a juicy opportunity

8/7/2019 A juicy opportunity

http://slidepdf.com/reader/full/a-juicy-opportunity 1/8

A juicy opportunityAs soft drinks manufacturers wage a public relations battle to counter accusations of poisoning consumers, fruit juice sellers sieze an unexpected boon. Ranjit Devraj reports.

September 2003 - With Coca-Cola and Pepsi bogged down in a losing publicity battleover pesticide residues in their bottled products, consumers are rediscovering the value of fruit juices and natural thirst-quenchers that are abundantly available.

Ever since the U.S. colas began flooding the markets as the most visible part of thedecade-old economic liberalization process, nutritionists have agonized over the dangersposed by "empty calories" in soft drinks. But pushed by relentless advertising campaignsinvolving top film stars and sports personalities on television and other media, both Pepsiand Coca-Cola have been steadily notching up sales to well over six million bottlesannually. It is amid such a scenario that the New Delhi-based environmental groupCentre for Science and Environment (CSE) sprung on an unsuspecting public on Aug. 5

the discovery by its laboratories that most soft drinks sold in India, including Pepsi andCoca Cola, were contaminated with large doses of commonly available pesticides.Among these pesticides are Lindane, DDT, Chlorpyrifos and Malathion.

Vandana Shiva, internationally known campaigner for chemical-free organic agricultureand 'people's food rights and food sovereignty', said that from the point of view of nutrition, colas were already bad but colas laced with pesticides were "doubly bad".Shiva, who runs the return-to-basics 'Navdanya' movement, which promotes traditionalIndian thirst-quenchers, said the pesticides controversy would not have risen in the firstplace if people had stuck to sustainable, organic farming.Also see : Interview with Vandana Shiva

Leading nutritionists have opined that the soft drink controversy may have not onlyserved to sensitize people to the serious problem of pesticides contaminating drinkingwater and the environment, but to issues like "empty calories" and the "chip-and-cola"diet that are relatively new to the country. "Nutrition awareness is generally low in thiscountry and there is a need for the right kind of knowledge on the value of fresh fruit andvegetables to reach people who may be easily swayed by advertisement campaigns," saidSantosh Jain Passi, reader in nutrition at the Institute of Home Economics at DelhiUniversity.

Passi said ignorance concerning the right type of diets may affect the well-to-do just as

easily as poor and illiterate people. "Broadly speaking, for all groups, money spent onsoft drinks is better utilized on fresh fruit or fruit juices because they carry the benefits of valuable micronutrients, bio-active compounds andphyto-chemicals," Passi added.

Most nutritionists say while there was nothingwrong with an occasional cola or the pizzas andburgers packaged alongside it at fast food outlets,

"Money spent on soft drinks isbetter utilized on fresh fruit or fruit juices because they carry thebenefits of valuablemicronutrients, bio-activecompounds and phyto-chemicals".

http://www.indiatogether.org/2003/apr/ivw-vandana.htm

http://www.indiatogether.org/php/sendform.php

http://www.indiatogether.org/2003/apr/ivw-vandana.htm



excessive and habitual consumption of such items in place of age-old dietary practicesare bound to have a negative impact in terms of early incidence of chronic degenerativediseases.

But following the 'pesticides-in-cola' controversy, fastfood outlets have begun advertising

their burgers and pizza packages with fresh fruit juice. Cola manufacturers reported amassive 40 percent drop in sales in August, the slack being taken up by unfashionablefruit juice vendors who ply their business on the street corners and the more trendy 'juice-bars' that have suddenly sprouted up in India's cities. Amoretto's, a firm which operateseight juice bars in Mumbai, Delhi and Calcutta, now has plans to increase them to 21outlets by the end of the year, thanks to a growing fad for all kinds of fruit juice amongthe well-heeled.

The switch from colas to fresh fruit juice is easy given that India is among the world'sbiggest fruit juice producers. It has an annual output of around 50 million tonnes,although the packaging industry is still lagging and lacks the technology of the advanced

countries. Meanwhile, the central government has announced that it would shortly passan ordinance to fix standards for drinking water, including that used by the bottlingindustry. So far, the cola companies seem to have avoided costly purification processesbecause of a total lack of standards.

In reaction to the outcry over CSE's findings, Union Health Minister Sushma Swarajreleased the results of tests carried out by the government on 12 brands of soft drinks,which showed nine of them failing to meet European standards for pesticide residues.Swaraj declared the beverages safe by present standard . However, all the samples testedby the Central Food and Technological Research Institute (CFTRI) were found to containlindane, a pesticide banned for agricultural use in the European Union and several other

countries because of its proven toxicity to the liver and kidneys.Parliament, which has already banned colas and soft drinks from its premises, saidreinstatement will happen only after an all-party parliamentary committee clears this.That must be bad news for those who would 'cola-nize' the country.

Ranjit Devraj September 2003

TRENDS

•

Already contributing 68% of fruit/vegetable juice off-trade value sales in 2010,juice drinks was also the fastest growing category in 2010. Lemon-based juicedrinks made their presence felt within one year of introduction. In 2010, thebrands Nimbooz by 7-Up (PepsiCo), Minute Maid Nimbu Fresh (Coca-Cola ) andLMN (Parle Agro) together accounted for 10% of off-trade value sales of juicedrinks. The “homemade nimboo pani” centric marketing followed by theseplayers seems to have worked wonders in introducing the product. This is in spite

mailto:[email protected]?subject=Feedback:%20A%20juicy%20opportunity





of tremendous growth shown by mango-based established brands such as Maaza,Frooti and Slice.

COMPETITIVE LANDSCAPE

•

The leading company in terms of off-trade value sales in 2010 was Coca-Colawith a 31% share of value sales. It was followed by Parle Agro with 26% andPepsiCo with 21% of sales in 2010. As juice drinks continues to be a driver for both Coca-Cola and PepsiCo, they have seen their share of throat withinfruit/vegetable juice rise dramatically in the review period. Dabur ’s juice drinksportfolio is yet to provide serious competition to Coca-Cola and PepsiCo in thiscategory. Parle Agro’s flagship brand Frooti also registered slower growth thanthat of other mango-flavoured juice drinks in 2010.

PROSPECTS

• Constant unit prices for 100% juice and nectars are expected to rise towards theend of the forecast period. There was a reduction in the same throughout thereview period in order to avoid astronomical unit prices in current terms due tohigh inflation. However, as consumers accept the health benefits of juices in theforecast period and inflation rates cool down, national juice manufacturers will beable to hike constant unit prices without a severe backlash from consumers.

Putting juice in growth

Sindhu J. Bhattacharya

IT'S a tale with a delicious twist. Compact International promoter D. K. Mittal was tomeet the Director of the Defence Research and Development Organisation (DRDO) onefine morning in Ladakh in connection with a tender for setting up some shelters for armypersonnel. During the meeting, the Director offered Mittal a drink made of an unheard of herb called seabuckthorn. A little sceptical at first, Mittal took several sips before gulpingdown the entire glass. And he asked for more.



This chance encounter with the wonder plant seabuckthorn was the reason Ladakh Foodswas set up as a separate company in 2002 to manufacture and sell seabuckthorn juice asLehberry. Ladakh Foods today claims to be one of the fastest growing fruit juicecompanies in a fiercely competitive environment where big names such as Dabur andPepsi already hold substantial market shares. Says Managing Director Varun Kumar,"Even when the fruit juice/nectar market is projected to grow at a scorching pace of 40per cent, a Tetra Pak study has found that a whopping 86 per cent of the fruit juice marketis still lying untapped."



Perhaps one of the main reasons why milk major Mother Dairy last week announced it isjumping on to the bandwagon of fruit juice. The company has launched packaged fruitjuices under its flagship brand, Safal. Starting from Delhi, the product is scheduled for

launched on a nation-wide scale in the months to come. The company says that havingpioneered the marketing of fresh and frozen vegetable products backed by a modernproduce handling and processing facility, Safal is now ready to script a new successstory. This time in the packaged fruit juices category. "With the market growing at ahealthy rate and with changing lifestyles and rising levels of health consciousness amongconsumers today, the demand for healthier products like packaged fruit juice is onlygoing to increase in the times to come."

Says the director of a top retail chain in Chennai, "The fruit juice category is rapidlygrowing by over 50 per cent at some stores for us; it's seen as healthy compared to softdrinks. They are more hygienic than roadside fruit juices and are a big hit with yuppies.

Also, non-sugar variants find favour with fitness freaks."



For Safal, with its expertise in producing and marketing various horticultural products inIndia as well as overseas, juices are a logical extension of its portfolio. With the launch of Safal juices, our intention is to grow the juice market further by providing a great-tastingproduct to the consumer at the right value," says Paul Thachil, Chief Executive of Mother Dairy. Ask Dabur Foods CEO Amit Burman where he thinks his company will be in thenext few years and pat comes the reply: "We will be a Rs 200-crore company by 2006-07. And a large chunk of this growth will come from the Real brand of fruit juices, sinceReal contributes as much as 85 per cent to the company's topline. It will continue to be anarea of focus."

However, realising that the fruit juice category, though growing at a healthy pace, needsto be activated further, Burman has just launched fruit drinks - drinks where the fruit pulpconcentration is only about 20 per cent - in typically Indian flavours of aam panna ,watermelon and pomegranate. And having realised that price is still an entry barrier for avast majority of the consumers, Dabur has priced Coolers about 15 per cent lower thanReal.



Pricing is one of the major worries. Says Executive Director (New Business) at PepsiFoods, Subroto Chattopadhyay, "Price is a barrier to this category because when you givefresh juice, packaging becomes critical. So, what the industry is now trying to do is offer different packaging to suit different price points while simultaneously working on waysto offer better quality and improved taste."

Pricing is also the downfall of fruit juice importers. Says A. V. Bhaskar, CEO, AdluriFoods, which distributes the Australian brand Berri in the South, "It is difficult to makeinroads into the middle class as it finds the prices prohibitive. Sales tax on importedproducts is not uniform across the States. In Tamil Nadu, it is 21 per cent, much lesser inAndhra Pradesh and Karnataka." So a one-litre bottle of Berri costs Rs 110 while aTropicana is in the Rs 75 range. PET bottles are another reason for the high prices.However, the retail prices are the same across all the States. Natural fruit juices are agrowing market and all players should have a level playing field, he says.

Taking advantage of the health consciousness pervading the market, Adluri Foods hasintroduced cranberry juice (something that the local brands also have done) and is testing

a mixed vegetable juice and a cocktail of apple, carrot and orange in the market.

Pepsi recently launched Tropicana Tropics Mango Nectar, which is made entirely frommangoes sourced from within India, as against other flavours for which sourcing has tobe done from other countries. The introduction of Tropics Mango Nectar will be followedby Tropics Litchi and Tropics Guava. Says Chattopadhyay: "India is now among the topten markets for Tropicana worldwide. Significantly India is now an approved source for mango pulp within the Tropicana worldwide system, and can soon emerge as a major sourcing base for other exotic fruits for Tropicana's international market." Which meansthat if the fruit juice producers work on further development of backward linkages, thepricing issue plaguing this industry can be better tackled. Besides, the industry has

already begun to offer packaging solutions to address different price points like a 125 mlpack of fruit drink Maaza from Coca-Cola India at just Rs 5 and a 500 ml Tropicanablend for Rs 25.

So where is the industry headed? Says Varun Kumar of Ladkah Foods: "We expect themarket to touch Rs 170 crore by next year and we are targeting break-even within thenext four years." So, while it took Dabur Foods seven years to make money on fruitjuices, thanks to product innovation, expanding market and increased consumer



preference for healthy foods, Ladakh Foods may repeat this feat in just four years. Buteven as the industry players are upbeat about growth prospects, there is an undercurrentof discomfiture, with talk of the new government thinking of levying eight per centexcise on food products including packaged fruit juice. So, while profit projections areunlikely to go completely haywire just yet, there might have to be some readjustments in

the time frame within which these targets may be achieved.Financial Daily from THE HINDU group of publicationsThursday, Jul 01, 2004

India has witnessed radical shift in consumption of non-alcoholic drinks over therecent past. Fast expanding middle class population that is currently around 350Million, increased urbanization and rising disposable income are some of themajor reasons contributing to this change. Besides this, growing healthconsciousness among India’s young population has brought about a revolution inthe Indian non-alcoholic drinks market. It has been seen that cola sales havefallen dramatically due to rising health concerns and this seems to havebenefited the country’s non-carbonated drinks market such as energy drinks andjuices.

According to our recent report “ Indian Non-Alcoholic Drinks Forecast to2012 ”, the Indian non-alcoholic drinks market was estimated at around Rs. 216Billion in 2008 and is forecasted to grow at a CAGR of around 15% during 2009-2012. The report covers various factors driving the growth of non-alcoholic drinksmarket in India.

The segment level analysis shows that the highest growth will be seen in thefruit/vegetable juice market, which is forecasted to growth at a CAGR of around30% in value terms during 2009-2012. It will be closely followed by the energydrinks segment at a CAGR of around 29% during the same period. There is agreater awareness of the ‘functional’ benefits of health beverages and a greater willingness to pay a premium for such beverages. With these strong drivers of growth, it is not surprising that the beverage industry in India has begunresponding with products that are marketed clearly on a health and wellnessplatform.

a juicy opportunity

Documents