It is that time of the year that spells more advertising from cooling powders, air conditioners, refrigerators and of course, cold drinks. Summer, the three-month long season in the tropical sub-continent of India, is notorious for two things — first, its legendary heatwave and second, chilled beverage companies making their pitch — both of which grow in intensity with each passing year.
This year too, beverage giants in the country are competing for the consumer’s share of wallet. As per an EY report, the Indian beverage industry including alcoholic and non-alcoholic (soft drinks) segments was valued at approximately `2.9 trillion in 2015 and grew in value terms at a CAGR of approximately 3.6% during 2010-2015. In volume terms, the industry grew at a CAGR of 14.1% during the same period to reach 17.5 billion litres in 2015. The industry is expected to grow in value terms at a CAGR of 3.1% to reach `3.3 trillion by 2019 while in volume terms the CAGR is expected to be 13.2% to reach 28.7 billion litres by 2019.
Summer is the most important quarter for non-alcoholic beverages companies. Close to 45% of annual sales come from the summer quarter. With high-voltage competition during this time of the year, beverage companies have, over time, adopted varied strategies to attract more consumers and achieve an uptick in sales. Strategies range from introducing healthier products and new packaging at affordable price points to entering new segments/markets.
Apart from competition from newer entrants in the market each year, established beverage majors have to keep in mind the changing preferences of the consumer. The target group for most consists of fickle youngsters who believe in ‘moving on’ and aren’t really loyal to any particular brand.
So what are companies like Coca-Cola, Parle Agro or PepsiCo up to this summer to make sure people opt for their products? BrandWagon takes a look.
Spoilt for choice
With a month already into the scorching summer, beverage companies find themselves in the middle of a mini war. The cola companies — PepsiCo and Coca-Cola — have launched miniature cans for consumers who are on the go. Pepsi intends to lead via packaging innovations this summer: this includes Pepsi mini cans (a new pack launch at 150ml) and ‘PepsiMojis’. This is part of the brand’s ‘Shelf to Media’ approach and is based on strong innovations in packaging that will make the brand stand out on retail shelves and drive consumer engagement.
Similarly, Coca-Cola on the back of extensive research on consumer preference has launched small packs (180ml cans) with the aim of reaching out to millions of untapped consumers who have not tasted its range of beverages. “This also provides consumers an additional option to enjoy their favourite drink in their preferred size cans and tetra packs,” says the Coca-Cola India spokesperson. The company’s bottling partner, Hindustan Coca-Cola Beverages, is also all set to scale up its splash bar and fountain machines all over the country.
The fruit-based drinks category too is in fourth gear. With a total marketing budget of `150 crore, Parle Agro has launched two new campaigns for Frooti with brand endorser Shah Rukh Khan and Appy Fizz with Priyanka Chopra. According to Parle Agro, last year’s revamp helped the mango drink witness a 12-15% growth. “With Appy Fizz we launched a new category 10 years ago. And now with better communication, we foresee an almost 100% growth,” says an optimistic Nadia Chauhan, CMO and joint MD, Parle Agro. Hector Beverages’ Paper Boat, launched in August 2013, has played the part of a true disruptor in the market with its varied ranged of traditional drinks. Now focussing on launching occasion-led flavours, it launched Thandai during Holi and Panakam which is especially consumed around Rama Navami.
Innovation is the key
In the soft drinks market, almost 75% of the sales come from urban areas; however, the demand for soft drinks in the rural market has grown at 22% CAGR over the past five years, while the corresponding figure for urban markets is 18% CAGR.“Demand from the rural market has been outpacing urban areas over the past four to five years owing to rising consumption there. Also, manufacturers have been targeting rural consumers due to the saturation in urban markets,” highlights Pinakiranjan Mishra, partner and national leader, retail and consumer products, EY. Soft drinks manufacturers are focussing on expanding their presence in rural and semi-urban markets by introducing customised products based on specific requirements of rural consumers such as smaller pack sizes and soft drinks in glass bottles, to make the products available at lower price points. There is no denying innovation is the key to survival in the market today. For Paper Boat, Hector Beverages partnered with Indo-Nissin (INFL); its distribution reach is now twice that of last year’s during the same period. This has helped the brand move beyond its early adopters who reside in metros to the ones from upcountry. According to Dhanraj Bhagat, partner, Grant Thornton India LLP, a large part of sales is driven by innovation. “Take Paper Boat, for example. The reason why people pick up its drinks, which by the way, can be easily made at home, is because of its packaging. It has used technology to disrupt the market,” he says.
Chauhan too believes that packaging is the first form of advertising. In 2013, Parle Agro had launched Frooti in Tetra Brik Aseptic Edge paper-based cartons, which helped it reach the interiors of India while giving consumers cheaper options. In 2015, the company introduced PET bottles for Frooti to ensure better strength, superior grip and a larger label area for branding. This was part for its revamp strategy to mark Frooti’s 30 years of existence.
This season, PepsiMojis want to bring to life the contemporary and universal language of emojis beyond the digital world into the physical world. The PepsiCo Design & Innovation Centre created hundreds of PepsiMoji designs for a universal language system proprietary to the brand. In India, consumers will be able to find 38 PepsiMoji designs on the packs, including eight designs that reflect the unique nature of India and the Indian consumer. “Beyond packaging, the brand has created an entire PepsiMoji ecosystem, with an exciting, fully integrated Jaisa Mood, Waisi Pepsi marketing campaign that supports the India launch,” says a PepsiCo India spokesperson. But apart from spending hundreds of crores on packaging and marketing, there are numerous other challenges beverage companies face. For instance, for fruit-based drinks, companies have to make sure the raw material, that is, the fruit, has a consistent taste. The supply-side linkage is a challenge. However, through the government’s Mega Food Park Scheme which will have facilities like production, processing plants, cold storage, collection centres and transport, brands are likely to attain the taste and quality they desire. Logistics too plays a spoilsport as certain drinks need to be displayed and kept at a certain temperature which isn’t always possible to achieve. To sustain the weather and transport, carbonated soft drinks are mainly sold in returnable glass bottles (RGB), aluminium cans and PET bottles whereas fruit juice and fruit nectar categories are mainly sold in liquid packaging cartons.
Beyond the fizz
With the consumer changing her preferences faster than earlier, brands have to innovate to keep pace. Companies believe that with changing consumer patterns and evolving taste preferences, consumers are not only moving towards ready-to-drink beverages, but also looking at healthier options. To convey this to the consumer, several beverage companies have increased their expenditure on marketing and advertising in recent years. Non-alcoholic beverages companies have increased their spend by close to 10% annually while some have even doubled it over the last couple of years. As per a futuristic report, 2020 Vision by Tetra Pak, product differentiation has become a key competitive strategy worldwide. By 2020, countries worldwide will see an increase in the number of people who are in their 40s and older, and to meet the needs of this demographic, manufacturers will have to offer health-oriented, functional foods and beverages.
The chilled beverage segment in India is witnessing a host of companies adopting various strategies to attract consumers and increase sales this summer. The war intensifies with innovation in products and packaging
Global Consumption Trends
Green Worriers
There is a growing awareness of environmental issues. Consumers are also aware that a healthier planet means a healthier me
Engaged experience
Consumers always want new products and experiences tailored to their needs. They are used to being exposed to new things and being emotionally engaged by brands
Food for health
Health awareness is going mainstream. Consumers are more aware as to what is considered healthy and are making choices on which brands to believe and buy into
Safe choice
When food safety is at risk, consumers are worried and want to be reassured that they are choosing trustworthy products
24/7 lifestyle
Globally, consumers live increasingly busy and mobile lifestyles, are constantly connected and feel more stressed. Convenient products become a key need for on-the-go consumers looking for instant gratification.(Source: Food & Beverage Packaging Trend Report, Tetra Pak)
Return of the Cola Wars
Pepsi
-UP Nimbooz Masala Soda created a storm on the shelves with a refreshing full-sleeved wraparound packaging that reflects the real lemon proposition in clutter-breaking manner
-Mountain Dew began 2016 with the launch of a new range of special edition neon PET bottles to celebrate the stories of Padma Shri awardees Arunima Sinha, Shital Mahajan and Lt. Col Satyendra Verma
-Tropicana Slice chose to celebrate packaging in its campaign this year, through its proprietary bottle that is inspired by a diced mango
-Entering its 40th year celebration, Maaza will roll out a series of initiatives including consumer-led digital engagement campaigns, special tours for mango enthusiasts to visit mango orchards and similar experiences that bring out the essence of summer
For the summers, it has launched two new products, Chilli Guava and Neer More, apart from focusing on all-time class-toppers, Aamras and Aam Panna. “Our aim is to launch new drinks every month,” says Neeraj Kakkar, co-founder and CEO, Hector Beverages, while adding that in the coming months it will release more drinks — Coconut water, Santra and Sol Kadhi.
