NEW DELHI: Right now, Akhil Gupta, a small-scale businessman in the Capital, is turning away new suppliers. His company Fresca Juices is running at full capacity to cater to already bagged orders (he has sold out the entire stock for the year). This is in stark contrast to the current water-cooler gossip at Coca-Cola and PepsiCo — the global beverage giants are still figuring out how to push their sales in India.
Many small home-grown beverage makers are running at full capacity even before peak summer. Others are taking the franchisee route to expand quickly. Some industry estimates have pegged the market share of regional players in the Rs 14,000-crore soft drinks business at around 15%. Their modus operandi is simple but effective: Flood the market with Rs 10 PET bottles.
“When something becomes a commodity, it’s easier to sell,” said Gupta. “The Rs 10 price point has worked like magic for our industry.” At present, one-third of Fresca’s volumes come from Rs 10 packs. “The success of these small players is a reality, which is staring at Coke and PepsiCo,” said a top executive at a global beverage firm, who did not wish to be quoted. “Compared with us, they may be small, with annual turnovers of Rs 5-30 crore.
The rebel brood consists of players such as Jayanti Beverages of Alwar, Delhi’s City Cola and Xalta, Haryana’s Campa Cola and Gujarat’s Hajoori & Sons, among many others. Such is the popularity of Jayanti’s Jaljeera, which is hawked as an indigenous digestion drink in smaller towns, that Coca-Cola had to re-launch its counterpart Rimzim Cola through its splash bar, a cost-effective dispenser that uses a two-litre bottle to pour chilled beverages in small cups priced at Rs 5.
Jayanti is strong in the north, but according to the group’s sales & marketing director, Rahul Jain, it is currently expanding to southern markets, including Bengaluru.
“Regional players are steadily gaining grounds in pockets,” said market researcher Nielsen. “Large markets like Tamil Nadu, Delhi, Uttar Pradesh and Madhya Pradesh have seen the emergence of regional brands that have grown the pie as far as both consumption and retail presence are concerned.”
Xalta, a company started by cricketer Virender Sehwag’s brother, is growing by 30% y-o-y, according to a senior executive at the local beverage maker. National players, on the other hand, have not had it so easy. Sales have either remained stagnant or dipped over the last few quarters due to bad monsoons and health concerns over carbonated beverages.
Volumes of health-based drinks such as dairy have grown by 1.3x during June 2014-June 2016, while that of soft drinks have grown 1.1x during the same period, according to market researcher Nielsen. Add to that the recent ongoing soft-drinks crisis in Tamil Nadu.
“The customer is greedy. And our bait is our pricing,” said Rakesh Khanna, the 55-year-old proprietor of Satguru Enterprises, which sells City Cola. Khanna started off in 1985 by handling distribution for Ramesh Chauhan,
Bisleri’s current chairman & MD, who created popular soft drinks brands such as, Thums Up and Limca and later sold them to Coca-Cola.
Sitting at his plant in Ghaziabad, which remains open even on a Sunday, Khanna said, “We can keep our prices low because of our thin operating costs. The salary of an MNC’s CEO will be more than our annual turnover. But here, I am the CEO, the worker and the chemist too.”