Bengaluru/Mumbai: FMCG companies are launching a spate of experimental drinks in the country, driven by rising demand for healthier and functional beverages, the rapid expansion of quick commerce and the need to broaden the market beyond peak sales of fizzy products in the summer.
“Carbonated sugar-based drinks are growing at a relatively slower pace, while several newer beverage categories are clocking double-digit growth. In a market with a young population that has greater spending power, it is only natural that more companies are entering this opportunity,” said Santosh Sreedhar, partner at Avalon Consulting.
Quick commerce has fundamentally changed the economics of launching beverages, allowing companies to test consumer acceptance for a diverse range of products.
E-commerce and quick commerce provide an alternative route for companies to reach consumers without heavy investments in distribution, Sreedhar said. Beverages are particularly suited to quick commerce because they are impulse purchases requiring instant gratification, while the online channel allows platforms to stock a much wider assortment than conventional retail, he said.
Companies are also increasingly launching products outside the traditional summer window while building categories that can drive consumption throughout the year.
"An off-season launch helps companies test the waters before the next summer and plan production better," said Sreedhar. He said that companies are moving beyond beverages meant only for summer, positioning nutrition, work and study breaks, and mixers to help sustain demand across seasons.
The push into year-round beverage occasions also reflects the industry's attempt to reduce its dependence on summer, which still accounts for about 40% of annual sales, according to Crisil Ratings. The vulnerability of that model was exposed last year when unseasonal rains disrupted demand during the crucial May-June period.
“We are going through a period which was terrible last year with all the rains," Varun Beverages chairman Ravi Jaipuria told analysts in Q1 of FY26 while discussing the weather-hit season last year.
Market growth
Ready-to-drink (RTD) beverages, excluding fizzy drinks, account for almost 70% of the country's non-alcoholic beverage market and are expanding at an 18% compounded annual growth rate, outpacing the broader beverage industry.
Hindustan Unilever Ltd, Tata Consumer Products, Varun Beverages, Dabur and ITC are looking to grab their share of this pie, which swelled to more than $32 billion in 2025 and is projected to reach $40 billion by 2030, according to Redseer Strategy Consultants.
Hindustan Unilever, India’s largest FMCG company, expanded its beverages portfolio over the past few years, adding the fast-growing RTD category to its offerings of Brooke Bond tea, Bru coffee and malt-based nutrition brands Horlicks and Boost.
The shift started in FY24 with a pilot project of Bru Ready-to-Drink Cold Coffee on quick commerce and online channels. It expanded the portfolio in FY25 with Boost Milkshake before unveiling Bru chilled coffee, Boost milkshakes and Horlicks milkshakes and functional beverages in FY26. Earlier this year, it launched Horlicks Protein Milkshake, targeting younger consumers.
"We are committed to accelerating this momentum with a focus on four strategic big bets: premiumising tea and coffee, pivoting to lifestyle nutrition, building Kissan into a mega food brand, and expanding our ready-to-drink beverages portfolio," Rajneet Kohli, executive director, foods, Hindustan Unilever, said in the company's FY26 annual report.
In June, Varun Beverages, one of the largest franchisees of PepsiCo outside the US, tied up with Japan's Asahi Group Holdings to introduce its century-old fermented milk beverage brand CALPIS in India. Varun Beverages will make and distribute CALPIS, expected to launch later this year.
“CALPIS is a category we are committed to building at Varun Beverages and one in which we see significant long-term potential," executive vice-chairman Varun Jaipuria said while announcing the partnership.
New categories
These new drink categories barely existed in India's mainstream beverage market a few years ago. ITC has widened its portfolio beyond B Natural juices, expanding into dairy beverages, coconut water, smoothies and, more recently, B Natural+ Fruit-Based Cola, which it calls the better-for-you carbonated drink. The company's strategy is to tap rising demand for healthier and more functional beverages while broadening consumption occasions.
Tata Consumer Products now offers kombucha, green tea, fruit teas and RTD coffee in cans and PET bottles alongside its packaged beverages under Tata Tea and Tata Coffee. During the March quarter, managing director and chief executive Sunil D'Souza said the company's RTD business recorded 28% volume growth and 23% revenue growth.
"And you will see more launches in the tea space as we go forward," he told analysts.
Dabur is betting on premium beverages to drive growth beyond its juices business. During the March quarter, its premium beverage portfolio grew 26%, led by Real Activ Juices, while its coconut water business doubled from a year earlier.
Sreedhar expects categories such as functional beverages, fermented drinks, iced teas, flavoured sparkling drinks, coconut water and milk-based beverages to emerge as meaningful growth drivers over the next three to five years.