Soft Drink Industry in India

Soft drinks are one of the non-alcoholic beverage that primarily Constitutes Carbonated water, -Sweetener in the form of Sugar, or substitute of sugar (in case of diet drink), fruit pulp, and Various other artificial flavours. Soft drink in India is available in Glass bottle Aluminium cans or tins and also in PET bottles in various quantities. Soft drinks can be divided into two categories namely Aeriated and Non-aeriated drinks. Aerated drinks are the ones which contain dissolved carbon-dioxide in them. The brands like Coca-Cola, Pepsi, Thumps Up, Diet coke Sprite, 7 Up, so forth fall under the classification of Carbonated drinks.

Minute Maid, Mazza, Tropicana etc. are the portion of brand which fall under the classification of non-aeriated drinks, which essentially contains fruit pulp in them. Gold Spot is said to be the first Soft drink brand of India which was introduced in the year 1965. Coca-Cola was the first foreign soft drink brand which entered India around same time.

Coca-Cola for a long time ruled the Indian market without intense competition from the Domestic makers until the point that it halted its activities in India due to some unfavourable conditions.

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After the exit of Coca-Cola from India a Delhi based company Pure drink introduced Cola drink under the brand name Camp-Cola. Later in the year 1980 Parle one of the major Indian player in this area introduced Thumps Up (now acquired by Coca-Cola) which continues to be the most renowned Soft-drink till today. For many years thereafter Parle enjoyed the position of being leader in the Indian Soft-Drink market and it had a market share of about 70% by the end of 1990s.

The nonattendance of Coca-Cola in India was viewed as a golden opportunity to enter into Indian market by another US based company Pepsi Co. The company had to manage several regulatory affairs such restriction of FDI, Limits on equity participation in Indian companies, and furthermore the problem of excess Government intervention, as it was the period before the Liberalisation of Indian economy. The company needed to find out some of the smart approaches to enter into Indian market. Pepsi Co. made a proposal to the Indian government saying that it would work towards Development of agriculture sector and creation of employment opportunities in Indian state of Punjab and was successful in convincing the Government and started its activities in India in the year 1989. It must be noticed that after the liberalisation of Indian economy in the year 1990 Pepsi Co, did not think that it’s important to full fill the commitments made to the Government of India. Year 1993 marked re-entry of Coca-Cola in to the Indian market.

Recent Developments in the Soft-Drink industry

People in India now have become increasingly health conscious and are paying greater attention what they consume. As a result, most of the companies have increased the use of natural ingredients in their products including use of Fruit pulp, and also have reduced the proportion Sugar contents used in their beverages. During 2016-17 Soft-Drink industries have focused on the introducing new products which Boosts energy, Enhance Vitamins, and Hydrate Human body. With the introduction of MAKE IN INDIA project by the Modi Government in the year 2014 many Soft-Drink manufacturers, have concentrated on Developing the new products which suite the taste and preference of Indian customers. This included introduction an entire new range of Fizzy drinks by Ramesh Chauhan who is known to be the father of Soft Drink industry in India. MR. Chauhan is planning to enter the market with four new flavours namely Pina Colada, Fonzo, Spicy Cola and Limmonata, and has done the test marketing of these flavours in five different locations across the country. The two US giants in the soft drinks industry which often used to set their own rules in Indian market are now facing the fear of losing their market to their counterparts. Introduction of innovative and healthy drinks and also the Smart positioning tactics used by the local manufacturers may be one the reason for this. As per the statistics provided by the Euromonitor between 2014-16 market share of Coca-Cola in India has come down from 35.5 to 33.5 percent and that and when we look at PepsiCo its market share has come down from 23,2 to 22.2 percent.

As a result, both of companies now are following the lines of the domestic producers and are concentrating on the introduction of healthy drinks and which are as per the choice of Indian customers. PepsiCo has introduced Tropicana Mosambi and is further planning to introduce several other drinks with the flavours of locally grown fruits like Guava, Mango, Pomegranate, and Litchi. Recently they also have signed a pact with Maharashtra Government to in order to promote fruit processing and horticulture in the state. This could a part of its aim of increasing the total investments in India to 33000 crores by the end of 2020. The company is also improving the yield and transforming the fruit processing industry in Maharashtra through its several initiatives. Its Us counter part Coca-Cola has also not left behind in this matter. Coca-Cola has also introduced a range of fruits-based beverages including Mazza, Minute Maid (which is available in several flavours like orange, Guava, Mixed fruit, Lemon etc.). Recently it has also introduced Fanta Green Mango in the Make in India summit held in Mumbai. The product is said to having 10.4% of mango juice content in it. According to Company sources this product has been introduced in order to benefit the Indian farmers and also it is matching the Governments vision for the food processing sector. From the latest stats it has been learnt that Indian beverage market is having the worth of 14,000 crores and is expected to grow at the rate of 30% per annum. Coca-Cola and PepsiCo together have a share of about 60% in the Indian market. Top selling Soft drink brands in India in the year 2017 could be listed as following:

1. Coca-Cola
2. Pepsi
3. Sprite
4. Thumps up
5. Limca
6. Fanta
7. Maaza
8. 7 Up
9. Mirinda
10. Mountain Dew

Company profile

Coca-Cola is US based multinational beverage brand, which was incorporated by Asa Griggs Candler in the year 1892 in Wilmington. The company is headquartered at Atlanta, Georgia. It is mainly engaged in manufacturing, distributing and marketing of non- alcoholic beverages. One of the most well-known product of the company Coca-Cola was invented by John Stith Pemberton a pharmacist in Atlanta, Georgia. Later both Coca-Cola formula and the brand were purchased by Asa Griggs Candler in the year 1889. Currently company is operating in 200 plus countries employing more than 7,00,000 people. To carry out the operations efficiently company has made 5 operating regions which includes Asia Pacific, Europe, Middle East & Africa, Latin America, and North America. In the year 2015 company had annual turn-over of $44,294 million.

Major Acquisitions made by the company

Minute maid in the year 1960

Indian cola brand Thumps in the year 1993

Fuze beverage from founder Lance Collins

Mazza in the year 1993

Coca-Cola in India

As I have mentioned in the introduction to soft drink industry in India that Coca-Cola entered into Indian market entered into Indian market in the year through a collaboration with Pure drinks Ltd & opened its first bottling plant in India at New Delhi in the year 1950. In the year 1977 Coca-Cola stopped its operations in India and decided to exit form the country with introduction of FERA (Foreign Exchange Regulatory Act). As per this act the foreign companies had to reduce their equity holdings in the Indian companies to 40%. Moreover, Coca-Cola was asked by the Government of India to reveal their secret formula which was not acceptable to the company. As a result of liberalisation, which gave more freedom to foreign companies, Coca-Cola once again was able to re-enter into Indian market in the year 1993, with a slogan which reads as “OLD WAVE HAVE COME AGAIN”. Coca-Cola made every effort to regain the brand reputation which it had before. The company built a strong association with cricket, which is most popular sport in the country. They sponsored Cricket world Cup 1996 which was hosted by three Asian countries including India. Further they also sponsored Tri-nation cricket tournament held at Sharjah which was termed as “Coca-Cola Cup”. As a result, the company was very successful in attracting large customer base towards its various product categories in Cricket admiring nation India. In the year 2002 Coca-Cola launched a marketing campaign using a tag line “THANDAI MATLAB COCA-COLA”, and it was very popular thought the country.

Coca-Cola system in India

In India Company works as two division namely Coca-Cola India private limited, and Hindustan Coca-Cola Beverages private limited. Coca-Cola India private limited, performs the task of building consumer franchise for the companies’ trademarks. It also governs the operations of various Bottling Partners, Suppliers, Distributors, and other Stake holders throughout the country. It is acting as a wholly owned subsidiary of Coca-Cola company USA. It also acts as a supplier of concentrates and beverage bases to authorised bottlers. On the other Hindustan Coca-Cola Beverages Private Limited is the part of bottling investment group of the company in India. It owns aggregate of 21 bottling plants, across different states. They carry out almost 65% of the bottling operations of the company in the country. They have independently developed local markets for the company’s products, through their extensive distribution channel. With the aim of achieve [sustained growth the company has been focusing on principles of safety, profitability, and solid governance. They are basically engaged in the manufacturing of different brands like Coca-Cola, Sprite, Maaza, Fanta, Thumps Up, Limca, Smart Water, Minute Maid (a range of fruit juices), Kinley, Bon aqua, Schweppes packaged water, Schweppes Soda, Kinley Soda and so on, at their different plants located across the country. They are aiming at the target of increasing their revenue to 2.5 billion by the year 2020. Hindustan Coca-Cola beverages private limited, have employed 8000 people, and have a vast network of 4000 distributors and 20 lakh retailers, across 25 states in India. Christina Ruggiero, is the present CEO of Hindustan Coca-Cola Beverages Private Limited. As per the company, statistics, they will be open 1 million new outlets by 2020 increasing their aggregate tally to 3 million.

About Bidadi plant

This plant is located in the vast area of 20 acres in Bidadi, a town which is 20 km away from garden city Bengaluru. The plant was inaugurated by then Chief Minister S. M. Krishna on 12th February 2000. It is one of the highly automated plant of the company and it is fully digitalised. The plant has lowest water and energy consumption ratios, when compared to all the bottling factories of the company across the world. There are totally 6 bottling lines in the plant, and among them 2 are RGB (Recyclable Glass Bottle) lines and remaining 4 are Pet () bottle lines. Among 2 of the RGB lines one is meant for manufacturing of Juice (Maaza), and other one is manufacturing of Carbonated drink. Plant has the capacity of filling 1735 bottles per minute.