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New categories & innovative ingredients driving growth of drink sector
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Saturday, 18 March, 2017, 08 : 00 AM [IST]
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Anurag More and Pushkar Oak, Mumbai
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Driven by innovative ingredients, better packaging and quality and the emergence of new categories, such as jeera in colas, flavoured yoghurt in dairy-based beverages and probiotic drinks in healthy beverages, the Indian beverage industry has shown positive growth and is now one of the largest segments in India.
Healthy & fruit-based beverages
Healthy beverages have begun to pick up pace after the release of nutraceutical regulations. Companies like Nestle, Abbott and GlaxoSmithKline (GSK) are planning to launch healthy beverages as functional drinks to provide nutrition, while Nestle India has already has entered the infant food category. Beverages with antioxidents are currently in vogue.
“Several companies are working to develop antioxidant ingredients for beverages, as it is recognised as one of the elements to prevent cardiovascular diseases,” said Vaibhav Kulkarni, chairman, Health Foods and Dietary Supplements Association (HADSA).
Almost all the major players in the country have launched fruit-based variants in the market. The fruit-based beverage segment is now developing as a category in itself, as the Food Safety and Standards Authority of India (FSSAI) - the apex food regulator - finalised regulations for pulp content in fruit-based beverages or drinks in 2016. With suggestions from the stakeholders, the regulator set a threshold limit for fruit-based beverages, which was between five and 10 per cent of the total volume of the product.
Dairy beverages
It is a sub-category under beverages, and one of the organised beverage categories in its own right if milk is excluded from it. Milk-based beverages and probiotic drinks are popular globally. The most popular ones are flavoured drinkable yoghurt. Although Danone had introduced flavoured yoghurts, they were not well received by people.
“Milk itself can be divided into different categories like low-fat milk and packed in Tetra Paks, which are now gradually picking up pace. In 2005, we had a pilot with Tetra Pak, which generated a 50-50 result. But currently, as on-the-go food and beverage products are becoming more popular with the consumers, there is a good market for Tetra Pak. While other beverages have already explored the category, milk is yet to do so,” said R S Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation (GCMMF), the dairy cooperative which manages Amul.
“In fact, flavoured milk is an old concept. It has held a sizable share of the market across India since the 1980s. Amul Kool enjoys a good market share in the western and northern states of the country,” he added.
“To encourage more such dairy-based beverages, there is a need to develop cold storage units across the nation immediately. This can be of great help to food business operators (FBOs) involved in the dairy business,” said Sodhi.
Seasonal demand
Between March and June, many states in India experience extreme heat, which increases the demand for packaged beverages. “With new policies and machinery dedicated towards food processing, the beverage market is roughly estimated to be worth Rs 400 million. From small aerated beverage manufacturers to multinational companies, they all have their fingers in the pie,” said Satyanarayana Venkatraman, a food and beverage consultant based in Chennai, Tamil Nadu.
“More players are welcome, because the customers range from the lowest strata of the society to fashionable ladies in five-star hotels. Everybody can do business and make huge profits,” he added.
Unorganised market
Almost 75 per cent of the beverage market is unorganised. With new policies announced by the government (including linking farms with processing centres), the quality of the beverages shall improve. The ministry of food processing industries (MoFPI) has conducted a number of meetings with parties from overseas to attract foreign direct investment (FDI) in food and beverage processing.
Experts have opined that the micro-, small and medium enterprise (MSME) sector lacks in the marketing of their products. “MSMEs like us do not compromise on the quality parameters, but to uphold the quality of the products, we have to invest a huge amount. Our products are of export quality, but to fetch market demand, we need capital. That is where MSME is lacking and all the big brands have an advantage,” said Nilesh Lele, director, Exelon Basket.
“Foreign investors tend not to invesr in MSMEs which are confined to a particular area and do not have a well-known name and brand image. If you see the market today, many brands have their variants in the Jeera Masala and Jeera soda categories. There is no single player dominating the national market. Rather every state has its own brand exploring this category. If a foreign investor backs small players in the market, they may be able to establish their own brand across the nation,” he added.
Further, the pulpy beverage segment, where major brands like Tropicana and Real are leaders, is another category explored by small players. Varun Tipnis, marketing manager, Bossar Packaging, said, “Many small players are opting for aseptic packaging for fruit juices. Certain local brands have also innovated through a packaging design which resembles the shape of fruit.”
“Beverages, as a category, require some or the other form of innovation, be it in the product itself or on the package. It must either click on the taste buds of your target audience or should be attractive enough to be picked by the consumer from the shelf. Many of our clients in India are now innovating with their designs. Most of them are small players who seek design advice,” Paul Winwright, director, graphics and design and customer fulfillment, Rexam.
“The major hurdle in the Indian market is the reliability and credibility of the products manufactured by small players. There are doubts about their quality. Several small beverage manufacturers are now upgrading their plants and processes to meet international standards, as the Indian government helps these manufacturers to fetch foreign markets under the commerce ministry’s export promotion initiative. Many manufacturers from South India are involved in the exports to nearby nations like Sri Lanka, Malaysia, Thailand, China and some Gulf nations,” he added.
Regulations
Overlapping regulations make it difficult for small players to sustain. Both the Bureau of Indian Standards (BIS) and FSSAI regulate packaged drinking water. FBOs are required to obtain approvals from both the authorities. Also the packaging of the product should have FSSAI and ISO marks with their respective codes and numbers.
“Local beverage manufacturers are informed with the updates on regulations through their tax consultants and auditors when they review their accounts,” said Gopan Subramani, managing director, Podaran Foods India Pvt Ltd, Tamil Nadu.
“According to FSSAI, there has to be a person from the company nominated for safety management systems. He would be responsible for the safety of both the products and the plant. Usually the managing director of the company is nominated, as he is the spokesperson of the company. If you review beverage manufacturing plants in the United States, a designated safety officer undertakes all safety checks and ensures that timely reports are recorded,” he added.
Industry automation and beverage safety
Automation installations in a beverage manufacturing plant can be a boon to the company, as they would keep a record of production and would let those working at the facility know about the glitches. Automation is a one-time investment which can ensure that the beverage is safe. Right from the cooling chambers which store fruit pulp (which can be stored in the silo chillers) to when the pulp is sent to the processing line (or if flavours are used), the quality parameters can be set according to the process and can be used. Many industries have sampling machinery, which also checks the quality of raw materials. Fruits having pests or pesticide residues can also be checked and further sorted for the necessary treatment.
Hinting towards clubbing small businesses and working cooperatively, R B Smarta, managing director, Interlink Marketing Consultancy Pvt Ltd, said, “Considering the difficulties of unorganised FBOs in beverage processing, it is a good idea that they should work in cooperation with existing manufacturing units. It would be a win-win situation, as a few manufacturers may have unutilised capacity and a few unorganised FBOs would have demand, which can be satisfied by clubbing these manufacturing units.”
“India has enough re-engineering capacity in existing and advanced technology as well as skills. These innate strengths of the country need to be channelised in such a way that the academia and industry, inclusive of the unorganised players, work in tandem. It will definitely assist in the short-term dimension,” he added.
Beverages & water
Multinational cola majors like Coca-Cola and Pepsi Co are recognised all over the nation. Many establishments of these majors have been challenged in courts of law.
D A Prabhakar, chairman, Federation of Consumer Organisation – Tamilnadu and Pondicherry (FEDCOT), suggested, “Such incidences may discourage the foreign investments. There needs to be a mechanism across the nation to review the water supply before issuing the certificate of incorporation and other clearances to the facility.”
“Many local manufacturers in Tamil Nadu are in the industry for almost 100 years now, but have been unable to establish their brands outside the state. There needs to be a mechanism which could help these local players to build their market or to take expert services to effectively market their brands,” he added.
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