Cold drink brands have a merry summer after Covid-19 fizzed out their sales for two consecutive seasons

Cold drink brands have a merry summer after Covid-19 fizzed out their sales for two consecutive seasons
Cold drink and beverage brands have amped up their marketing activitiesPixabay
  • Summer started early this year in India and it has been a hot season for cold drink brands.
  • Cold drink and beverage brands have amped up their marketing activities, expanded their distribution network both online and offline to meet the high demand this summer, and outreach to consumers across India.
  • We spoke to soft drink and beverage brands to find out how this summer has fared for them so far.
After going through two consecutive dry summers, 2022 has proved to be promising for beverage and soft drink brands in India. With the mercury touching 45C in several parts of the country, people are looking for ways to beat the heat and stay hydrated, resulting in a massive demand for cool beverages.

Two dry summers

Unlike other industrial sectors which derive sales throughout the year, beverage sales are heavily seasonal. According to industry experts, the summer period from March to June contributes to more than one-third of the annual business for soft drinks and beverage brands.

The pandemic-induced nationwide lockdown had forced restaurants, bars, theatres, and live events to shut shop. Soft drink consumption in India was predominantly out of home and occasion-dependent then.

As a result, the soft drink and beverage industry was severely affected in the last two summers, fizzing out their sales significantly.


Pandemic changed consumer, and company behaviours, too

As the pandemic forced people to stay indoors, it brought about many changes in consumer behaviour. For the first time, key industry players increased door-to-door deliveries to drive sales.

“During the pandemic and associated lockdowns, out-of-home consumption patterns were notably impacted while in-home consumption trends improved significantly. The industry underwent a significant shift in consumer purchase patterns,” shares Sundeep Bajoria, vice president of the India franchise at The Coca-Cola Company.

A bright summer for cold drinks

Early summer brought cheer for cold drink brands this year, reviving out-of-home consumption after two plateaued summers.

Soft-drinks giant Coca-Cola India has witnessed a boost in consumer sentiments across product lines and it is upping its marketing activities to increase its reach.

“In Q1 2022, we have seen double-digit growth across all categories. As consumers resume out-of-home activities and look towards outdoor entertainment channels, our focus will be on new and innovative ways to get products to consumers through integrated marketing efforts and wider holistic reach,” said Bajoria.

“We continue to win market share with transaction growth of more than 3X of GDP growth, and triple-figure growth in e-commerce sales,” he added.

Coca-Cola’s Bajoria is optimistic about seeing the non-alcoholic beverage portfolio in India would see immense growth this year, characterised by ‘innovation, fragmentation, and alternate routes to market business models.’

Out-of-home consumption and marketing activities fizz up

Parle Agro shifted its marketing gears as the lockdown lifted. It started focusing on in-home consumption and strengthening its e-commerce presence. It witnessed a 14% growth in 2021 over 2019 in terms of volume and grew about 47% in 2021 over 2020.

Now that out-of-home consumption is picking up due to sweltering heat, Parle Agro is witnessing healthy growth and demand for beverage brands across the board.

A large part of the consumer base for beverage companies consists of people who are on the move, commuting to work, schools and colleges or travelling.

During their travel, they look for refreshing and energizing drinks for a quick, satisfying swig to quench their unrelenting thirst.

“We see a substantial surge in sales and demand for our out-of-home consumption packs during this season,” says Nadia Chauhan, joint managing director & chief marketing officer, Parle Agro.

Chauhan told Business Insider India that the demand for fruit and dairy-based beverages is significantly high.

“Additionally, with the growing trend for health and wellness products, consumers are opting for fruit-based and dairy-based drinks over synthetic ones in the beverages category,” Chauhan said.

“These factors have led to huge demand and preference for our brands i.e. Frooti, Appy, Appy Fizz, B Fizz and our dairy brand, Smoodh. We are expecting significant growth in 2022 and are targeting a 30-35% growth this year over calendar year 2021,” she added.

Parle Agro’s marketing budget for this summer is ₹200 crore, 20% higher than last year.

Soft drink major Pepsi is seeing an upward trend in both in-home and out-of-home consumption.

“Our beverage portfolio be it Pepsi, Mountain Dew, 7UP, Slice, Sting and Tropicana – all continue to see an uptake in demand across the country and are witnessing a jump in both penetration and frequency. We are also strengthening our distribution both through traditional and e-commerce channels to be able to cater to consumers across urban and rural geographies,” shares a company spokesperson.

On the back of a strong marketing plan for all its products and increased consumption revival, a spokesperson for PepsiCo India said that the consumer company is optimistic about seeing a good summer season.

According to Research and Markets, the carbonated beverages market segment is expected to reach a value of ₹349.64 billion by FY 2027, expanding at a CAGR of ~15.12% during the FY 2022-FY2027 period.

The non-carbonated beverages segment in India is expected to reach ₹781.88 billion by FY 2027, expanding at a CAGR of ~20.52% during the FY 2022-FY 2027 period.

The scorching heat this summer has set the ball rolling again for beverages and cold drinks, which are expected to grow significantly in the coming years.