Indian homes grow warmer towards cold beverages - The Economic Times

In-home penetration of cold beverages including soft drinks, squashes, powdered mixes and packaged juices have witnessed a growth of 47% in May as against 38% in 2019, a survey showed. In-home penetration refers to the number of households in the survey that consumed the product.
Average household consumption of soft drinks too has gone up to just over 7 litres annually from 6.5 litres in 2019, reports TOI.

This 47% in-home penetration, according to marketing data and analytics company Kantar, which shared the household panel data exclusively with TOI, is significantly better than any 12-month period before the pandemic.

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"Whatever struggle the sector faced in the summers of 2020 and 2021 was wiped out by strong performance in 2022 and a reasonably good 2023. There have been important strides that the category made from a purchase standpoint, with increasing trips and quantity signifying a deepening habit," said K Ramakrishnan, MD, south Asia, Worldpanel division at Kantar.
Moreover, families are shopping more frequently for soft drinks. Households are buying bottled soft drinks 6.5 times (average) annually as against 5.5 times in 2019, showing that the habit is now well entrenched.

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Bottled soft drinks (45% penetration) form the bulk of the sector as they reach almost all cold beverage households. In comparison, juices have 5% penetration and squashes 6%.
The cold beverage sector, which is heavily dependent on seasons, had a penetration of 29% in March-May of 2019, said Kantar. Yet, despite excessive rains, a penetration of 37% in March-May this year is close to the annual in-home figure in 2019.

Nadia Chauhan, joint MD & CMO of Parle Agro, which makes Frooti, said that since 2019, there has been a significant shift in consumer behaviour, primarily due to the impact of the pandemic. This shift has led to a notable increase in demand for larger SKUs (stock-keeping units) and shared packs, primarily for in-home consumption and on-premise gatherings.

In the case of Frooti, Chauhan said that sales of bigger packs have experienced a surge of about 45% in year-to-date 2023 compared to 2019. "One of the prominent drivers behind the preference for larger packs is the increasing emphasis on value for money in purchasing decisions. Consumers are now seeking optimal spending and enhanced value, leading them to favour mid-sized packs that cater to various needs while also being budget-conscious," said Chauhan.

However, the bottled soft drink category and the summer continue to be major factors in the cold beverage industry. Before the pandemic, the March-May months contributed 40% of the annual volumes. This year, the contribution has risen up to 42% volumes (moving annual total in May 2023).

In March-May 2023, the average purchase quantity of cold beverages dropped to 3.8 litres from 4.1 litres in the year-ago period. Part of this slowdown is attributed to a milder summer and unseasonal rains in the north, a high-consumption market.

Beverage maker Coca-Cola had earlier said that its India business was “unfavourably impacted” by unseasonal rains in the April-June quarter, in its global earnings statement in July.

The April-June quarter is the largest contributor to annual sales of beverage companies, contributing to close to 40% of annual sales.

"In fact, most of the decline in purchases seem to be coming from Delhi and Punjab, two high-consuming markets for the category. In contrast, southern states continued to purchase the category more," said Ramakrishnan.

(With inputs from TOI)

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