Association after their review estimated the damage to be around 20 million kilograms crops, which is again estimated to be the highest damage in the history of tea industry. It has been observed that due to the damage of crops in Assam, the total crop loss for North India increased to 13 million kg for the crop year. In the year 2010, the Country is estimated to export 20% i.e. 193.29 million kilograms of its total production. Despite of the major chunk of the total tea produced being consumed domestically, India happens to be the fourth largest exporters of tea in the World. India is trying to raise the bar of tea production to compete with other countries such as Sri Lanka and Kenya. Despite of the north India loosing shares in tea production, south India has managed to register a production of 794.6 million kilograms of production in FY2010. Moreover, it is estimated that the supply of tea would fall short in 2011 due to an increasing domestic consumption and the rising demand during the winters. The Indian tea market, being one of the oldest and the largest market in India, is majorly tapped by the unpackaged or the unorganized sector of the industry. The market is generally unorganized because of the presence of several small and local players who continue to 39
India has maintained a strong foothold in tea industry in the production, exports, imports and consumption across the world. Around 30% of the global tea production is contributed by India
dominate the tea industry with better quality and low price. In states such as Assam and West Bengal, consumers prefer unpackaged tea over packaged tea. The packaged tea industry in India is a matured market with more than 300 brands competing for their survival and with around 42% of the tea market shared by Tata Tea and HUL. Other players such as Waghbakri, Duncans Eveready, Goodricke, Dhanseri, Sapat and others are also gaining market through their regional presence. In addition to these players, there are many small and local players who share a major portion of the market.
6.1. INDIAN TEA MARKET SIZE, FY2005-FY2010
With market share of 6.9% in 2010, tea is the third largest market in the Indian non-alcoholic beverage industry. In FY2010, the per capita consumption has declined to 653 grams from 670 grams in FY2009. This decline in the per capita consumption of tea has been the result of the loss suffered in production in some of the major producing areas due to pest attacks and excessive rainfall. However, measures have been taken and the consumption is expected to increase over the period of time.
Figure 17: Indian Tea Market Size in terms of Consumption in Million Kilograms and Per Capita Consumption in Grams, FY2005-FY2010
810 678 800 Consumption(in Million Kilograms) 790 780 770 802 760 750 740 730 2005 2006 Consumption
685 PerCapita Consumption (In Grams) 675 670 672 670 680 675 670 665 804 653 795 660 655 650 645 640 2007 2008 2009 Per capita Consumption 2010
786 771 757
40
6.2. INDIAN TEA MARKET SEGMENTATION BY GEOGRAPHY, FY2010
India has continued to stand as one of the largest producers of tea in the world. In 2010, the tea production in north India and south India for the year 2010 dipped down to 723.0 million kilograms and 243.4 million kilograms from 734.8 million Kilograms and 244.1 million kilograms respectively in 2009 due to pest attacks in Assams tea plantations, one of Indias major tea producing state. However, despite of the damage suffered in the production, the country stands to be the second largest producer of tea in the world as on 2010.
Figure 18: Indian Tea Market Segmentation in terms of Production by Geography, in Percentage, FY2005-FY2010
1,200 946.0 Production(In million kilograms) 1,000 227.6 228.6 221.7 247.0 244.1 243.4 South India
981.8
986.43
981
978.98
966.39
800
600
400
718.4
753.2
764.7
734.0
734.8
723.0
North India
200
0 2005 2006 2007 2008 2009 2010
Source: Tea Board of India
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6.3. INDIAN TEA TRENDS AND DEVELOPMENTS
Changing Consumer Preference towards Different Flavors and Varieties Changing consumer preference to test new products, flavors and varieties have led many big players in the tea industry to expand their product line with several new flavors and variants. In the last 10 years, players such as Tata Tea, Taj Mahal and Twinings have introduced several flavors such as ginger, cardamom, lemon, earl grey (with bergamot essence), ashwaghandha, mulethi (yashtimadhu), and tulsi. Even, the green tea sales have increased on health grounds. It is expected in the near term, Indian population will switch to different flavors due to rising curiosity to try new varieties. Increasing Joint Ventures between the Giants of the Indian Non-Alcoholic Beverage Market The Indian tea market has been witnessing a plethora of activity. Recently, HUL brand Lipton has entered into a joint venture with the carbonated soft drinks giant, PepsiCo to launch Lipton ice tea in three variants for those who prefer active and healthy lifestyle. Moreover Coca-Cola joint venture with Nestle launched Nestea to target the on-the-goyoung adults who spend most of the time out of home or at work. Evolving Concept of Internationalizing Plantations The increasing demand and the overgrown land have led the Indian tea companies internationalize their tea plantation operations by acquiring tea companies overseas. It is being observed that Indian tea companies are acquiring tea estates and tea companies in Africa to increase its production to cater to the increasing demand of the tea drinkers.
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6.4. INDIAN TEA MARKET COMPETITIVE LANDSCAPE
Table 6: Indian Tea Market Competitive Landscape Major Brands

Major Products and Positioning Tata Tea Premium: Flagship brand of Tata Tea repositioned as afresh strong tea including small and big leaves for younger consumers Tata tea Gold: Up-grader product of Tata Tea available in 4 variants of Darjeeling, Assam, Nilgiris and Ceylon to provide consumers an exotic tea drinking experience. Tata Tea Agni: Positioned as a tea of choice in India Life: Positioned as a refreshener for stressful busy lifestyle Founded in 1990, Brooke Bond operates as an wholly owned subsidiary of Hindustan Unilever Brooke Bond has a portfolio of 5 brands including Red Label, Taj Mahal, 3 Roses, Taaza and Sehatmand and commands a Brooke Bond Red label: Repositioned as a tasty and healthy tea for Indian families Brooke Bond Taaza: Positioned as a refreshing blend of tea for FY2010 Revenue: USD 432 million; 93,924 tonnes Expected FY2011 Revenue: USD 465 million with Operates Estates and Plantations in North and South India Owns Tea export plants in Maharashtra and Uttar Pradesh
Business Overview
Tata Teas was founded in 1962 and became a public listed firm in 1963 The Tata Tea with 21.4% share dominates the Indian tea market Company is involved in all the operations in value chain including research and development, tea cultivation, manufacture of black and instant tea, blending, packaging, branding, marketing, sales and distribution of tea .
Financials FY2010 Revenue: USD 1,473 million
Geographical Reach
Strong presence in over 40 countries Owns and Operates 24 Plantations in Assam and West Bengal Operates Packaging factories in Karnataka, Uttar Pradesh and other states of India.
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market share of 21% of the tea market in India On 6th June 2011, HUL in collaboration with PepsiCo announced the launch of Lipton ice tea in pet bottles targeted to position among 18-30 age groups.
inspiring women. Brooke Bond Taj Mahal: Positioned as a premium tea for tea lovers. Lipton Tea: With variants such as green tea and Darjeeling tea, Lipton tea is positioned as a healthy tea for the Healthy Indian. WB Organic Assam and Darjeeling Tea: Positioned as rich aromatic organic tea for connoisseurs WB Organic Darjeeling Green Tea: Positioned as a flavored tea for health conscious consumers
an expected sale of 94,719 tonnes
Founded in 1892, Waghbakri is one of the largest tea producers and sellers in India The company markets both unpackaged and packaged tea brands from Darjeeling, Assam and Nilgiri tea estates; Sells organic black and green tea for the health conscious individuals The company is planning to set a new production plant in Ahmedabad along with another production unit in west Asia with an investment of Rs.40 crore to boost up the exports. Headquartered in Ahmedabad, the Company has an employee base of over 400 professional managers and skilled personals
FY2010 Revenue: USD 122 million
Major markets include Madhya Pradesh, Maharashtra, Gujarat, Rajasthan, Kolkata and Delhi NCR
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6.4.1. MARKET SHARE OF THE MAJOR BRANDS OF INDIAN TEA MARKET, FY2010
In FY2010 Tata Tea with a strong brand positioning amongst the households and increasing exports managed to lead the packaged tea market with 21.4% share, followed by HLL with 21.0% and Waghbakri with 7.6%. The unorganized segment shared around 50% of the market in FY2010 with strong presence in areas such as Assam, West Bengal and Gujarat and Maharashtra where people comparatively consider unpackaged tea to be of better quality and taste.
Figure 19: Indian Tea Market Share of Major Brands, in Percentage, FY2010
21.4% Tata tea
HLL 50.0% Waghbakri 21.0% Others
7.6%
Source: Company Reports and AM Mindpower Solutions Note: Others Include the Unpackaged or Unorganized Tea Market
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6.5. INDIAN TEA MARKET FUTURE OUTLOOK AND PROJECTIONS, FY2011-FY2015
The Indian tea market is one of the oldest markets in the non alcoholic beverage industry and has a prominent place in the Indian economy. The tea production has grown at a steady growth rate of 1% in the last 5 years from 757.0 million kilograms in FY2005 to 794.6 million kilograms in FY2010. The seasonality and weather conditions have always played a major role in determining the production and consumption of tea in India. Indian tea production has grown by about 6% YoY in the first half of 2011 and with weather conditions likely to remain normal in the second half of the year, it is expected that tea production will grow to 801.0 million kilograms in FY2011. The market is anticipated to receive high foreign exchange by the major tea importing countries with the shortfall of tea in the global markets. Strong global tea prices due to demand-supply mismatch will also aid the Indian tea plantation companies to yield around INR 10-12 per kilograms higher return relative to previous year. An expected rise in demand for Indian tea and incline in average return in the global markets will result in a further Indian tea market is poised to achieve improvement in the average export return. Domestic packaged and unpackaged tea market is also expected to maintain the growth trajectory in the coming years, assuming that major tea producing states will continue to witness favorable or atleast neutral weather conditions. Branded tea market is projected to gain higher penetration in major cities such as Bangalore, Delhi and Ahmedabad with the growing number of organized retail channels. However, the potential for nationwide growth for packaged tea will remain limited in the short run due to higher price differential between branded and unpackaged tea and with the dominance of unorganized sector which caters to Indian households through more than 2.5 million kirana stores. Meanwhile, the unpackaged tea will continue to gain foothold in eastern and western region especially in Assam, West Bengal, and Gujarat with the strong consumer preference and good quality perception towards unpackaged tea. Tea consumers who are highly concentrated towards middle aged people will soon witness a shift towards youth and young adults. This shift has already been initiated with several brands targeted towards younger generation through effective media campaigning such as Tata Teas Jaago Re campaign. This shift will aid several players in the matured branded tea industry to tap this niche segment. The Indian tea bag segment will also witness major growth with an increasing out-of home consumption. Several Indian tea bags manufacturers have already launched various flavors in their leading brands such as Lipton, Taj Mahal, Tetley, Nestle and Double Diamond to 46
balanced growth of 1.1% in the next 5 years with an increasing regional consumption of branded and unpackaged tea, rising consumer base of youth and young adults, and development of niche segments of tea bags and flavored tea
provide different choices to the consumers. It is estimated tea bag consumption in India will increased to 7,260 tonnes per annum in FY2011 with an annual growth rate of over 21%. In the long run, the tea bag consumption will register an exceptional growth and will cross the benchmark of 15,000 tonnes per annum consumption by FY2015. Overall, Indian tea market is poised to achieve balanced growth of 1.1% in the next 5 years with an increasing regional consumption of branded and unpackaged tea, rising consumer base of youth and young adults, normal weather conditions, firm global tea prices, inclining exports and development of niche segments of tea bags and flavored tea. Total tea consumption in India is expected to grow to 840.9 million kilograms by FY2015.
Figure 20 Indian Tea Industry projections by Consumption in Million Kilograms and Per Capita Consumption in Grams, FY2011-FY2015
850.0 Consumption(In Million Kilograms) 840.0 830.0 820.0 810.0 800.0 809.8 790.0 780.0 2011 2012 Consumption
651.0 Per Capita Consumpiton(In Grams) 649.8 650.0 649.0 648.1 647.3 646.1 840.9 820.3 828.5 645.0 644.0 2013 2014 Per Capita Consumption 2015 801.0 646.0 648.0 647.0
648.2
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6.5.1. CAUSE AND EFFECT RELATIONSHIP BETWEEN DEPENDENT AND INDEPENDENT FACTORS PREVAILING IN INDIAN TEA INDUSTRY
Table 7: Cause and Effect Relationship Analysis between Industry Factors and Expected Tea Market Prospects
Industry Factors Regional consumer preference of packaged and unpackaged tea Market Impact Comments Cause: Different tea quality perception of various region has molded the consumer preference towards packaged and unpackaged tea with preference of dust tea in South India, leaf tea in North India, unpackaged tea in Western and Eastern India Effect: Aid players to concentrate on different regions with strategies according to consumer preference; High growth of branded tea in almost all the metros Changing Consumption Pattern Positive; Cause: Rising out-of-home consumption and increasing youth and young adults consumers will shift the focus of the industry Effect: Expected growth in demand for instant tea made from tea bag; Rise in growth of flavored tea offering several options such as ginger, cardamom, lemon tea among young consumers Heath concerns Positive; Cause: Mounting health concern among consumers with an increasing awareness level regarding the ingredients and benefits of non-alcoholic beverages Effect: Expected to increase the consumption of green tea, which is considered healthy. Demand-Supply Mismatch in the international tea market Positive; Cause: Shortfall in production relative to consumption due to adverse conditions in several countries has led to an increase in global tea prices Effect: Expected to increase the tea exports with higher return from major tea importing countries Negative; Cause: Lower wage rate and less benefits has led to protests by labour in plantations Effect: Expected shortfall in the tea production
Positive;
Labour Unrest in the estates
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7. INDIAN JUICE MARKET INTRODUCTION
A change has been witnessed in the Indian non alcoholic beverage segment with a shift from carbonated soft drinks towards the preference for more healthy drinks. The growing health concerns, changes in the tastes and preferences and the increasing disposable income of the consumers by large has brought such changes in the market scenario. The Indian juice market has been classified into Fruit Juices, Fruit Drinks and Nectars. Fruit juices account for 100% of the pulp content, The packaged fruit juice market which is nectars account more than 24% but less than worth USD 819.1 million in FY2010 is 99% and fruit drinks consist less than 24% of excelling at a growth rate of 15.8%. Pulp content. However, the per capita consumption in The juice industry in India is widely covered by the unpackaged segment of the market in which local stores and road-side juice shops play a vital role. As on FY2010, 86.6% of the market was covered by the unpackaged segment which is comparatively much higher than 13.5% of the market which is held by the packaged juices. However, it has been estimated that the market for packaged juices would increase over the period with a strong preference amongst the age group of 18-35 years, because of the increased shelf life of packaged juices, readily availability and easy to carry packaging. . The packaged fruit juice market which is worth USD 819.1 million in FY2010 is excelling at a growth rate of 15.8%. However, the per capita consumption in India is much lower (20 ml approx) than other developing countries such as China (1500 ml approx). The enormous growth of the sector has left the Indian players thinking to expand their portfolio into the juice segment. For instance, in the recent past, Dabur India has launched Real Activ and Real Junior under the flagship of Real to gain a larger share of the Indian fruit juice market. Similarly, Parle Agro, once the leader of the packaged juice market is now planning to enter into 100% Juice market. These juices do not contain any preservatives and are more durable with respect to the duration of the life of the product. However, Parle Agro with its new brand in 100% juice market is said to face a cut throat competition from other major players such as Daburs Real, PepsiCos Tropicana and Coca-Colas Minute Maid. Parle is planning to adopt innovative marketing strategy for introducing its new product in a similar manner to the one adopted for Appy Fizz. Since the product was targeted for the youth segment of the population, the packaging was made which appealed to the youth.
India is much lower than other developing countries such as China
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Coca Cola is also likely to enter the 100% juice market in the near future. With brands like Minute Maid and Maaza doing well in the market, the company has now strategized to expand their beverage portfolio by entering into this segment. Dabur Foods continue to dominate the juice market with their wide range of fruit juice variant under the brand Real. After achieving a major stake in the market for juices, Dabur has stepped on to segmenting the juice market by launching Real Junior. This preservative free fruit drink with an appealing packaging showcasing animated fruits is targeted to position in the minds of the children below six years. As a strategy to tap the juice market, Dabur in the recent past came up with their brand Real Active, which is showcased as a healthy drink. The drink was targeted to tap the health conscious mass who wants to stay healthy and fit. In order to maintain their position in the market, PepsiCo has been strategizing to expand their beverage portfolio under the brand Tropicana. Following Dabur, PepsiCo has also streamlined itself into 100% juice market. Analyzing the lucrative state of the juice market in India, Boost is set to launch around five fresh juice bars in India under the brand Boost Juice Bars. This change is expected to revolutionize the future of the Juice segment of the Indian non-alcoholic beverage market.
7.1. INDIAN JUICE MARKET SIZE, FY2005-FY2010
7.1.1. INDIAN JUICE MARKET CONSUMPTION IN VOLUME, FY2005-FY2010
The Indian juice market is one of the fastest growing and emerging markets in the Indian non-alcoholic beverage market. During the historical period from FY2005-FY2010, the market has grown at a CAGR of 15.3%. In FY2010, the per capita consumption of the Indian juice market was recorded at 401 milliliters as compared to 212 milliliters in FY2005. This immense growth of the juice segment of the market has attracted the giants like Coca-Cola, PepsiCo to enter into 100% juice market. However, the strong shift in consumers tastes and preference and growing health concerns have led to the growth of this market. Moreover, the rising disposable income has increased the consumers demand for healthy and natural drinks.
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Figure 21: Indian Juice Market Consumption in Million Liters and Consumption Per Capita in Milliliters, FY2005-FY2010
600 500 305 Consumption(In Million Liters) 400 237 300 200 100 0 2005 2006 Consumption
401 351 270 212 487 421 239 272 314 361
450 400 Per capitaConsumpiton (In MIlliliters) 350 300 250 200 150 100 50 0
2007
2008
2009
2010
7.1.2. INDIAN JUICE MARKET SALES IN VALUE, FY2006-FY2010
In FY2010 the market registered value sales at USD 564.0 million as compared to USD 369.0 million in FY2006. The rise in the sales of the juice market has been largely contributed by the growing health concerns and the rising disposable income. Another fact that added to the rise in the sales of juices in India was the pesticide controversy which had propelled the consumers to prefer and consume hygienic beverages.
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Figure 22: Indian Juice Market sales in USD Million, FY2006-FY2010

600 500 Sales(in USD MIllions) 424.0 400 300 200 100 0 2006
564.0 484.0 454.0 369.0
2007
2008
2009
2010
7.2. INDIAN JUICE MARKET SEGMENTATION ON THE BASIS OF PACKAGING, FY2005-FY2010
Although the Indian juice market has been dominated by the unpackaged segment but the recent past has seen enormous growth potential in the packaged juice segment. In comparison to the growth rate of 9.8% in FY2005, the packaged juice segment has registered a growth of 13.5% in FY2010. The growing health concerns and the preference of consumers to consume fresh and hygienic juices have led to the increase in consumption of packaged juices in India. Moreover, the packaged juices in India have found a place in the households, where skipping the breakfast is a common practice. Individuals tend to consume packaged juice so as to cover up for the less intake of nutritional food. On the other hand, the unpackaged juice segment in India is driven by low price factor. People still prefer to consume low priced quality juices at the road side stalls rather than consuming a liter of packaged juice which is twice the price of a liter of unpackaged juice.
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Figure 23: Indian Juice Segment on the Basis of Packaging, in Percentage, FY2005FY2010
100%
95%
9.8%
10.5%
10.9%
11.8%
12.4%
13.5%
90%
85% 90.2% 80% 89.5% 89.1% 88.2% 87.6% 86.6%
75% 2005 2006 2007 Unpackaged Juice

2008 Packaged Juice
2009
2010
7.2.1. INDIAN PACKAGED JUICE MARKET SIZE, FY2005-FY2010
The packaged juice market has grown at a historical CAGR of 15.3% as on FY2010. The consumption of the packaged juices in India grew from 23.5 million liters in FY2005 to 65.3 million liters in FY2010 showcasing the growth potential of the market. This growth has been largely attributed to growing urbanization, changing lifestyle tastes and preference and increasing health concerns.
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Figure 24: Indian Packaged Juice Market Size in terms of Consumption in Million Liters and Per Capita Consumption in Milliliters, FY2005-FY2010
70.00 60.00 Consumption(In Millioin Litres) 0.04 50.00 0.04 40.00 0.02 30.00 20.00 10.00 0.00 2005 2006 Consumption
0.05
0.06 Per Capita Consumption(In Millilitres)
0.05
0.04
0.03 65.53 52.36 42.44 23.46 28.59 34.27 0.01 0.03 0.02
0.02
0.00 2007 2008 2009 2010 Per Capita Consumption
7.2.1.1.
INDIAN PACKAGED JUICE MARKET SEGMENTATION
BY FRUIT DRINKS, FRUIT JUICES AND NECTAR CATEGORY, FY2010
In 2010, 63.4% of the market was majorly held by the fruit drinks segment followed by 28.9% of fruit juices and 7.7% by nectars. The presence of several brands such as Real, Frooti, Maaza, Minute Maid and the preference of consumers towards them have led the market in the FY2010. However, the growing preference for nutritious drinks amongst the working class of the population, who often skip their breakfast have made the fruit juices market gain a healthy share in the market for packaged juices.
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Figure 25: Indian Packaged Juice Market Segmentation on Basis of Fruit Drinks, Fruit Juices and Nectar Category, in Percentage, FY2010
7.7%
Fruit Drinks 28.9% Fruit Juices
63.4%
Nectar
BY GEOGRAPHY, FY2010
The southern region leads the segmentation by geography in the packaged juice segment. With a dominant share of 64.3%, South India is the clear leader in consumption of packaged juice followed by the Western India with 20.9% of the market share. Figure 26: Indian Packaged Juice Market Segmentation by Geography, in Percentage, FY2010
6.3% 8.5%
South West 20.9% North 64.3% East
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7.2.2. INDIAN FRESH JUICE/ UNPACKAGED JUICE MARKET SIZE, FY2005-FY2010
The Indian fresh juice or the unpackaged segment constitutes a major portion of the Indian juice market. Although, the consumption of juice is increasing consistently but overall the unpackaged juice segment is forfeiting its shares to the packaged segment of the Indian juice market because of the increased benefits offered by the packaged juices such as easy to keep packaging and increased shelf life. The unpackaged juice market consumption has risen to 421.7 million liters in 2010 from 215.9 million liters in 2005. This growth rate has been driven by factors such as affordability and availability. However, this segment of the market also faces the threat of being unhygienic which may affect the consumption of fresh juices in the long run.
Figure 27: Indian Unpackaged Juice Market Size by Consumption in Million Liters and Per Capita Consumption in Milliliters, FY2005-FY2010
450.00 400.00 0.31 Consumption(In Million Litres) 350.00 300.00 250.00 200.00 150.00 100.00 50.00 0.00 2005 2006 Consumption
0.40 0.35 Per Capita Consumption(in Millilitres) 0.35 0.27 0.24 0.21 0.19 421.7 368.5 243.7 280.1 318.2 0.30 0.25 0.20 0.15 0.10 0.05 0.00 2007 2008 2009 2010
215.9
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7.3. INDIAN JUICE TRENDS AND DEVELOPMENTS
Increase in the per capita consumption The Indian Juice market has been witnessing an upward shift in the per capita consumption over the period. Growing preference towards fresh and healthy beverage along with the increase in the population has increased the per capita consumption of juices in India. Consumer Preference towards healthy beverages The growing health concerns have led to a strong consumer preference towards the consumption of juices in India. Moreover, the busy lifestyle of the working class has increased the need to consume healthy and nutritious beverages. Innovative Juice Bar concept The Indian juice market which is still in its growing stage, witnesses a great capability in the on-trade sector. Marketers are adapting the juice bar or juice shop concept in India to increase the consumption of juice across India. This concept has been adapted recently to tap the health conscious segment. In India, the evolving concept of juice bars and juice shops could be seen in shopping malls and convention centers. This concept has made independent and retail Juice bars such as Amorettos HAS Juice bar and Bloom Juices mark their presences in few of the major cities in India. Intensifying competition in the 100% juice market The growing preference towards 100% and nutritious juices amongst the working class of population in India has led carbonated soft drinks makers to enter into 100% juice market. Coca-Cola recently launched the 100% Minute maid to foray into the 100% juice market and give a head to head competition to the already established brands such as Real and Tropicana. This market competition is expected to grow more intense with the foray of other players such as Parle Agro in the near future.
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7.4. INDIAN JUICE MARKET COMPETITIVE LANDSCAPE
Table 8: Indian Juice Market Competitive Landscape Major Players

Major Products and Positioning
Business Overview
Launched in 1996, Real fruit juice is a Dabur flagship brand in the packaged juice category
Geographical Financials Reach

Estimated FY2011 Revenue: USD 91.6 million Historical 10 year CAGR of 33% in Revenue Major Markets for Real brand includes Delhi, Mumbai, Kolkata and Chennai, minimetros such as Bangalore, Hyderabad, Pune, Chandigarh, Ahmedabad The brand is also focusing to gain major foothold in small cities such as Ludhiana, Amritsar and Jalandhar Major markets for Tropicana encompasses Mumbai, Uttar Pradesh (UP), Delhi (NCR) and many states across India
Real Activ: Positioned as a fruit and vegetable juice available in 6 flavors for health #1 player with over 52% conscious young of the market share due to professional early entry in fruit juice in 100% preservative free Real Junior: Positioned as fruit packaged form juice available in Offers 12 flavors of fruit 125 ml packs and 2 juice including orange, flavors for children mango, pineapple, mixed below six years fruit, grape, tomato, guava, tomato, litchi, pomegranate, peach, apple and cranberry Company has recently launched Burrst as a light and refreshing fruit beverage in packaged juice category Launched in 2004, Tropicana fruit juice is a PepsiCo flagship brand in the packaged juice category. Real 100%: Positioned as 100% fruit juice with no added sugar for the health and fitness conscious young adults
Tropicana is one of the Tropics: Positioned leading players of the as 100% juice in 3 Indian juice market which variants for people holds 34.8% of the who love to be market with its range of healthy 100% preservative free juices. The strategy of the brand Tropicana has been to target the working class of the society who usually
Estimated Tropicana 100%: Positioned as a fruit FY2011 Revenue: juice available in 11 USD 59 variants for health million conscious consumers
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skip their breakfast and do not get proper nutrition. For example: Tropicana 100% was launched in 2008 to target the working class of the society. The company is headquartered in Gurgaon, Haryana. Launched in 1985 as a Fresh n juicy mango drink, Frooti is one of the revenue earners for Parle Agro. #1 mango drink with a share of 7.1% in the Indian Juice market. Frooti: Positioned as a pure mango drink to cater to need of the mango lovers. Appy Fizz: Positioned as a drink for the young generation which is available in 3 variants With a flagship brand, Maaza tends to serve the mango lovers across the world. Frooti has FY2010 major presence Revenue: in Assam, west 35.3 million Bengal, AP, litres Chennai, Maharashtra, MP, UP, Delhi NCR, Rajasthan, Kerala, Karnataka and Uttarakhand Major markets FY2010 for Maaza Revenue: includes New 16.9 million Delhi, litres Gurgaon, Noida, Mumbai, Bangalore, Kolkata and many other places across India
Launched in 1970, Maaza was positioned as a delicious 100% mango drink for mango lovers Around 15% of the mango drinks market is currently held by Maaza. The company is headquartered in Gurgaon, Haryana
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7.4.1. MARKET SHARE OF THE MAJOR PLAYERS OF THE INDIAN JUICE MARKET
In FY2010, Daburs Real with a 52.1% market share continues to lead the Indian Packaged juice market followed by PepsiCos Tropicana with 34.8% and Parles Frooti and CocaColas Maaza with 7.1% and 3.4% respectively. It has been observed that in FY2010, Dabur with strong brand position and packaging strategies have been able to tap a major share of the market. The expansion in product line under the brand Real juices also reaped positive returns for Dabur. Dabur under its flagship brand Real have launched Real Active and real junior to tap the 100% juice market. Real junior was launched in tetra packs with animated packaging just to attract the market for kids between 6-10 years. Moreover, other players such as PepsiCos Tropicana, Parles Frooti and Coca-Colas Maaza have been trying to explore the market with their packaging strategies and introducing varied flavors under their juice brands.
Figure 28: Market Share of the Major Players of the Indian Juice Market, in Percentage, FY2010
3.4% 2.6% 7.1% Dabur- Real Pepsico-Tropicana Parle Frooti 52.1% 34.8% Coca Cola's Maaza Others
Source: Company Report and AM Mindpower Solutions
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7.5. INDIAN JUICE MARKET FUTURE OUTLOOK AND PROJECTIONS, FY2011-2015
The juice market in India has showcased supernormal performance in the recent years with a 5 year CAGR of 15.3% from FY2005 to FY2010. The market has witnessed a gamut of activities interplaying to formulate the business strategies of several players. The juice has over the period able to position itself as a healthy drink, refreshing alternative to carbonated soft drinks and a part of recreational activity available to population i.e. male and females of all age group. Currently, a major proportion of the market is unorganized, dominated by the fresh juice segment. However, packaged juice is consistently making a mark to prove its mettle with a high growth rate. The market share of this industry has inclined to 13.5% in FY2010. With the ongoing trend, performance and development of primary market for kids, teens, youth, working class segment, housewives and elderly people, the sector is poised to achieve unprecedented growth in the coming years. Indian juice market is set to register exceptional growth in the coming years with several opportunities propelling the industry such as change in Juice consumption will surge at an lifestyle and urbanization, increasing disposable expected CAGR of 14.7% to 966.4 income and monthly allocation to expenditure on million litres by FY2015 with health related drinks, geographical market packaged juice to be on the path to development, innovative products and supply chain overtake the unorganized sector development. With the fast life pace of young working class adults, juice has become a convenient, ready and healthy option for all the enriched required nutrition. The market is expected to witness geographical market expansion with several players moving towards South India. Juice market future prospects are also dependent upon the several challenges and threats creating complexities for the industry. The seasonal availability of fruits and vegetables and perishable nature of the raw materials have always created inefficiencies in the production process and costing. Additionally, increasing competition in packaged juices market with several positioned brands has created high entry barriers for new players to position their brand in this segment. For example, Mother Dairy which recently launched Safal brand of juices and Ladakh Foods which produces Leh Berry seabuckthorn berry drink have not been able to position their brand with market leaders capturing the major market share. Overall, juice market is expected to record mixed performance in the short run with several challenges affecting this industry. However in the long run, the market will be bullish in terms of the rise in the consumption. It is projected that juice consumption will surge at an expected CAGR of 14.7% to 966.4 million litres by FY2015 with packaged juice to be on the path to overtake the unorganized sector. The unexplored nectar juice market is also
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expected to witness an incline in the market share relative to fruit drinks and fruit juice segment as several players will move to this niche segment. The Indian juice market is expected to record an increase in the consumption to 552.5 million litres in FY2011. The growing popularity amongst the working class of the population is expected to drive the market for juices in India in the next 5 years. Moreover, the growing health consciousness and desire to consume healthy beverages is also influencing the growth of the market. Figure 29: Indian Juice Industry Projections by Consumption in Million Litres and Per Capita Consumption in Milliliters, FY2011-FY2015
1,200.0 639.2 1,000.0 Consumption(In Million Litress) 560.2 800.0 448.2 600.0 494.9 500.0 400.0 300.0 200.0 100.0 2011 2012 Consumption
743.8
800.0 700.0 600.0 Per Capita Consumpiton(In Millilitress)
400.0
552.5 618.2
709.0 819.7
966.4
200.0
2013 2014 Per Capita Consumption 2015
The Indian packaged juice industry is although small but is an emerging market. The growing necessity of people to consume healthy and hygienic beverages in order to stay healthy and fit is driving the market in India. This market is expected to increase its consumption to 77.90 million litres in FY2011 with an increase in the per capita consumption of 0.06 milliliters during the period. Moreover, it is estimated that the present market conditions will influence the market to record a consumption of 160.07 million litres in FY2015.
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Figure 30: Indian Packaged Juice Industry Projections by Consumption in Million Litres and Per Capita Consumption in Milliliters, FY2011-FY2015
180.00 0.12 160.00 Consumption(In Million Litress) 140.00 120.00 100.00 80.00 60.00 40.00 20.00 2011 2012 Consumption
0.14 Per Capita Consumpiton(In Millilitress) 0.10 0.12 0.10 0.08 160.07 77.90 91.37 109.70 132.80 0.06 0.04 0.02 2013 2014 2015
0.09 0.07 0.06
The unpackaged juice segment dominates the Indian juice market. A major share of the population prefers fresh and instant juice whose availability has increased over the years. Moreover, the cost factor which serves as a competitive advantage for the unpackaged juice segment is expected to increase the consumption of unpackaged juices to 474.58 million litres in FY2011. It has been estimated that with the prevalent market conditions the consumption will grow to 806.37 million litres by FY2015.
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Figure 31: Indian Unpackaged Juice Industry Projections by Consumption in Million Litres and Per Capita Consumption in Milliliters, FY2011-2015
900.00 Consumption(In Million Litress) 800.00 700.00 600.00 0.39 500.00 400.00 300.00 200.00 100.00 0.00 2011 2012 Consumption 2013 2014 Per Capita Consumption 474.58 526.86 0.42 0.47 0.54
0.60 0.50 0.40 0.30 806.31
599.35 686.86
0.20 0.10 0.00 2015
7.5.1. CAUSE AND EFFECT RELATIONSHIP BETWEEN DEPENDENT AND INDEPENDENT FACTORS PREVAILING IN INDIAN JUICE INDUSTRY
Table 9: Cause and Effect Relationship Analysis between Industry Factors and Expected Juice Market Prospects
Industry Factors Changing consumer tastes and preferences Market Impact Positive; Comments Cause: Growing urbanization, rising disposable income and health concerns have impelled the consumers preference for healthier nonalcoholic beverages Effect: Expected increase in the demand of juice over other non-alcoholic beverages
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Per Capita Consumpiton(In Millilitress)
0.62
0.70
Increase in the spending power
Positive;
Cause: Increasing employment and potential to save has increased the customer expenditure for healthy non-alcoholic beverages. Effect: Expected to rise the consumption of packaged juices
Increasing FDI inflows
Positive;
Cause: Lax government regulations has led several MNCs to enter into compelling juice market resulting in higher FDI inflows Effect: Expected improvement in the manufacturing and processing of juices.
Health Consciousness amongst the working class
Positive;
Cause: The deficiency of proper nutrition amongst the working class has led the marketers adapt to innovative positioning strategies Effect: Expected to increase the popularity of the juice market amongst the working class who normally skip their meals
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8. INDIAN COFFEE INDUSTRY MARKET INTRODUCTION
Coffee is one of the most significant cash crops that are grown in India in terms of the export value it generates. The coffee cultivation in India is constricted in the southern as well as north-eastern parts of India namely, Karnataka, Tamil Nadu, Andhra Pradesh, Arunachal Pradesh, Assam, Madhya Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Orissa, Sikkim, Tripura and West Bengal of which the southern part accounts for almost 70% of the coffee production in India. The consumption of coffee in India has grown steadily at a historical CAGR of 6.3% during FY2005-FY2010 and is expected to pace at a CAGR of 4.9% in the near future. In FY2010, the per capita consumption has increased to 89 grams from 85 grams in 2005 at a growth rate of 5%. The Indian coffee market has witnessed a steady growth in the past 5 years due to the growing preference for instant and organic coffee The consumption of coffee in India has amongst the coffee drinkers. Moreover, rising grown steadily at a CAGR of 6.3% in consumer expenditure and export promotion the last 5 years. In FY2010, the per schemes implemented by government has capita consumption has increased to influenced the growth of the market in India. The 89 grams from 85 grams in 2005 coffee market in India has also witnessed a growth in the demand for out-of-home consumption of coffee because to the majority of time spent by the young adults at work or out-of-home. This potential of the market and the preference of the young population have led many global players to foray into the domestic market. Many domestic and international coffee parlors and chains such as Cafe Coffee Day (CCD), Barista, Costa Coffee and others, with around 1,503 outlets have marked their foothold across India. This revolution in the Indian coffee market has changed the tastes of the consumers and overwhelmed them with variety of new options. Thus, a change is witnessed in the coffee drinking habits amongst Indians. Today people prefer instant coffee over the traditional coffee, because of the busy lifestyle and changes in their tastes and preference towards instant coffee. The Indian coffee market is dominated by big players such as Nescafe who has a share of 68.8% followed by BRU and Tata Coffee with 13.5% and 3.2% respectively. Marketers today see a lot of potential in the instant coffee segment, which is one of the reason many big companies are adopting various strategies to capture it. One of the strategies being adopted by Nescafe to penetrate the market in India is by launching vending machines. The concept of vending machines has revolutionized the coffee market in India and has increased the consumption of coffee over the years. On the other hand, HULs BRU has launched
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single serve packaging catering to the need of the segment who does not consume more than a cup of coffee a day.
8.1. INDIAN COFFEE MARKET SIZE, FY2005-FY2010
The recent past has witnessed an upward shift in the per capita consumption of coffee in India, with growing preference amongst the young population. With a young population of about 35% below the age group of 40 spending most of their time at work or outside home, the out of home consumption of coffee is spreading rapidly. Moreover, the increasing spending propensity of the young Indians and their changing lifestyle has increased the demand for coffee in India. As compared to FY2005 a clear growth can be witnessed in FY2010 in per capita consumption. The per capita consumption in FY2010 increased to 89.3 grams as compared to 70.9 grams in FY2005 due to presence of a strong preference towards instant coffee. Figure 32: Indian Coffee Market Size by Consumption in Million Kilograms and Per Capita Consumption in Grams, FY2005-FY2010
120.0 89.3 85.1 Consumption (In Million KIlograms) 100.0 70.9 80.0 74.1 77.3 79.9 80.0 70.0 60.0 60.0 90.0 94.4 102.0 108.6 40.0 30.0 20.0 10.0 0.0 2005 2006 Consumption
100.0 90.0 Per Cpaita Consumption(In Grams)
50.0
40.0
80.2
85.0
20.0
0.0 2007 2008 2009 2010
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8.2. INDIAN COFFEE MARKET SEGMENTATION, FY2010
8.2.1. BY GEOGRAPHY, FY2010
The coffee production has experienced a setback in FY2008 due to shortage of skilled and experienced labour. However, the market has managed to achieve a positive growth in FY2009 and FY2010 with major players contributing large proportion to production. Coffee production has been dominated by Karnataka because of the favorable climate and better land quality followed by Kerala, Tamil Nadu and Andhra Pradesh and Orissa.
Table 10: Indian Coffee Market Segmentation by Geography in Metric Tonnes, FY2007- FY2010
Region Karnataka Kerala Tamil Nadu Non-Traditional Areas (Andhra Pradesh & Orissa) Total FY2007 206,025 59,475 18,225 4,085 288,000 FY2008 191,575 49,000 18,100 3,175 262,000 FY2009 183,860 57,200 16,255 4,870 262,300 FY2010 205,700 59,250 19,350 5,185 289,600
Source: Indian Coffee Board, Federal Ministry of Commerce and International Coffee Organization
8.2.2. BY INSTANT AND CONVENTIONAL COFFEE, FY2010
Indian coffee market has always been dominated by the conventional or traditional coffee and instant coffee was a new product on offer for Indian consumers. The liberalization of trade policies back in 1991 has turned the ballgame. With the advent of MNCs like Nestle, Barista, Costa Coffee, several options/varieties and flavors become available to consumer which has changed the coffee consumption pattern in India. Currently most of the population in India spends time out of home which has increased the consumption of coffee in the form of instant coffee at coffee retail chains or cafes. This growth has also been boosted by the consistent increase in the consumer expenditure due to the increase in the level of income.
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However, the conventional form of coffee continues to dominate the market due to its enriched taste and the existing consumer base for in-house consumption. This form of coffee with its strong preference in the households still continues to be the market leader. In other words, the market for instant coffee although small is gaining popularity in India and is expected to take over the conventional coffee market in the near future.
Figure 33: Indian Coffee Market Segmentation by Products, in Percentage, FY2010
23.1%
Instant Coffee
Conventional Coffee
76.9%
8.3. INDIAN COFFEE MARKET TRENDS AND DEVELOPMENTS
A major part of the countrys foreign exchange earnings come from the Coffee industry. Since the inception of coffee in India, the production has been rising along with changes experienced in the consumption pattern over the years. Increasing Per Capita Consumption Due to the constant increase in population over the period, the per capita consumption has also increased from 85 grams in 2009 to 89 grams in 2010.This increase in the per capita consumption has influenced the overall growth of the Indian coffee market.
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Evolving Coffee Retail Chain Concept The Indian coffee market has been experiencing activities in form of increasing coffee retail shops. This has been the result of the growing trend of out-of-home consumption and increasing propensity of young population to spend. Many coffee parlors or cafes such as Cafe Coffee Day (CCD), Barista and Costa Coffee are spreading their distribution network to cater to coffee drinkers across India. There are 1,503 coffee retail outlets across India to serve the out-of-home coffee drinkers across India. Global players foraying into the Indian market The increasing disposable income of young Indians and their changing preference towards coffee consumption have led many global players to foray into the domestic market. For example, Britains Costa Coffee entered the Indian coffee market in 2005. Moreover, Starbucks, one of the leading global players is planning to enter Indian market in the near future. Increasing preference towards Instant Coffee After Nestle and HUL launched their product in the Indian coffee market, the popularity of instant coffee has increased gradually. Today, people prefer instant coffee over the traditional coffee because of their changing life style and variety of options available in the instant coffee market. About 23.1% of the market is captured by instant coffee and is expected to increase further in the near future with a strong preference among the age group of 20-45 years. Growing preference towards organic coffee: Organic Coffee is usually considered to be normal coffee beans that are produced without the use of pesticides or herbicides. The growing health concerns and the preference of consumers to consume healthy beverage have led the marketers and producers adapt to organically grown coffee.
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8.4. INDIAN COFFEE MANUFACTURERS COMPETITIVE LANDSCAPE
Table 11: Indian Coffee Manufacturers Competitive Landscape Major Players

Major Products and Positioning Nescafe Classic: Positioned as natural instant soluble coffee for people of all age group for enjoying their quality moments Nescafe Sunrise: Positioned as a morning hot coffee drink with strong aroma Nescafe Cappuccino: Positioned as coffee drink to experience cafe ambience in the homes Nescafe 3 in 1: Marketed as instant coffee ready-mix for a coffee cup ready in seconds Launched in 1968, Bru was the pioneer of instant coffee in India Offers a range of products in instant coffee, conventional coffee, ice and hot cappuccino and out of home vending under family coffee brand Bru Bru Instant: Marketed as an instant coffee chicory mix to enjoy coffee onthe-go Bru Cappuccino: Launched in 2007 as an instant coffee premixes for the youth population Bru Roast and Estimated FY2011 Revenue: USD 367 million Bru with the metro-focused market, is currently targeting the 6 major cities, including the four metros, Ahmedabad, and Pune
Business Overview
Launched in 1963, Nescafe is the flagship brand of Nestle in the hot beverages category #1 player in coffee market with 68.8% share due to strong hold in the instant coffee segment and robust penetration in the urban areas Nescafe is currently focusing to build instant coffee market in rural areas and small towns through product sampling
Financials FY2011 Revenue: USD 1,874 million Sells over 700 million cups of hot and cold coffee annually
Geographical Reach
Nescafe has major reach in all the 4 metros and other states such as Punjab, Haryana, Goa, Karnataka, Tamil Nadu and Uttarakhand Nestle has set up coffee corners and vending machines across the major states of India to increase out of home consumption
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#2 player in the coffee market with over 13.5% share due to Companys pricing strategies, product and packaging innovation Bru has strong presence at various out of home locations such as coffee stalls, vending machines and kiosks Tata Coffee is the largest coffee plantation company in India involved in the production and export of coffee With a capacity to cure 10,000 metric tonnes, Tata Coffee has the largest curing facility in Karnataka Tata Coffee is planning to enter into joint venture with Starbucks to promote Coffee culture in India Company has ventured into branded coffee through out of home beverages retail stores through Tata Cafe Jiffy and Mr. Bean Coffee Junction
Ground: Marketed as freshly roasted conventional coffee drink of rich aroma for special moments of warmth and happiness
Instant Coffee: Produces spray dried and agglomerated instant coffee from 2 Export Oriented Units with an installed capacity of 5600 tons per annum; Major brands include Mysore Gold, International, Tata Cafe, Tata Cappi and Private Label Conventional Coffee: Major brands include Mr. Bean, Coorg pure, Coorg Filter Coffee, Roasted Coffee Beans, French Press and Private label
FY2011 Revenue: USD 88 million
Tata Coffee owns 19 estates in India for Coffee production and distribution network to over 54 countries Major target markets in India include Kerala, Tamil Nadu, Chennai, Bangalore, Gujarat, Sikkim, Trivandrum, Guwahati
Source: Company Reports and AM Mindpower solutions Note: Average USD/INR exchange rate over the period; 1 USD = 48.001 INR
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8.4.1. MARKET SHARE OF THE MAJOR BRANDS OF INDIAN COFFEE MARKET, FY2010
Indian coffee market is dominated by Nescafe with a major share of the market under followed by BRU and Tata Coffee. Nescafe with better brand positioning and consumer preference has been successful to drive the attention of the consumers. Moreover, the youth segment of the population spends more time at work or out of home thereby forming a target market for instant coffee buyers.
Figure 34: Market Share of the Major Brands of the Indian Coffee Market on the Basis of Sales, in Percentage, FY2010
14.5%
3.2%
Nescafe
BRU 13.5% Tata Coffee
Others 68.8%
Source: Company Reports, AM Mindpower Solutions
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8.5. INDIAN COFFEE RETAIL MARKET COMPETITIVE LANDSCAPE
Table 12: Indian Coffee Retail Market Competitive Landscape Major Players
Business Overview
CCD had opened their first coffee shop in Bangalore in 1996 It is a division of Indias largest coffee conglomerate, the Amalgamated Bean Coffee Trading Company Limited (ABCTCL). Dominates the market with a share of 75.5% in 2010 with total retail outlets of 1,034 in over 100 cities.
Products and Offerings The company offers numerous options in the product offerings such as cappuccino, Espresso, Caf Latte, Cafe Mocha, Irish coffee and Ice tea along with wide variety of eatables such as sandwich, cakes, burger and others. The products are offered to be consumed in the cafe as well as in take away format. The company also offers various merchandise products such as coffee mugs, gift vouchers and others Along with offering coffee, the company also offers fresh salads, sandwiches, pizzas, pastas and desserts. The company offers in stores promotions from time to time along with other promotions in commercials and films.
Geographical Reach
The company has major presence in Delhi with 121 retail outlets, Bangalore with 172 stores , Maharashtra with 225 stores and AP with 84 stores
Founded in 2000, the company is a pioneer of Indian Cafe culture. The company has positioned the brand as a joint where people can indulge in conversations with a cup of coffee The target segments for the company are the youth and young adults, who are aware about the global lifestyles and enjoy new flavors and taste of coffee Barista is planning to expand its latest chain of cafes Barista Creme Lavazza to more parts of
Barista has a pan India presence with 230 retail outlets. 45 of the top outlets offer wi-fi availability along with 75 outlets offering blufi for mobile savvy generation.
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the country. Presently the company owns 15 such stores Costa Coffee was incorporated in India in 2005 with a tie up with Devyani International Limited Head quartered in New Delhi, the Company serves the coffee lovers across India Company inaugurated its launch with 4 cafes in Bangalore. The company commands a share of 4.9% in the Indian coffee market in 2010.
The company offers different variety of coffee such as Espresso, cappuccino, cafe latte and others Some of the premium offerings which the company offers are muffins, cakes, desserts, sandwiches, wraps and pastas The company operates with nearly 74 stores across India.
The company is planning to focus on the prominent cities such as Pune, Delhi, Mumbai and Bangalore The company is planning to predominantly expand in the metros
8.5.1. MARKET SHARE OF MAJOR COFFEE RETAIL CHAINS IN INDIA, FY2010
The Indian coffee market is passing through an evolutionary phase where consumers preference towards out-of home consumption is developing. The exceptional growth of out-of -home consumption of coffee in the coffee chains has been triggered by the young adults. The young adults segment of the population spends The retail coffee market in India is major time outside home or at work, which has majorly dominated by Cafe Coffee Day influenced the growth of the coffee chains in with 1,134 chains across India India. The retail coffee market in India is majorly followed by Barista with 230 coffee serving chains and Cost Coffee with 74 dominated by Cafe Coffee Day with 1,134 chains chains across India followed by Barista with 230 coffee serving chains and Cost Coffee with 74 chains. It is being observed that almost 96% of the coffee retail market has been held by these three players and the rest 4% being held by other small and new players. Overwhelmed by the response in India, coffee retail giants are expected to expand their network in India in the near future.
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Figure 35: Market Share of the Major Brands of the Indian Coffee Retail Market, in Percentage, FY2010
4.3%
4.9%
Cafe Coffee Day 15.3% Barista
Costa Coffee
Others 75.5%
Table 13: No. of Outlets the Major Brands of the Indian Coffee Retail Market, FY2010
Coffee Retail Brands Cafe Coffee Day Barista Costa Coffee Others Total
Source: Company Reports and Am Mindpower Solutions
No. of Outlets 1,134 230 74 65 1,503
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8.6. INDIAN COFFEE MARKET FUTURE OUTLOOK AND PROJECTIONS, FY2011 FY2015
The Indian coffee market is one of the oldest but yet an untapped market. The market consumption has registered a CAGR of 6.3% in the past 5 years due to strong preference amongst the young urban population. Over the years, coffee has been positioned as a stress buster or a refreshing hot drink. However, Indian coffee market has compelling potential this concept is evolving with a change in in the future with the lower per capita the form of consumption from traditional consumption of coffee relative to other Asia coffee to Instant coffee. Consumers pacific countries. The consumption is preference towards instant coffee has expected to increase at a CAGR of 5.8 % to inclined over the period and has led to an 144.3 million kilograms by FY2015 increased consumption. The coffee market in India is still at a nascent stage and is budding with a strong preference amongst the young adults. Moreover, the trend of consuming coffee out of home has led the marketers such as Nestle and Tata Coffee to adapt new business strategies in the form of coffee vending machines providing ready to drink coffee. A strong preference of consuming coffee at the specialty coffee shops have led the marketers enter into collaboration. Specialty coffee houses like Starbucks with a collaboration with Tata is planning to enter into the coffee retail business in India The Indian coffee market may face challenges in the future due to the presence of caffeine content which may lead the consumers to opt for healthy drinks other than coffee. Additionally, the coffee is consumed in different forms in the southern and the Northern part of India due to which several tea manufacturers have to modify their offerings according to regional preference. Marketers are expected to tap the northern part of India by launching various pack sizes and variants of leaf teas. Overall, Indian coffee market has compelling potential in the future with the lower per capita consumption of coffee as compared to other Asia pacific countries such as Japan. The market is expected to register an incline in the consumption in the next 5 years with the rising popularity of the coffee in various states. Accordingly, the Indian coffee consumption is expected to increase at an estimated CAGR of 5.8 % to 144.3 million kilograms by FY2015.
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Figure 36: Indian Coffee Industry projections by Consumption in Million Kilograms and Per Capita Consumption in Grams, FY2011-FY2015
160.0 111.0 140.0 Consumption(In Million Kilogramss) 106.3 120.0 102.2 100.0 97.8 80.0 93.4 60.0 40.0 20.0 2011 2012 Consumption
115.0 110.0 105.0 100.0 129.4 144.3 95.0 90.0 85.0 80.0 2013 2014 Per Capita Consumption 2015
122.2 115.1
136.4
8.6.1. CAUSE AND EFFECT RELATIONSHIP BETWEEN DEPENDENT AND INDEPENDENT FACTORS PREVAILING IN INDIAN COFFEE INDUSTRY
Table 14: Cause and Effect Relationship Analysis between Industry Factors and Expected Coffee Market Prospects
Industry Factors Rising preference among young adults Market Impact Comments Cause: The growing preference for coffee among young adults has been because of the rising urbanization. Effect: It is expected to raise the demand for instant coffee or ready to drink coffee.
Positive;
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Per Capita Consumpiton(In Grams)
Health awareness
Negative;
Cause: Consumers have increasingly become aware about the high caffeine content in coffee Effect: This may result into switch from coffee to tea which has comparatively less caffeine content. Cause: Lower wage rate have influenced the labors to shift to urban areas for higher wages Effect: It is anticipated that this factor will lead to a vast gap between the supply and demand; Fluctuation in the production due to unavailability of skilled labour
Lack of skilled and efficient labour
Negative;
Growing Disposable income of the young adults
Positive;
Cause: Rising level of income of young adults have increased the allocated budget for consuming coffee Effects: Expected to increase the consumption of coffee.
Changing consumption pattern
Positive;
Cause: Young adults spend most of the time at work or out of home Effect: Increase in the consumption of instant coffee is expected
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9. INDIAN ENERGY DRINKS INDUSTRY MARKET INTRODUCTION
The Indian energy drinks market has been experiencing an exceptional growth trajectory. The market has taken off in the recent past and has steadily opened up for several new players. Currently, many players have entered into the industry to share the pie of the double digit growth of 29.7% resulting in an increased competition in the market. In the recent past, the energy drinks market has faced the controversy of containing a high caffeine content, consumption of which is injurious to health and causes restlessness. However, based on this, an amendment has been laid down in 2009 in the Prevention of Food Adulteration (PFA) Act of 1954, which restricted the caffeine content in energy drinks to 145 (ppm). Energy drinks are usually targeted to young adults in the age group of 18-35 years who indulge in sports and other functional activities such as partying and clubbing. Energy drinks acts as stimulant for body functions and provides an alternative to young population to experiment something different without the alcohol content in it. Many individuals are using energy drinks as a complementary or a base drink to mix with the alcoholic drinks, shooting the sales of these drinks in the night clubs and bars. The energy drinks market in India in terms of per capita consumption has increased up to 39.4 milliliters in FY2010 from 28.8 milliliters in FY2009 at a growth rate of 37.1%, presenting the potential of the market. The per capita consumption for energy drinks is expected to rise up to 125.4 milliliters by FY2015. Moreover, the rising urbanization and increasing purchasing parity of the middle class segment of the society will influence the growth of this segment of the market.
9.1. INDIAN ENERGY DRINKS MARKET SIZE, FY2005FY2010
During the period from FY2005-FY2010, the energy drinks market has increased at a high CAGR of 29.7%. The preference for energy drinks has increased among the youth and young adults who prefer gymming or partying or involved in any sports activities. In FY2010 the per capita consumption has increased to 39.4 milliliters from 11.6 milliliters in FY2005.
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Moreover, the growing FDIs and liberalization of trade policies has paved way for MNCs such as Red Bull, Coca-Cola, Cloud 9 to explore the Indian energy segment, which in turn has brought about a change in the consumption pattern, tastes and preference of the consumers. It is expected that this segment which is in its adolescence stage would treble itself in the near future. Figure 37: Indian Energy Drinks Market Size by Consumption in Terms of Million Liters and Consumption Per Capita in Milliliters, FY2005-FY2010
60.0 50.0
39.4
45.0 Per CapitaConsumption(In Milliters) 40.0
35.0 40.0 30.0 16.1 20.0 10.0 13 0.0 2005 2006 Consumption 2007 2008 2009 2010 11.6 13.4 35 25 15 19 21.2 48 28.8 30.0 25.0 20.0 15.0 10.0 5.0 0.0
9.2. INDIAN ENERGY DRINKS MARKET TRENDS AND DEVELOPMENTS
Rising per capita consumption The energy drinks market has grown over the years. The increasing popularity of energy drinks amongst the youth and young adults has resulted into an increase in the consumption. The consumption has increased at a CAGR of 29.4% from FY2005-FY2010. However, the per capita consumption has increased from 28.8 milliliters in FY2009 to 39.4 milliliters in FY2010.
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Intense competition The intensifying consumption and the market potential have lured many players to enter the energy drinks industry. Few years back in India, Red Bull was the only brand to tap the market with its strong brand positioning but today the Indian energy drinks market has been experiencing the advent of multiple players. Recently, brands such as Cloud 9, XXX and Burn were launched in the market to give a stiff competition to Red Bull. Innovation in the product category The marketers of energy drinks are now adapting to an innovative expansion in their product line. Recently, Cloud 9 has launched a new variant which is promoted to be free from any caffeine or alcoholic content. Such developments can be a major turning point in this industry due to the fact that other energy drinks contain caffeine which if taken over a limit may cause restlessness and may prove injurious to health.
9.3. INDIAN ENERGY DRINKS MARKET COMPETITIVE LANDSCAPE
Table 15: Indian Energy Drinks Competitive Landscape Major Players Business Overview
In 2003, Red Bull was introduced to the Indian Energy Drinks Market Red Bull in India is marketed by Narang Hospitality Services (NHS) Red Bull with its flagship brand leads the energy drinks market with a commanding share of 60.3% The company is headquartered in Target Market and Positioning Target Market Segment: The brand is majorly targeted to tap the youth and young adults associated with gym or sports Positioning strategy: The Company has positioned its brand in the minds of the target market as a Drink which gives you wings to fly and boosts your energy Marketing Approach: The reason for the success
Products Red Bull with its flagship brand serves the energy drinks market in India
Geographical Reach
Red Bull carries its operations across India with its offices in Delhi, Gurgaon, Noida, Bangalore, and Hyderabad
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Mumbai, Maharashtra
of the brand in India is the BUZZ marketing approach, promotional campaigns in Colleges and sample product distribution in offices and gyms The target market segment has been the workaholics and individuals involved in work outs or who prefer to party Positioning Strategy: The brand proclaims to be the first natural energy drink with no alcohol or caffeine content Wild Berry: Positioned as Indias first natural drink with a taste of wild berry Premium: Positioned as a drink for party lovers Pomegranate: Positioned as energy booster Red Grapes: Positioned as an energy drink with healthy ingredients together with a taste of grapes. Cloud 9 Cola: Positioned as Indias first caffeine free energy drink Cloud 9 has its manufacturing facility in Nandur, Maharashtra
Launched in India in the year 2008 by Goldwin Healthcare Pvt. Ltd. Cloud 9 with its strong consumer base holds 19.6% of the market
GT&T, a subsidiary of JMJ Group launched their energy drinks brand XXX in December 2009. XXX is available in two variants to the energy drink consumers. The company is headquartered in Mumbai,
Marketing Strategy: The Company has tied up with Cafe Coffee Day across India to offer XXX Power Play Drinks to the consumers. The company as a marketing strategy promotes the IPL team Kolkata Knight Riders Target market segment: Smokers
REJUVE: Positioned as a drink which boosts up stamina NICOFIX: Positioned as a product that suppresses the nicotine urge.
Manufactured in Dubai, the XXX energy drinks are sold across the globe.
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Maharashtra XXX holds a market share of 9% of the total energy drinks market
and People who indulge in partying at night clubs.
9.3.1. MARKET SHARE OF MAJOR BRANDS OF THE INDIAN ENERGY DRINKS MARKET, FY2010
The energy drinks market is a growing and an emerging market in India. The market has huge potential to grow with several players presently operating in the industry such as Red Bull, Cloud 9, XXX, Burn and others. Red bull with a strong brand positioning and preference amongst the age group of 18-40 years earns the largest share of the market. On the other hand, Cloud 9 and XXX are foraying into the market with varied products and variants. In addition to that, Coca-Colas Burn which has been recently launched in the market is planning to adapt strategies to create a consumer base in the energy drinks market. In FY2010, Red Bull leads the market with 60.3% followed by Cloud 9 and XXX with 19.6% and 9.0% respectively. Coca Colas Burn, Power House, Pepsis Sobe, Rockstar and Monster constitute the remaining 11.1% of the market. Figure 38: Market Share of Major Brands of the Indian Energy Drinks Market, in Percentage, FY2010
11.1% 9.0%
Red bull Cloud 9 XXX
19.6%
60.3%
Others
Source: Company reports, AM Mindpower Solutions
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9.4. INDIAN ENERGY DRINKS MARKET FUTURE OUTLOOK AND PROJECTIONS, FY2011-FY2015
The energy drinks market in India is in the growth stage. The prospects showcased by the market have astounded the marketers. The market with a growth rate of 39% in FY2010 has paced to maintain a healthy CAGR of 29.7% in the past 5 years. Due to the positioning of energy drinks as healthy or functional drinks, this market is much more prevalent amongst the young adults. Over the period, the market has The energy drinks market in terms of also streamlined energy drinks to be a functional consumption is expected to increase to drink which has created a market amongst the 61.8 million litres at 28.9% in FY2011. gamers, sportsmen and the party going The consumption is estimated to grow at a CAGR of 32.1% to achieve 192.6 million population. The energy drinks market size is expected to treble itself with the expansion in the product line and innovative marketing strategies. However, rising level of income accompanied with the growing awareness about energy drinks as an alternative drink to other alcoholic beverage will drive the market to the next level. The marketers of the energy drink segment have partnered with coffee parlors, fitness centres, night clubs and similar others to channelize their sales and is expected to record an enormous growth in future. For example, XXX, a product of JMJ has collaborated with Cafe Coffee Day to expand their bandwidth and offer XXX Power Play Drinks who spend long hours at the coffee chains. Although, the Indian energy drinks market has enormous growth prospects, the segment is also popular because of the side effects of the drinks. Many health conscious consumers are expected turn the preference towards healthy beverages over energy drinks containing caffeine. This might also propel the government to ban the marketing and sales of energy drinks across the country. However, marketers have been trying to reduce the caffeine content in the energy drinks and present it as a healthy drink. For instance, in the recent past, Cloud 9 introduced a range of energy drinks which is free from any caffeine content. Considering the prevalent market conditions and the growing consumers attitude of indulging in social activities and parties, the energy drinks market in terms of consumption is expected to increase to 61.8 million litres at 28.9% in FY2011. The consumption is estimated to grow at a CAGR of 32.1% to achieve 192.6 million litres in the next 5 years.
litres in the next 5 years
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Figure 39: Indian Energy Industry Projections by Consumption in Million Litres and Per Capita Consumption in Milliliters, FY2011-FY2015
250.0
148.3
160.0 140.0
109.2 150.0 65.0 100.0 50.1 192.6 50.0 61.8 2011 2012 Consumption 2013 2014 Per Capit Consumption 2015 104.8 81.2 140.0
120.0 100.0
82.8 80.0 60.0 40.0 20.0 -
9.4.1. CAUSE AND EFFECT RELATIONSHIP BETWEEN DEPENDENT AND INDEPENDENT FACTORS PREVAILING IN INDIAN ENERGY DRINKS INDUSTRY
Figure 40: Cause and Effect Relationship Analysis between Industry Factors and Expected Energy Drinks Market Prospects
Industry Factors Rising Personal Disposable Income Market Impact Positive; Comments Cause: The increase in monthly income has increased the propensity of consumer to spend. Effect: Expected increase in the per capita consumption of energy drinks
Per Capita Consumpiton(In Millilitres)
200.0
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Consumer Health
Negative;
Cause: The caffeine content in the form of guarana present in energy drinks is injurious to the consumers health. Effect: Increase in the awareness may reduce the demand for energy drinks and may propel the demand for other healthier non-alcoholic beverages.
Changing consumer tastes and preferences
Positive; Negative;
Cause: Changing lifestyle and disposable income leading to consumption of energy drinks with alcohol as an additive. Positive Effect: Expected to increase the popularity and sales energy drinks. Negative Effect: Several litigations and regulations are expected to govern the energy drinks market segment. Cause: Higher price as compared to other nonalcoholic beverages. Effect: Expected to suppress the growth in the consumer base of energy drinks.
Higher Price
Negative;
10. INDIAN NON ALCOHOLIC BEVERAGES INDUSTRY SWOT ANALYSIS
STRENGTHS Strong consumer base and target markets. Large capital investment in the positioning and branding of non-alcoholic beverages. Available in varied flavors and sizes to cater to the need of every segment of the market.
WEAKENESSES Complex supply chain configuration; high dependency on partners for nationwide distribution Low-entry barriers and problems from low-quality adulterated products 87
OPPORTUNITIES Increasing private and foreign investments in the production, processing and infrastructure development of the Indian non-alcoholic beverage industry. Changing consumers tastes and preference towards healthy and nutritious nonalcoholic beverages. Rising consumers propensity to spend on non-alcoholic beverages. Mounting out-of-home consumption High potential for further expansion in smaller towns and rural areas
THREATS Public campaigns and litigations against the use of inferior quality of ingredients in producing non-alcoholic beverages. Intensifying competition due to the advent of small and local players in the market. Price volatility of key raw materials, packaging materials and fuels
11. INDIAN NON ALCOHOLIC BEVERAGES INDUSTRY FUTURE OUTLOOK AND PROJECTIONS, FY2011-FY2015
The Indian non alcoholic beverage industry has experienced a healthy growth rate of 11.3% in the last 5 years. As compared to 6,774 million litres of non alcoholic beverage consumed in FY2005, the market has grown to consumption of 11,558.5 million litres in FY2010. The major proportion of the consumption has been contributed by the youth and the young adults, who are always interested in trying out new products. Indian non-alcoholic beverage market is set to register an unprecedented growth in the coming years with several opportunities impelling the industry such as change in lifestyle and urbanization, fast expanding middle class population, increasing disposable income and rising monthly allocation to spend on food and beverages, increasing awareness regarding the ingredients of non-alcoholic drinks and integration of supply chain. Rising health consciousness among young population in India has brought about a shift in the Indian nonalcoholic drinks market. Non-alcoholic beverages such as juices have now become a convenient option for the young working class in order to keep up to the health and nutrition intake due to the fast lifestyle. Hence, the consumers have started to respond well to the products that are marketed clearly on health and wellness platform. 88
The non-alcoholic beverage market is facing several challenges and threats creating complexities for the industry. The competition in the market is intensifying among several brands, brands and unbranded products and among unbranded products. Several players are competing in the market by reducing their cost, price or quality of the product. This has even resulted in the availability of adulterated low quality inexpensive drinks which is affecting the health of the consumers. Food inflation on the other side is also expected to take a toll on the consumption of non-alcoholic drinks as the lower middle class, lower income group and rural people are cutting on their expenditure on these commodities. However, despite of these challenges, the market has a huge room for expansion with the low per capita consumption of 9.51 litres in FY2010 relative to other Asia Pacific countries such as China and Japan. It is expected that in the near term, the per capita consumption will rise 12.42 litres and will reach the benchmark level of 15.59 litres by FY2015. The overall consumption of nonalcoholic drinks is estimated to double itself in the next 5 years to 20,259 million litres by 2015 by growing at an estimated CAGR of 11.9%. Figure 41: Indian Non Alcoholic Beverage Industry Projections by Consumption in Million Liters and Per capita Consumption in Litres, FY2011-FY2015
25000.0 15.6 Consumption(In Million Litres) 20000.0 12.4 11.3 15000.0 10.4 13.8
18.0 Per Capita Consumption(In Litres) 16.0 14.0 12.0 10.0
10000.0 12,798 5000.0 14,074 15,714 17,750
20,259
8.0 6.0 4.0 2.0
0.0 2011 2012 2013 2014 2015
0.0
Consumption
Per capita Consumption
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12. MACRO ECONOMIC INDICATORS: CURRENT AND PROJECTIONS
12.1. POPULATION, FY2005-FY2015
India is the second largest populated country in the world. The population has increased at a CAGR of 1.5% in the FY2010 to 1.21 billion. About 68.84% of India's population resides in the rural areas while the remaining resides in urban areas. The country has nearly 41% in the age group of 0-19 years, 25% in the age group of 20-35 years, 28% in the age group of 35-65 years and around 6% in the age group of 65 years and above. With such a massive population, the consumption of non alcoholic beverages in India is expected to increase at a CAGR of 11.9% in the next 5 years. It has been witnessed that the major chunk of the Indian population which comprises of youth has been a major factor driving this industry. In other words, an increase in the population will increase the demand for non-alcoholic beverages in India, which in turn will increase the consumption of the non alcoholic beverages. Figure 42: Population of India in Million, FY2005-FY2015
2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 1,000.0 1,050.0 1,100.0 1,299.2 1,282.4 1,265.7 1,249.3 1,232.7 1,215.9 1,199.1 1,182.1 1,165.0 1,147.7 1,130.6 1,150.0 1,200.0 1,250.0 1,300.0 1,350.0
Population (Million)
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12.2. CONSUMER EXPENDITURE ON FOOD AND BEVERAGES, FY2007-FY2015
The Indian non-alcoholic beverage industry has witnessed enormous growth prospects in the recent past and is emerging to be one of the most profitable industries. The consumers expenditure for non-alcoholic beverages has been increasing over the period, primarily because of the increase in the level of income. The rising health consciousness among the individuals is driving the consumption of healthy beverages. The consumption of health beverages such as juices, mounting preference of energy drinks along with surge in the number of coffee chains have led to an increased demand for non alcoholic beverage market. It is expected that the consumer expenditure will increase at a CAGR of 10.6% to USD 437,586 million in the next 5 years on account of the rising income level and the growing economy. Figure 43: Consumer Expenditure on Food and Beverages in USD Million, FY2007FY2015
2015 2014 2013 2012 2011 2010 2009 2008 2007 50,000 437,586.3 402,145.1 357,607.4 325,569.0 294,485.0 266,180.0 243,385.0 232,278.1 207,061.1 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 Consumer Expenditure (USD Million)
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12.3. FDI INFLOWS IN FOOD PROCESSING INDUSTRY, FY2006-FY2015
Ever since the liberalization of trade policies, the Indian non-alcoholic beverage industry has been witnessing an increase in the inflow of FDIs into the industry. FDI inflows have increased the efficiency of the industry in the form of infrastructural development and technological improvement in the processing and manufacturing of non-alcoholic beverages. It is because of the large FDI inflows in the Indian non-alcoholic beverage industry, that the country is able to meet up to the need of 1,215.9 million people. In FY2010, the FDI inflows have increased to USD 283 million as compared to USD 70 million in FY2006, which showcases the growth of the industry in the past. It is also estimated that the FDI inflows will increase to USD 329 million at a rate of 14.3% in FY2015. Figure 44: FDI Inflows in Food Processing Industry in USD Million, FY2006-FY2015
2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 50 69.7 100 150 200 250 300 350 104.6 92.7 101.7 206.0 282.6 254.1 288.1 308.8 329.3
FDI Inflows (USD Million)

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12.4. AD SPEND ON FOOD AND BEVERAGES INDUSTRY, FY2005-FY2015
The Indian non alcoholic beverage industry has been tapped by few of the large players Coca-Cola, PepsiCo, HUL, Dabur and others who spend a lot on the positioning and brand promotions. With a focus on the youth and the young adults, almost all marketers are spending a major chunk of their income in positioning their offerings in the minds of the target market. The industry has witnessed an increase in the ad spend to USD 479 million in FY2010 as compared to USD 236 million in FY2005. This clearly presents the level of competition amongst the giants of the market and their desire to position their offerings into the minds of the youth. It is expected that the ad spend by the players of the non-alcoholic beverage market will increase to USD 420 million in FY2011 with a strong focus in positioning their offerings amongst the target consumers. It is the level of competition and willingness of consumers to try out new products in the market which is leading to an increase in the ad spend by the players. It is estimated that with the increasing competition in the industry, the level of ad spend will increase to USD 683 million in FY2015. Figure 45: Ad Spend on Food and Beverages Industry in USD Million, FY2005FY2015
2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 100 200 236.0 300 400 500 600 700 800 291.2 338.3 346.3 394.8 420.0 478.9 480.9 562.8 576.1 683.3
Ad Spend (USD Million)

93
12.5. COMMODITY FOOD PRICE INDEX, FY2005-FY2015
The commodity food price index reflects the cost of living of the population. With the rise in inflation, the commodity food prices have increased over the years. As compared to index value of 100 in FY2005 (base year), the commodity food price index has increased to 149.4 in FY2010, showcasing the increase in the standard of living of the people. Although the commodity prices have increased, but a greater increase has been witnessed in the personal disposable income of the individuals in upper middle class group. The increased effect of rise in the commodity prices has been largely felt by the population in the lower and middle class level since their personal disposable has not increase in proportion to the rise in the commodity prices. Whereas the upper middle class and the upper class have been unaffected with the rise in the commodity prices. It has been estimated that in the next 5 years, the commodity food price index will increase to 261 which is likely to have a negative effect on the non alcoholic beverage market.
Figure 46: Commodity Food Price Index, FY2005-FY2015

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 50.0 110.5 100.0 100.0 150.0 200.0 250.0 300.0 127.3 149.4 134.0 157.0 194.1 183.8 237.5 222.6 261.0
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13.
APPENDIX
13.1. MARKET DEFINITION
Indian non-alcoholic beverages: Non-alcoholic beverages industry is defined as a summation of 6 segments in India, Bottled water, carbonated soft drinks, juices, tea, coffee and energy drinks. Indian carbonated soft drinks: The Indian carbonated soft drinks include the market of cola and non-cola drinks. Fruit Drinks: Fruit drinks are defined as fruit beverages which contain 0%-24% of the fruit pulp. Fruit Juices: Fruit juices contain 100% of the fruit pulp. Nectars: Nectars are defined as fruit beverages which contains 24%-99% of the fruit pulp. Indian packaged Juices: Indian packaged juice market is defined as the organized segment of the Indian juice market Unpackaged Juices: The Indian unpackaged juice market forms the unorganized segment of the Indian juice market Instant coffee: Instant coffee is defined as on-the-go coffee, which consumes less time in preparation. Conventional coffee: Conventional coffee is defined as traditional form of coffee where the coffee beans have to be roasted for consumption. FY2010: It is the financial year which starts from April 1st 2009 till March 31st 2010. Youth: Person within the age group of 15-20 years Young adults: Person within the age group of 21-40 years.
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13.2. ABBREVIATIONS
BIS: Bureau of Indian Standards CAGR: Compound Annual Growth Rate CCD: Cafe Coffee Day CSE: Centre for Science and Entertainment CTC: Crush Tear Curl CTC: Crush, Tear and Curl FDI: Foreign Direct Investment FY: Financial Year GDP: Gross Domestic Product GNP: Gross National Product HUL: Hindustan Unilever ISI: Indian Standards Institution ML: Milliliter MNCs: Multi National Corporations NCR: National Capital Region PFA: Prevention of Food Adulteration PPM: Parts Per Million ROI: Return on Investment RTD: Ready to Drink US: United States USD: United States Dollars
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13.3. RESEARCH METHODOLOGY
Several statistical methods such Covariance, Correlation, Regression and Coefficient of Determination (R square) analysis have been used to assess the industry performance and analyze the future outlook of the industry. Correlation analysis is a measure of degree of association between two set of quantitative data. Correlation coefficient describes the direction and strength (both positive and negative) of association between the dependent variable and independent variables and overcome the shortcomings of covariance analysis. Regression analysis helps to calculate the value of one variable from known or assumed values of other variables related to it. The report has independently studied the cause and effect relationship between dependent and independent variables and has formulated the regression coefficient explaining the estimated change in the response variable due to a unit change in the corresponding explanatory variable, conditional on the other explanatory variables remaining constant. R Square is the coefficient of determination that represents the proportion of total variation in the dependent variable that is accounted for by the variation in the factors. In simple terms, it explains the validity of the independent variables and reflects the degree of influence independent variables have on the dependent variables. The report has analyzed several socio-economic, demographic, political, and regulatory market factors which directly or indirectly affect the industry performance by indicating their degree of impact in the cause and effect relationship between them. The reason for selected these macro-economic and industry factors has also been explained.
DATA COLLECTION METHODS
In terms of data collection, we have used both primary and secondary data sources. Secondary Data Sources: Secondary data sources includes the analysis of existing macro economic and demographic factors, obtained from national statistics of India and from magazines, journals and online articles The secondary data sources are used to form the initial perception and contention on several forces playing their role in determining the future growth in the industry. Primary Data Sources: Structured interviews are conducted through telecon with several industry veterans including major decision makers of companies operating in the sector, 97
representatives of several associations and research institute such as ministry of food processing and Indian Beverage Association. These interviews help the research team to authenticate the data collected from secondary data sources and to reject or accept the hypothesis regarding the future projections.
APPROACH
Our research team follows a Top-down approach for the future projections in which they first study the effect of economic factors and then industry factors on the sector. This approach indicates the several independent macro-economic and industry variables and their degree of relationship with the sector. The cause and effect relationship between these macro-economic and industry factors and their degree of impact has been discussed and analyzed in the non-alcoholic beverages segments future outlook.
VARIABLES (DEPENDENT AND INDEPENDENT)
Reasons for the selection of these independent variables in bullets: Consumer spending on food, beverages and tobacco indicates the annual budget allocation and expenditure on food, beverages and tobacco which has direct positive bearing on the consumption of non-alcoholic beverages India has the second largest population in the World thus providing an extensive consumer base to cater to. With changing demographics and culture, there is an increase in the number of youth who have become the leading consumer segment for the non-alcoholic drinks market. FDI inflow in food processing industry has led to an increased investment in beverages especially in non-alcoholic beverages in which 100% FDI investment is allowed. This is direct impact on the market competition level, technology and infrastructure Ad spends on food and beverage includes the print, visual and online advertisement expenditure on promoting food and beverages brand. This factor has a direct impact on the sales of the non-alcoholic beverages industry. Commodity food price index represents the changes in the price of food and beverages commodities over the period which has a direct bearing on the prices and thereby on the demand of non-alcoholic beverages 98
The report applies Correlation and Regression analysis methods to forecast the future of the industry. The capabilities of SPSS and predictive analytics software have been leveraged to determine the relevant indicators used for forecasting this industry. In the present case, non-alcoholic beverage consumption in volume for India has been taken as the dependent variable and five other variables (Ad spend on Food & Beverages, FDI Inflow in Food processing, Population, consumer expenditure on food, beverages and tobacco and commodity food price index), affecting the industry have been taken as the independent variables.
MULTI FACTOR BASED SENSITIVITY MODEL
The model first identifies the correlation (whether linear or non-linear) between the dependent and independent variables. After calculating the degree and strength of relationship between the variables, the regression model is used to calculate the sensitivity of each factor on the dependent variable. Finally, the expected value and sensitivity of the independent variable is used to determine the future value of dependent variable.
99
Table 16: Correlation Matrix

Non Alcoholic Beverage Consumption (Million Litres) Non Alcoholic Beverage Consumption (Million Litres) Ad Spend on Food & Beverage (USD Million) Pearson Correlation Sig. (2tailed) N Pearson Correlation Sig. (2tailed) N FDI Inflow in Food Processing (USD Million) Pearson Correlation Sig. (2tailed) N Consumer Spending on Food, Beverage and Tobacco (USD Million) Population (Million) Pearson Correlation Sig. (2tailed) N Pearson Correlation Sig. (2tailed) N Commodity Pearson 4 .936 1 Ad Spend on Food & Beverage (USD Million) .936 FDI Inflow in Food Processing (USD Million) .816 Consumer Spending on Food, Beverage and Tobacco (USD Million) .984* Commo dity Food Price Index .371
Population (Million) .997**
.064
.184
.016
.003
.629
4 1
4 .917**
4 .950**
4 .945**
4 .905**
.064
.001
.000
.000
.001
4 .816
9 .917**
9 1
9 .858**
9 .895**
9 .814**
.184
.001
.003
.001
.008
4 .984*
9 .950**
9 .858**
9 1
9 .988**
9 .981**
.016
.000
.003
.000
.000
4 .997**
9 .945**
9 .895**
9 .988**
9 1
9 .959**
.003
.000
.001
.000
.000
4 .371
9 .905**
9 .814**
9 .981**
9 .959**
9 1
100
Food Price Index
Correlation Sig. (2tailed) N .629 .001 .008 .000 .000
* Correlation is significant at the 0.05 level (2-tailed) ** Correlation is significant at the 0.01 level (2-tailed)
From the correlation table, we can conclude that: Ad spends on food and beverages factor is highly correlated with the non-alcoholic beverage consumption with the correlation value of 0.936 indicating that the changes in the ad expenditure has major impact on the non-alcoholic beverages consumption FDI inflow in food processing shows a high positive correlation with Indian nonalcoholic beverage industry representing a correlation value of 0.816 underscoring higher degree of impact on the market with changes in the FDI inflow on food processing in the country The strength of association between non-alcoholic beverage consumption in India and Consumer spending on food, beverages and tobacco is high, representing 0.984 correlation value. Population represents the consumer base of non-alcoholic beverage industry and hence become an important contributor. The above table shows the strength of association is high (.997 correlation value). Food inflation has direct positive low correlation with non-alcoholic beverages market as increased price of food commodities has led consumers to switch among several beverages. Non-alcoholic beverages consumption and commodity food price index has low correlation of (0.405).
The research has then proceeded to use the multiple linear regression approach with dependent variable (Non-Alcoholic Beverage Consumption in Volume) and explanatory variables (Ad spend on Food & Beverages, FDI Inflow in Food processing, Population, consumer expenditure on food, beverages and tobacco and commodity food price index) to quantify the nature of relationships between the dependent and independent variables. Regression Matrix A multiple regression model has been used through SPSS statistical tool which analyzes the multiple correlation coefficients, R, its square, and an adjusted version of this coefficient as summary measures of model fit. Further, R-Square is used to explain the validity of the independent variables. R Square is also known as the coefficient of determination represents
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the proportion of total variation in the dependent variable explained by the variation in the independent factors. Applying multiple regression analysis to a set of data leads to regression coefficients, one for each explanatory variable. These coefficients give an estimated change in the response variable associated with a unit change in the corresponding explanatory variable, conditional on the other explanatory variables remaining constant. Table 17: Regression Coefficients Output
Model Unstandardized Coefficients B 1 (Constant) Ad Spend on Food & Beverage (USD Million) FDI Inflow in Food Processing (USD Million) Population (Million) -53,594.8 3.942 Std. Error .000 .000 .187 Standardized Coefficients Beta
-.152
.000
-.010
52.068
.000
.836
a. Dependent Variable: Non Alcoholic Beverage Consumption (Million Million Litres) b. Excluded Variable: Consumer Spending on Food, Beverage and Tobacco (USD Million)
FINAL CONCLUSION The final conclusion regarding the expected value of dependent variable is determined by using weighted average of the output of subjective judgment, primary research and SPSS output opinions. The weights are assigned on the basis of effectiveness and accuracy of each output according to the degree of confidence interval assigned to them. The weighted average method enables us to filter out the possible noise in each computation method and help us to derive the best possible future projections.
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13.4. DISCLAIMER
The research reports provided by AM Mindpower Solutions are for the personal information of the authorized recipient and is not for public distribution and should not be reproduced or redistributed without prior permission. You are permitted to print or download extracts from this material for your personal use only. None of this material may be used for any commercial or public use. The information provided in the research documents is from publicly available data and other sources, which are reliable. Efforts are made to try and ensure accuracy of data. With respect to documents available, neither the company nor any of its employees makes any warranty, express or implied, including the warranties of merchantability and fitness for a particular purpose, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use will not infringe privately owned rights. The report also includes analysis and views expressed by our research team. The research reports are purely for information purposes. The opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time without notice. Investors should not solely rely on the information contained in the research documents and must make investment decisions based on their own investment objectives, risk profile and financial position. The recipients of this material should take their own professional advice before acting on this information. AM Mindpower Solutions will not accept returns of reports once dispatched due to the confidentiality of information provided in our reports. In case, a report qualify for return, we will issue a credit, minus shipping charges, of equal value to the original purchase price, toward a future purchaseno refunds. The decision about whether the product return can be accepted or not is solely at our discretion. Any dispute will be subject to laws of India and exclusive jurisdiction of Indian Courts.
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TABLE OF CONTENTS

4.1.1. 4.1.2. 4.2.

4.2.1. 4.2.2. 4.3. 4.4.

5.1.1. Indian Carbonated Soft Drinks Market Consumption in Volume, FY2005FY2010 28 2

5.2.1. 5.2.2. 5.2.3. 5.3. 5.4.

Indian Tea Market Future Outlook and Projections, FY2011-FY2015 ................. 46

7.1.1. 7.1.2. 7.2.

By Fruit Drinks, Fruit Juices and Nectar Category, FY2010 .................................. 54 3

Indian Juice Market Future Outlook and Projections, FY2011-2015 ...................... 61

8.2.1. 8.2.2. 8.3. 8.4.

Indian Energy Drinks Market Future Outlook and Projections, FY2011-FY2015 85

12.1. 12.2. 12.3. 12.4. 12.5. 13.

13.1. 13.2. 13.3.

Disclaimer ............................................................................................................ 103

1. INDIAN NON ALCOHOLIC BEVERAGES MARKET INTRODUCTION

2. INDIAN NON-ALCOHOLIC BEVERAGES MARKET SIZE, FY2005 FY2010

9.5 8.7 7.8 7.2 6.6 6.0

10.0 9.0 8.0 7.0 6.0 5.0

4.0 3.0 2.0 1.0 0.0

Per Capita Consumption

3. INDIAN NON-ALCOHOLIC BEVERAGES MARKET SEGMENTATION BY PRODUCT, FY2005 FY2010

FY'2005 42.7% 41.2% 11.2% 3.5% 1.2% 0.2% 100%

FY'2006 45.4% 39.4% 10.2% 3.6% 1.1% 0.2% 100%

FY'2007 47.2% 38.4% 9.3% 3.7% 1.1% 0.2% 100%

FY'2008 50.0% 36.2% 8.6% 3.9% 1.0% 0.3% 100%

FY'2009 53.2% 33.6% 7.7% 4.1% 1.0% 0.3% 100%

FY'2010 56.2% 31.4% 6.9% 4.2% 0.9% 0.4% 100%

Source: AM Mindpower Solutions

4. INDIAN BOTTLED WATER INDUSTRY MARKET INTRODUCTION

4.1. INDIAN BOTTLED WATER MARKET SIZE, FY2005FY2010

4.1.1. INDIAN BOTTLED WATER MARKET CONSUMPTION IN VOLUME, FY2005-FY2010

Source: AM Mindpower Solutions

4.1.2. INDIAN BOTTLED WATER MARKET SALES IN VALUE, FY2006-FY2010

Figure 3: Indian Bottled Water Market Sales in USD Million, FY2006-2010

Source: AM Mindpower Solutions

4.2. INDIAN BOTTLED WATER MARKET SEGMENTATION

4.2.1. BY PACKAGED DRINKING AND NATURAL DRINKING WATER, FY2010

Figure 4: Indian Bottled Water Market Segmentation by Product, in Percentage, FY2010

Packaged Drinking Water

Natural Mineral Water

4.2.2. BY GEOGRAPHY, FY2010

26.3% North East West 9.7% South

Source: AM Mindpower Solutions

4.3. INDIAN BOTTLED WATER MARKET TRENDS AND DEVELOPMENTS

4.4. INDIAN BOTTLED WATER MARKET COMPETITIVE LANDSCAPE

4.4.1. INDIAN PACKAGED DRINKING WATER MARKET COMPETITIVE LANDSCAPE

Kinley: Positioned as a pure and safe

The company marks its footfalls in some of the

packaged drinking water

Source: AM Mindpower Solutions

Bisleri Kinley Acquafina

4.4.3. INDIAN NATURAL MINERAL WATER MARKET COMPETITIVE LANDSCAPE

Table 3: Indian Natural Mineral Water Competitive Landscape Major Players

Source: Company Reports and AM Mindpower Solutions

Figure 7: Indian Natural Mineral Water Market Share, in Percentage, FY2010

Growing Heath Concern

Changing consumer tastes and preferences

Rising Personal Disposable Income

Increasing private investments from domestic and international players

5. INDIAN CARBONATED SOFT DRINKS INDUSTRY MARKET INTRODUCTION

5.1. INDIAN CARBONATED SOFT DRINKS INDUSTRY MARKET SIZE, FY2005-FY2010

5.1.1. INDIAN CARBONATED SOFT DRINKS MARKET CONSUMPTION IN VOLUME, FY2005-FY2010

3.5 3.0 2.5 2.0 Per capita Consumption(In Liters)

Source: AM Mindpower Solutions