Indian Beverage Industry Shifts Focus to Healthier Options Amid Market Changes
India's beverage market is witnessing a significant transformation as companies shift from traditional carbonated drinks to healthier and functional beverages. This change is driven by the growing demand among consumers for more nutritious options and the rapid expansion of quick commerce, which allows companies to experiment with various products without significant distribution investments.
According to Santosh Sreedhar, a partner at Avalon Consulting, carbonated sugar-based drinks are experiencing slower growth rates, while newer beverage categories are seeing double-digit growth. The young population with increasing spending power is a key factor attracting more companies to enter this expanding market.
The quick commerce model has revolutionized the way beverages are launched, enabling firms to gauge consumer acceptance and diversify their offerings. This model provides an alternative distribution channel, allowing companies to offer a wider range of products than traditional retail can accommodate.
FMCG giants like Hindustan Unilever and Varun Beverages are at the forefront of this shift. Hindustan Unilever has expanded its portfolio to include ready-to-drink (RTD) beverages, such as Bru Ready-to-Drink Cold Coffee and Boost Milkshake. The company aims to accelerate growth in this segment, focusing on premiumizing tea and coffee and expanding its RTD lineup.
Varun Beverages, a major PepsiCo franchisee, has partnered with Japan's Asahi Group Holdings to introduce the CALPIS brand in India, anticipating a launch later this year. This collaboration highlights the company's commitment to building new beverage categories with significant long-term potential.
Other companies like ITC and Tata Consumer Products are also diversifying their offerings to include products like dairy beverages, kombucha, and RTD coffee. During the March quarter, Tata Consumer Products reported significant growth in its RTD business, with a 28% increase in volume and a 23% rise in revenue.
These developments indicate a broader industry trend of reducing seasonal dependency and tapping into year-round consumption opportunities. The introduction of new drink categories, such as functional beverages and coconut water, suggests a strategic move to capture a larger share of the growing non-alcoholic beverage market, which is projected to reach $40 billion by 2030.
