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India's packaged juice market has huge untapped potential
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Friday, 04 March, 2016, 08 : 00 AM [IST]
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Vaibhav Verma & Manish Malhotra
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fiogf49gjkf0d India’s packaged juice market has charted a high growth trajectory, thanks to its easy availability, anytime-anywhere consumption, and convenience.
The Indian juice industry was pegged at US$3.5 billion in 2012 and is estimated to reach US$21.14 billion by 2018. The per capita consumption of fruit juice-based beverage is 45 litre in Germany, 42.5 litre in Switzerland and 39 litre in the US. In India, the per capita consumption is just 20 ml, which is negligible compared to other countries. Hence, there exists huge untapped potential in this segment. Shift in consumer preference towards non-carbonated fruit beverages, raising concern over obesity and other health issues, a change in lifestyle, affordability and availability of packaged juices are some of the reasons behind the rise of the packaged fruit juice market. They are slowly becoming a staple part of family breakfast, and even a must at social dos. The untapped markets in the tier-II and tier-III cities can be epicentre of growth for this sector as people in these cities still prefer fresh juices over packaged ones.
Prime minister Narendra Modi also suggested that multinational cola giants should help augment fruit sales for Indian farmers by adding fresh fruit juices to their fizzy drinks. India, the world's second-largest producer of fruits and vegetables, throws away fresh produce worth millions of dollars every year because of the country's lack of adequate cold storage facilities and refrigerated transport.
Within the beverages market, the fruit-based beverages category is one of the fastest-growing categories, and has grown at a CAGR of over 30 per cent over the past decade. As of March 2013, the Indian packaged juices market was valued at Rs 1,100 crore (~US$200 million) and projected to grow at a CAGR of ~15 per cent over the next three years.
The packaged fruit juices market can be divided into three sub-categories: fruit drinks, juices, and nectar drinks. Fruit drinks, which have a maximum of 30 per cent fruit content, are the highest-selling category, with a 60 per cent share of the market. Frooti, Jumpin, Maaza, and so on are the most popular products in this category. Fruit juices, meanwhile, are 100 per cent composed of fruit content, and claim a 30 per cent market share at present. In contrast, nectar drinks have between 25 and 90 per cent fruit content, but account for only about 10 per cent of the market.
Rise in the disposable income, people adopting Western culture, health awareness and import of fruits to India are among the top most factors to drive the juice business in India.
Over the years, we have seen that people no more stick to eating traditional foods. They have become experimental in terms of trying out new, they are travelling more, and they have grown an appetite of West among themselves.
Emerging trends like increased preference on wellness, the desire to spend extra on health and maintaining healthy lifestyle, especially in the middle-class and strengthening Indian economy, which offers more disposable income to the masses are major catalysts that drive strong growth of the non-alcoholic beverages market in India.
Indians are adopting Western style of living and eating habits. At the same time, fruit is an inherent property which can cure a lot of disease and improve the immune system of human body. So, that’s where the idea comes from - perhaps, juice has become a substitute to food today.
The rising number of health-conscious consumers is giving a boost to fruit juices; it has been observed that consumers are shifting from fruit-based drinks to fruit juices as they consider the latter a healthier breakfast/snack option.
Dabur is the market leader in the Indian packaged juices market with its brands Real and Real Activ. Other players include Parle, Fresh Gold, and Godrej. Some of the other brands of fruit juices and drinks include Frooti, Appy, Maaza, Minute Maid, Slice, Fresh Gold, and Del Monte. Considering the attractiveness of the segment, diversified consumer food companies such as ITC are working towards making a foray into packaged juices.
As per studies, the most preferred pack size is the individual (small) pack which is convenient, and easy to carry and consume. These are in great demand as out-of-home consumption is on the rise. Tetrapaks are most popular among manufacturers as well as consumers. Some companies are also offering their products in tins (e.g., Del Monte) and PET bottles (e.g., Maaza); however, they are more expensive than Tetrapaks, which add to production costs, and, as a result, affect the market price.
Fruit juices have created a space for themselves in regular household menus, as a part of a family’s breakfast, social gatherings, and evening snacks. As a result, consumers are picking up multiple family packs at one go, which is an emerging consumption trend.
There are several reasons behind the growth of the Indian packaged juices category: Changing consumer lifestyles, increased health awareness, hygiene concerns, growing category of informed buyers, rising disposable incomes, booming modern retail, habitual purchase, and introduction to new flavours.
Among all challenges, it is difficult to control the cost of production at the price points of juices, primarily because of rising food inflation. The continuous, year-long supply of raw materials, and the non-stop production of juices for the full season, is another production-linked issue which needs to be managed carefully. Also of vital importance is controlling transportation and logistics costs.
Packaged juices are gradually cementing their place in the urban household in the metros and tier-I cities; however, replicating the same success in tier- II and -III cities is still a struggle as residents in these regions still prefer fresh juices over packaged ones because they are comparatively cheaper, and also in sync with the traditional belief that juices are best consumed freshly pressed.
Manufacturers are also adopting a number of other strategies to attract more consumers. Some companies are planning to launch fruit juices in cans that are preferred over bottles by the younger generation. Fruit juice companies are also trying to rope in popular Indian movie stars or sports personalities as brand ambassadors for their products as part of a proven marketing strategy. The growing trend of fitness and keeping one self healthy is driving the juice business in India. Over the last five years, the country has seen juice bars and juice cafes opening in India.
On the one hand, local players are expanding their wings and signing deals with global majors to start their business in India, and on the other, beverages majors like PepsiCo, Coca Cola and Manpasand are investing heavily in packaged juice business.
At the same time, Dabur is the market leader in the Indian packaged juices market, with its brands Real and Real Active having 55 per cent share in the packaged juices market followed by PepsiCo with a 30 per cent share. In May 2014, Hindustan Coca Cola Beverages announced that it aims to start mango juice business in partnership with Jain Irrigation after success of mango farming initiative 'Unnati' launched in 2011. Both the partners plan to invest Rs 50 crore over the next 10 years to boost mango production by using the Ultra High Density Plantation (UHDP) technology with the involvement of about 25,000 farmers in an area of 50,000 acre.
Meanwhile, ITC Ltd, one of the biggest FMCG majors is planning to invest Rs 1,000 crore in dairy and juice businesses. The group has also acquired Bangalore-based B Natural juices to tap the fast-growing juice business in India. The company is planning to enter into both 100 per cent juices and nectars with 7-8 variants.
The fruits and vegetables-based drinks market was estimated to be around Rs 1,300 crore of the around Rs 1,540 crore market in 2012-13. The industry describes these drinks as on-the-go consumption or out-of-home.
While Andhra Pradesh accounts for 30 per cent of the market, Tamil Nadu is the second-largest with 28 per cent, followed by Karnataka 22 per cent and the rest is made up by Kerala and Puducherry.
As far as fruit drink is concerned, 92 per cent of the market is estimated to be mango-based. This segment has been classified into three categories based on the pulp percentage.
It is appropriate to say that the packaged juices market in India is still evolving. As there are many national and international brands on the verge of succeeding and expanding further into the field, new entrants can also cash in on this opportunity by positioning/promoting packaged and bottled fruit juices as part of the consumers’ daily diet. Simultaneously, it is critical to ensure affordability for consumers, while maintaining the hygienic aspects and quality of products throughout the year.
(The authors are asst professors at Banarsidas Chandiwala Institute of Hotel Management & Catering Technology)
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