The non-alcoholic ready-to-drink (NARTD) beverages business is going through a quiet but definite change. And, it has nothing to do with the legendary cola wars.
In a surprise shift, South India has become the country’s top market in non-alcohol beverages category, beating North India in sales volume.
Based on the data, collected from the beverage industry
as well as market research agencies, South India constituted more than 31 per cent of the NARTD volume sales in 2016, while North India was a notch lower at 29 per cent. In 2015, they were fighting neck and neck at around 30 per cent share each. West India was in third place, with a 25 per cent share, and the rest was in the East.
The country, according to the data, consumed 1,401 million unit cases of non-alcoholic beverages in 2016, up by around 21 per cent from 1,150 million unit case sold in 2013.
The NARTD category includes colas and flavoured aerated drinks, juices, retail water, flavoured milk and sports drinks. It does not include small home-grown brands in this category, which in many states could be a substantial portion of the market.
South becoming the most dominant player in this segment perhaps explains why Hindustan Coca-Cola Beverages, which runs the bottling plants as well as the core business, decided to shift its headquarters from Delhi to Bengaluru just a few months ago.
Christina Ruggiero, chief executive officer of the company, said, “South India as a contiguous geography is one of the large beverage markets in the country. This is one of the reasons for Hindustan Coca-Cola Beverages moving its headquarters to Bengaluru.” The city is close to some of the top markets and factories of Coca-Cola, she said.
Around 40 per cent of the country’s NARTD volume sales come from the Coca-Cola brands.
While for Coke brands, South India is the largest zone, it is not the case for Pepsi. In the water retail segment, said Ramesh Chauhan, the maker of the Bisleri brand, “for us, North and South are neck and neck in the retail water space. In the institutional water market, it is South and West which are level.” Bisleri is the largest water player in the country. There are many factors which have helped the South to grow. Climate is the top reason. Down South, soft drink sales continue throughout the year unlike in the North when sales plummet in the winter months. Growing prosperity of the South - the gross domestic product per capita income is higher than the national average — is yet another reason.
Also, unlike in most northern markets where one aerated brand dominates the market, mostly two brands dominate in the South. Both flavoured as well as colas do equally well in the South, experts said. According to a senior executive of a beverage company, Andhra Pradesh/Telangana is the largest market for this category with a volume share of about 7 per cent. In this market, both colas as well as well as flavoured aerated drinks compete intensely for market share.