Companies selling soft drinks to Indians have discovered something important: there’s coloured water, and then there’s coloured water.
That could explain the sudden interest in drinks based on traditional recipes—aam panna (raw mango extract), jal jeera (essentially water flavoured with cumin seeds) and nimbu pani (lemonade).
“Cola companies are finding it difficult to grow traditional cola volumes beyond a point, which is why they are increasingly catering to the local taste preferences of their audience,” said C.V.L. Srinivas, an independent media analyst. “And this trend is here to stay,” he added.
The local arm of Coca-Cola Co. will soon launch Maaza Aam Panna across the country after a 1,000-store test across three cities, according to the company’s spokesperson. Coca-Cola is also testing the market for flavoured powders because “research shows that Indians like adding rock salt to their soft drinks,” said the spokesperson. The company is currently distributing free samples of the powder, in three flavours—mint, jal jeera and ginger—in New Delhi and its environs. If the test marketing effort succeeds, Coca-Cola will launch this product, too, said the spokesperson.
In June, Rasna Private Ltd announced its foray into the soft drinks segment and its focus is on local flavours too. “Our research and development has shown us that our consumers prefer local flavours,” said Piruz Khambatta, Rasna’s chairman and managing director. Rasna currently makes preparatory drinks— consumers use concentrates supplied by the company to make the drink at home—that come in local flavours such as alphonso mango, khus and nimbu pani. People in towns and cities with populations less than 5,000 account for 40% of Rasna’s sales, said Khambatta, and “it’s important for us to offer them flavours they are familiar with.”
The experience of Dabur India Ltd and the Gujarat Cooperative Milk Marketing Federation (GCMMF), which sells products under the Amul brand, shows that there’s a market for Indianized drinks. Four years ago, Dabur launched Indian juice flavours such as guava and lychee to its portfolio. Last year, it added mousambi (sweet lime) and pomegranate to it. “It is the Indian flavours that are driving growth in our juice portfolio,” said a spokesperson for Dabur India. “The local flavours are growing at around 40% while the rest of the flavours are showing a 25% growth,” he added. Four years ago, GCMMF, too, launched the Amul Kool flavoured milk products in varieties such as kesar, rose, and elaichi, all perennial Indian favourites. In 2005, the company followed up with Amul Masti buttermilk. The use of words such as masti (fun, in Hindi) and kool (derived from cool), was meant to draw teenagers to the brand, said Jayen Mehta, assistant general manager, marketing, GCMMF. The cooperative’s beverages business clocks a turnover of Rs200 crore a year now, and much of it, according to Mehta, has to do with the popularity of the milk-based drinks.
PepsiCo’s local arm, too, launched variants of its Tropicana juice to suit local tastes. “We introduced juice blends and fruit fusions that have been created keeping in mind the Indian consumer’s liking and taste,” said Punita Lal, executive director, marketing, PepsiCo India Holdings Pvt. Ltd.
Focus on health
“Indians are more health-conscious today and when they are being provided healthier options in flavours they are familiar with, it is becoming their preferred choice,” said Mehta. Allegations of pesticide residue in colas and other carbonated drinks sold by companies such as Coca-Cola and PepsiCo turned customers off these drinks to other, seemingly healthy, options.
“Fortunately, the pesticide controversy took place in 2003, around the same time we were launching these flavoured milk-based drinks, so we benefited hugely from it,” said Mehta.
Analysts say the controversy also helped to create a new market segment in the country. “This is when the health and nutritional drink market began to pick up in India,” said Puneet Bansal, senior analyst, Data Monitor PLC.
The size of the entire carbonated soft drinks, branded juice and branded water market is around Rs8,200 crore. The soft drinks segment accounts for Rs6,000 crore of this, but is growing at 5%, while the branded juice market is worth Rs1,200 crore and growing at 25%.
“Both Coke and Pepsi have created a Rs6,000 crore carbonated segment which has at this point matured. So, both both companies are now fighting it out at the juice and water market, where we are seeing new flavours being introduced and a lot of innovation taking place,” said an executive at a soft drink company who did not wish to be identified.
“India is a heterogeneous country with lots of different flavours,” said Srinivas. “We can expect to see a lot more niche products developed to suit the specific needs of consumers and, along with it, we will see a lot of niche marketing practices around it.”