ABOUT THIS REPORT This Euromonitor market report provides market trend and market growth analysis of the

Soft Drinks industry in India. With this market report, youll be able to explore in detail the changing shape and potential of the industry. You will now be able to plan and build strategy on real industry data and projections. The Soft Drinks in India market research report includes:

    

Analysis of key supply-side and demand trends Detailed segmentation of international and local products Historic volumes and values, company and brand market shares Five year forecasts of market trends and market growth Robust and transparent market research methodology, conducted in-country Our market research reports answer questions such as:

    

What is the market size of Soft Drinks in India? What are the major brands in India? What potential exists for multinational vs. local soft drinks companies looking to increase market share? How have changing social attitudes affected soft drink sales? How have sustainability issues; such as environmentally-friendly packaging, legislation on recyclability, or the amount of plastic in bottles, affected the soft drink industry? Why buy this report?

  

Gain competitive intelligence about market leaders Track key industry trends, opportunities and threats Inform your marketing, brand, strategy and market development, sales and supply functions This industry report originates from Passport, our Soft Drinks market research database. Each report is delivered with the following components: Report: PDF and Word Market statistics: Excel workbook SAMPLE ANALYSIS EXECUTIVE SUMMARY Commendable growth of soft drinks in India In 2010, soft drinks registered its highest off-trade value growth rate for the review period. This growth was helped by high double-digit volume sales growth in most categories as well as appreciably higher unit prices in 2010. Sports and energy drinks, bottled water, ready to drink (RTD) tea and fruit/vegetable juice all maintained bullish growth even as abundant rainfall seemed to halt the spectacular recovery of carbonates witnessed in 2009. National brands engage in rebranding strategies to revive sales growth Several leading soft drinks brands made use of extensive marketing campaigns to revive fledging volume sales in 2010. Parle Agro rolled out widespread advertising of its flagship brand Frooti, while Hamdard Laboratories followed nuances of modern marketing for Rooh Afza. Carbonates brands 7-Up and Coca-Cola also invested in excessive marketing to achieve higher brand visibility. Pioma Industries concentrate brand Rasna also shifted product positioning, while continuing to target its products towards children. Carbonates majors maintain dominance of soft drinks Soft drinks players Coca-Cola and PepsiCo were the leaders in overall soft drinks off-trade value sales in 2010. Although domestic players, such as Parle Bisleri, Parle Agro and Dabur, also held notable shares,

they remained some distance behind Coca-Cola or PepsiCo. While Coca-Cola entered two high growth categories in the shape of energy drinks and lemon-flavoured juice drinks in 2010, PepsiCo launched its carbonates brand Pepsi Max. As the value sales of both of these companies came primarily from carbonates in 2010, they are expected to experience a reduction in their share of soft drinks in the forecast period. Domestic players will benefit from this development as consumers will opt for healthorientated soft drinks. Supermarkets/hypermarkets recovers as a retail channel After an indifferent 2009, consumers returned to shop for their grocery needs at modern retail formats. Emphasis on health and wellness helped drive sales of soft drinks categories primarily retailed through such channels. These included 100% juice, sports and energy drinks, and RTD tea. The convenient shopping environment and promotions offered by supermarkets/hypermarkets attracted consumers to this channel. As the countrys major retailers plan to expand their footprints over the forecast period, the channels contribution to soft drinks sales is expected to increase gradually. Rosy outlook for soft drinks over the forecast period Emerging categories of soft drinks, such as bottled water and fruit/vegetable juice, will have significant influence on soft drinks volume sales in the forecast period, which will achieve double-digit growth rates. Increasing demand for healthy and hygienic products is expected to fuel this growth. Increasing penetration in rural areas will also contribute to considerable sales increments. Sports and energy drinks, however, will retain its status as the fastest growing soft drinks category as its popularity will develop among young Indians.

Multinational soft drinks groups have built strong positions in the growing Indian soft drinks market, in spite of relatively high taxation and the setback of the pesticide row in 2003. And with a huge amount of untapped potential remaining, particularly i n rural markets, industry analyst Euromonitor believes the majors will continue to dominate. While the soft drinks market in India remains underdeveloped compared to its Asian counterparts, favourable economic conditions and the vast population, with so mu untapped potential ch particularly in rural areas, have attracted growing interest from international players. The soft drinks industry in India experienced a spectacular growth of 151% in volume terms between 1997 and 2004, with total volume sales reaching 4.21 billion litres in both retail and foodservice channels combined in 2004. In 2004, total volume sales expanded by 16%, which is slightly higher than that in 2003, when the market grew by 14%. India has one of the fastest growing soft drinks markets in the world, and the potential remains immense thanks to the extremely low consumption base. Total per capita consumption is about 4 litres, which is the lowest in the world, and considerably lower than that of comparable Asian countries. In the booming soft drinks industry, multinationals seem to be the biggest winners in terms of market share. The Coca-Cola Company led the highly consolidated market with a 42.8% volume share, followed by PepsiCo at 28.6% in 2004. Danone is a minor player in India with a 0.5% share, chiefly due to its late market entry and limited offerings.

Despite the dominant positions in this land of promise, multinationals face challenges from the operating environment. Despite the reduction in excise duty from 32% to 24% in 2003, taxation on soft drinks remains high compared to that on other drinks, such as tea. Mainstream soft drinks' marketers feel that the high excise duty levied on soft drinks prevents them from fully exploiting the potential of the market, with soft drinks remaining a luxury product to many Indian consumers. According to the Federation of Indian Chambers of Commerce and Industry (FICCI), 90% of total consumption is generated by the middle income group. Soft drinks companies believe lower taxation would stimulate demand, creating additional employment and reduce the large quantities of counterfeit products on the market. In developing markets, growth is mainly achieved by reaching new consumers and developing affordable products to cater to low-income groups, and in India this comes down to reaching the 70% of India's one billion population living in rural areas. Pricing is a crucial factor in these areas. In late-2002, both The Coca-Cola Company and PepsiCo undertook aggressive marketing strategies by dropping the price of 200ml packs to Rs5 (US$0.1). The significant price cut was seen as a driver for volume growth, allowing them to successfully expand their reach to new consumers. This strategy was especially well received in rural areas and collectively, both companies claimed to have double-digit volume growth between 2002 and 2003. However, in the third quarter of 2004, with increased costs in raw materials and transportation squeezing margins, Coke and PepsiCo increased prices for their 200ml and 300ml bottles. It remains to be seen if rural consumers will retreat from the price hikes. As well as price cuts, flexible packaging formats suitable for low-income consumers also seem to have been received well. Coke began selling Kinley water in small pouches in 2002, helping the brand to make considerable progress in semi-urban and rural areas. As a result of various concerted efforts to expand rural consumption of soft drinks, industry sources estimate that sales in rural areas grew from 227m litres in 1998 to 471m litres in 2003. Carbonates account for over 54% of total soft drinks sales in volume terms in India, with sales amounting to 2.3 billion litres in 2004. Growth in carbonates was around 6% in 2003, which is slower than the previous year, when the market grew by 10%. As elsewhere, the share of carbonates within soft drinks is under pressure from bottled water with consumers looking for healthier drinks.

Pressure on the CSD sector was also created by negative publicity over pesticide levels in soft drinks in 2003. An Indian environmental group claimed that the colas manufactured by The Coca Cola Company and PepsiCo contained unhealthy amounts of pesticides, an sales of the product d slumped by 35%-40% in the third quarter of 2003. Coca-Cola and PepsiCo denied the charges, and filed cases with the High Court in Delhi to block the publication of the report. At the same time, random tests were conducted by the Indi n central a government and by some state governments. Test results released in October 2003 revealed that the pesticide levels in the majority of tested bottles were within the EU norm. Despite the boom and bust in sales of carbonates in 2003, multinationals appear firm and resilient. The Coca-Cola Company launched Vanilla Coke in 500ml PET bottles in April 2004. Essentially, the launch was an attempt to create some excitement and cushion the slower demand for carbonates, and PepsiCo's Mountain Dew recorded good growth after its initial launch in February 2003. It was reported that Mountain Dew sold 3m cases within three months of its launch, and the brand continued to perform well at the beginning of 2004. In terms of multinational penetration, unlike alcoholic drinks where domestic companies and local governments protect the local industry and discriminate against foreign players, the large multinational players already dominate the soft drinks industry. Euromonitor does not expect the continued liberalisation of the Indian economy to have any significant impact on the operations of the soft drinks industry and therefore the dominance of the established multinationals. This is the first of two features on the Indian soft drinks market from Euromonitor. The second will look at progress in non-carbonated soft drinks sectors. PESTICIDES IN SOFT D RINKS

Adopting dual standards is a practice large multi national corporations follow especially when it comes to developing countries. Soft drinks industry is a classic case of this as the Centre for Science and Environment (CSE) discovered way back in 2003. A laboratory report prepared by

CSE detailed some astonishing facts about the extent of pesticide contamination in soft drinks sold in India. CSE found high levels of toxic pesticides and insecticides, high enough to cause cancer, damage to the nervous and reproductive systems, birth defects and severe disruption of the immune system. Market leaders Coca-Cola and Pepsi had almost similar concentrations of pesticide residues. At the same time CSE also tested two soft drink brands sold in the US, to see if they contained pesticides. They didnt. This only goes to show the companies were following dual standards. These startling facts forced the government constitute a Joint Parliamentary Committee, only the fourth in post independent India and the first on health and safety of Indians. The committee was tasked to find out whether the findings of the CSE regarding pesticide residues in soft drinks are correct or not and to suggest criteria for evolving suitable safety standards for soft drinks, fruit juice and other beverages where water is the main constituent. The JPC report vindic ated CSEs findings and said it is prudent to seek complete freedom from pesticide residues in sweetened aerated water. All this did not stop Coke and Pepsi from launching a vicious campaign to get discredit our findings. Cases were filed and threats issued. But these pressure tactics did not work. CSE stood its ground and the cases were withdrawn. Fast forward to August, 2006. CSE undertook a nation wide study of nearly a dozen soft drink brands and found little had changed. The study found pesticide residu in all samples. This after es JPC had asked for standards for carbonated beverages. It took the health ministry a good three more years to notify standards for pesticides in carbonated water. Even these standards are meaningless as their is no methodology available to test for pesticides. CSE is currently engaged with Bureau of Indian Standards to put in place a methodology for testing pesticides.