Beverage firms get their fizz back1 min read . Updated: 06 Nov 2020, 07:40 AM IST
- The recovery was led by demand in rural and semi-urban areas
Indians guzzled more colas, juices and fizzy drinks in the September quarter, cheering beverage companies which saw their peak season sales wiped out by the coronavirus lockdown in summer.
Parle Agro Ltd that sells the Appy Fizz and Frooti beverages said the company saw a “significant recovery and pick-up in sales during the months of June-July", as more shops opened up and consumers stepped out more frequently.
“Sales growth further accelerated in the months from August to October with our brands crossing last year’s sales figures during the same period," said Nadia Chauhan, joint managing director and chief marketing officer, Parle Agro, in an e-mail. Despite the loss in summer sales, Parle Agro expects 2020 to see 5-10% higher sales than the previous year.
The lockdown crushed sales of fizzy and still drinks, more than half of which are consumed outside homes. While in-home snacking benefitted significantly during the period, beverage sales dipped as restaurants, schools and transport remained shut. Many beverage makers tried to move consumption in-home through small and family packs. However, consumers wary of catching cold avoided chilled beverages.
Varun Beverages Ltd, which bottles and distributes carbonated drinks Pepsi, Mirinda and Mountain Dew for PepsiCo, reported “healthy recovery" in domestic demand in the second half of the September quarter. Recovery was led by demand in rural and semi-urban areas.
“As the country moved into the Unlock phase, we witnessed healthy recovery in demand in the second half of the quarter, especially from rural and semi-urban areas. This enabled us to restrict sales volume de-growth at 6.7% year-on-year in India," Ravi Jaipuria, chairman, Varun Beverages, said in the company’s earnings statement earlier this week.
Analysts at Jefferies said despite a reasonably high share of out-of-home consumption, Varun Beverages Ltd witnessed a strong recovery in India volumes through the course of the quarter with the September month volumes growing double digits. The analysts maintained a “fairly strong" outlook on the company’s volumes, with expectations of further improvement in the out-of-home segment.
“Demand for drinks has clearly seen a good recovery quarter-on-quarter. What is driving this is small unit packs and for some companies, a higher rural penetration," said Abneesh Roy, executive vice-president, research, Edelweiss Securities. Roy said consumers are diversifying their packaged food and beverages consumption, moving beyond cookies and snacks.