Rise in at-home consumption helps non-alcoholic beverages market clock recovery

Fruit juice

The non-alcoholic beverages category, which includes products such as soft drinks, juices and milk-based drinks, saw demand surge during the peak summer season, even as the second wave of the pandemic hit the country. According to data from marketing research firm Kantar, the category's purchase volumes surged 26 percent in the April-May period, an indication that the second wave did not impact it as severely as the first wave.

Last year, with the onset of the pandemic (which also coincided with peak summer), the category had seen a decline of 25 percent between April to September in purchase volumes, according to Kantar. Experts attribute that slump to a decline in out-of-home consumption as mobility was restricted due to the countrywide lockdown.

“While categories like biscuits and salty snacks benefited as out-of-home occasions dried up because of the lockdown, beverages suffered. A possible hypothesis for this could be the association of cold beverages with being unhealthy and causing common cold problems,” said K Ramakrishnan, Managing Director, South Asia, Worldpanel Division at Kantar.

However, as consumers learn to live with the ‘new normal’, beverages have picked up again as shown by data from Kantar and the results of a few companies operating in the segment.

Adjusting to the new normal

According to data from Kantar, the cold beverages category started witnessing a recovery even as the first wave ebbed, resulting in 26 percent growth in the October 2020-March 2021 period. Furthermore, the April-May 2021 period saw a 26 percent surge, the data show.

“This is a sign that the second wave did not impact the category as much as the first wave did. Consumers are perhaps more aware of what to expect in Covid and seem to have worked their lifestyles around it,” said Ramakrishnan.

The localised and staggered lockdowns also helped the category, said experts, as mobility was not as badly impacted this time around.

The first-quarter earnings of companies such as Dabur, which owns the Real Fruit Juices brand, as well as Tata Consumer Products, show a similar trend.

Dabur’s food and beverage category reported 80 percent year-on-year (YoY) growth in the first quarter ended June. The company’s CEO, Mohit Malhotra, said growth was driven by the strong performance of Real Fruit Juices, especially, 1-litre packs, which are used for in-home consumption. The company has also extended the category with the launch of carbonated variants under the brand, expanding its total addressable market and helping growth.

Tata Consumer Products, similarly, registered 28 percent growth in its India beverages category, including NourishCo, which makes bottled water and non-carbonated beverages such as Himalayan mineral water, Tata Gluco Plus, and Tata Water Plus.

“NourishCo sustained strong growth momentum during the quarter with 91 percent revenue growth on a standalone basis, albeit on a low base that was impacted by the nationwide lockdown last year,” the company said in a press note.

Low base effect

It must be noted here that the growth in the category also rode on the low base of last year, caused by the plunge in consumption. The Kantar data reveals that the category is still below pre-pandemic levels — it is still 28 percent below its 2019 numbers.

Though the Kantar data suggests further improvement in the segment is possible, it will still end the year below the 2019 level.

“We project that the category will see 12-16 percent growth in the year 2021, in the absence of a third wave. Despite this growth, the category is expected to remain 6-9 percent behind its 2019 numbers,” said Ramakrishnan.