comparative study of soft drinks retail sector in india
TRANSCRIPT
“Comparative Study of Retail Sector of Soft Drink Industry in
Nagpur City”
Dissertation report submitted to International University of Vienna, Austria
In partial fulfillment of the requirement for the award of degree of
Master in Business Administration
Submitted by:Ritabrata PanM.B.A – III Sem.
Guided by:Prof. Kaustav Mukhrejee
Global Business School
“Comparative Study of Retail Sector of Soft Drink Industry in
Nagpur City”
Dissertation report submitted to International University of Vienna, Austria
in partial fulfillment of the requirement for the award of degree of
Master in Business Administration
Submitted by:Ritabrata PanM.B.A – III Sem.
Period of References: 2004 to 2006.
All the data will be taken from Primary sources (retail sector of Soft drinks
in Nagpur City) and Secondary sources; from January 2004 to December
2006 data will be used for the study.
Geographical Area: Nagpur city.
Prof. Kaustav Mukherjee. Prof. Swati Sharma. Project Guide H.O.D.
M.B.A Department.
I hereby declare that the dissertation entitled “Comparative Study of Retail
Sector of Soft Drink Industry in India” is the result of my original work
and the same has not been previously submitted to any examination of this
university, and the dissertation will be liable to be rejected and / or
cancelled, if found otherwise. Whatever data have been collected they are
based on original facts & figures.
Place: Nagpur. Ritabrata Pan.
Date: M.B.A III Sem.
DECLARATION
I take this opportunity to acknowledge the deep sense of gratitude towards
my guide Prof. Kaustav Mukherjee, whose valuable co-operation and
guidance resulted in successful completion of this dissertation. He not only
encouraged me throughout the project but also took great pains going
through the manuscript carefully and made numerous valuable suggestions
and corrections which have greatly improved the quality of work.
I am equally indebted to Prof. Swati Sharma, H.O.D., MBA
Department , Global Business School, G.H.R.S.M.S, Nagpur, for their, co
operation, guidance and constant encouragement.
Ritabrata Pan.
ACKNOWLEDGEMENT
Chapter-1
Introduction
About Soft Drink:
Soft drink market size for FY00 was around 270 m.n cases (6480mn
bottles). The market witnessed 5- 6% growth in the early‘90s. Presently the
growth rate of soft drink industries in India is 22% as compare to the
previous year. The market size for FY01 was around 7000 mn bottles & the
market size for FY07 is expected to be 11000 mn bottles.
In Nagpur city, market size for FY00 was around 0.04 m.n cases (9.6 lacks).
The market witnessed 7 – 8% in the early ‘90’s.
Soft Drink Production area: The market preference is highly regional
based. While cola drinks have main markets in metro cities and northern
states of UP, Punjab, Haryana etc. Orange flavored drinks are popular in
southern states. Sodas too are sold largely in southern states besides sale
through bars. Western markets have preference towards mango flavored
drinks. Diet coke presently constitutes just 0.7% of the total carbonated
beverage market.
Growth promotional activities: The government has adopted liberalized
policies for the soft drink trade to give the industry a boast and promote the
Indian brands internationally. Although the import and manufacture of
international brands like Pepsi and Coke is enhanced in India the local
brands are being stabilized by advertisements, good quality and low cost.
The soft drinks market till early 1990s was in hands of domestic players like
campa, thumps up, Limca etc but with opening up of economy and coming
of MNC players Pepsi and Coke the market has come totally under their
control. The distribution network of Coca cola had6.5 lakh outlets across the
country in FY00, which the company is planning to increase to 8 lakhs by
FY01. On the other hand Pepsi Co's distribution network had 6 lakh outlets
across the country during FY00 which it is planning to increase to 7.5 Lakh
by FY01.
Types Soft drinks are available in glass bottles, aluminum cans and PET
bottles for home consumption. Fountains also dispense them in disposable
containers Non-alcoholic soft drink beverage market can be divided into
fruit drinks and soft drinks. Soft drinks can be further divided into
carbonated and non-carbonated drinks. Cola, lemon and oranges are
carbonated drinks while mango drinks come under non carbonated category.
The market can also be segmented on the basis of types of products into cola
products and non-cola products. Cola products account for nearly 61-62% of
the total soft drinks market. The brands that fall in this category are Pepsi,
Coca- Cola, Thumps Up, diet coke, Diet Pepsi etc. Non-cola segment which
constitutes 36% can be divided into 4 categories based on the types of
flavors available, namely: Orange, Cloudy Lime, Clear Lime and Mango.
The Soft Drinks in India industry profile is an essential resource for top-
level data and analysis covering the soft drinks industry. It includes detailed
data on market size and segmentation, plus textual analysis of the key trends
and competitive landscape, demographic information, and descriptions of
the leading companies.
Evolution of Soft Drink in India:
Euro monitor International's Soft Drinks in India market report offers a
comprehensive guide to the size and shape of the market at a national level.
It provides the latest retail sales data, allowing you to identify the sectors
driving growth. It identifies the leading companies, the leading brands and
offers strategic analysis of key factors influencing the market - be they new
product developments, packaging innovations, economic/lifestyle
influences, distribution or pricing issues. Forecasts illustrate how the market
is set to change.
Soft drinks experienced another good year in 2006. The positive growth in
soft drinks in India was primarily driven by the increased demand for
fruit/vegetable juice and bottled water. With rising disposable incomes and a
preference for healthy and natural products, fruit/vegetable juice was in great
demand in 2006. Bottled water also continued its fast growth, with demand
stemming from the rising populations in cities and the crumbling public
infrastructure for tap water.
India's soft drinks market will continue to grow apace in 2003, overcoming
the obstacles presented by the difficulty in marketing to such a large and
diverse population and the relatively high cost of packaging as a proportion
of selling price. Much of this continued growth is likely to come from
bulk/HOD water with demand for carbonates and packaged water remaining
strong but increasing a little more slowly.
Nagpur & Indian Market Scenario:
Market Definition: The soft drinks market consists of bottled water,
carbonates, concentrates, functional drinks, juices and ready-to-drink (RTD)
tea & coffee. The market is valued according to retail selling price (RSP)
and includes any applicable taxes. Any currency conversions used in the
creation of this report have been calculated using constant 2004 annual
average exchange rates. Soft drinks are available in glass bottles, aluminum
cans and PET bottles for home consumption. Fountains also dispense them
in disposable containers Non-alcoholic soft drink beverage market can be
divided into fruit drinks and soft drinks. Soft drinks can be further divided
into carbonated and non-carbonated drinks. Cola, lemon and oranges are
carbonated drinks while mango drinks come under non carbonated category.
The market can also be segmented on the basis of types of products into
cola products and non-cola products. Cola products account for nearly 61-
62% of the total soft drinks market. The brands that fall in this category are
Pepsi, Coca- Cola, Thumps Up, diet coke, Diet Pepsi etc. Non-cola segment
which constitutes 36% can be divided into 4 categories based on the types of
flavours available, namely: Orange, Cloudy Lime, Clear Lime and Mango.
The concerns about the safety of carbonates were renewed in the wake of the
pesticides controversy in August 2006. Similar concerns were voiced in
2003. The alleged harmful effects of pesticide residues in carbonates
affected the image and consumption of carbonates negatively. Within
carbonates, consumers increasingly preferred non-cola carbonates to cola
carbonates. The pesticides controversy resulted in an increasing number of
consumers shifting towards perceived healthier beverages.
Indian consumers were slow to accept new soft drink options such as
functional drinks and RTD tea, although these beverages produced dynamic
growth rates from a low base in 2005 and 2006. On the other hand,
carbonates, bottled water and fruit/vegetable juice have long been popular
beverages in India. The relatively low consumer awareness of functional
drinks and RTD tea stems mainly from the lack of promotional activity.
Manufacturers have marketed and positioned these products in large
metropolitan cities. Thus, the combination of high prices, restricted product
availability and a lack of promotional activity led to the slow uptake of
emerging soft drinks.
While soft drink producers in western Europe bemoaned yet another cold,
wet summer in 2002, their counterparts in India were struggling to keep up
with demand, with exceptionally hot weather there driving sales growth. A
new report from beverage industry analysts Canadean estimates that
consumption in India leapt by 13 per cent as a result of the heat wave, and
producers will clearly try to capitalise on this rapid advance in years to
come.
Still drinks remain the largest single sector, according to Canadean, and
while sales of packaged still drinks grew strongly, the sector as a whole was
held back by almost flat consumption of unpackaged or loose alternatives.
Helped by strong sales through roadside vendors, loose or unpackaged still
drinks account for over 90 per cent of total still drinks consumption, the
report shows.
Carbonates, on the other hand, gained considerable ground in 2002, with a
20 per cent increase in consumption helping fizzy drinks narrow the gap
with their still counterparts. This performance is even more impressive given
the fact that Indians do not tend to consume carbonates with meals and home
consumption is low.
The major carbonate producers reverted back to offering 20cl refillable glass
- a move that enabled affordable pricing to be implemented and one that
resulted in sales of the pack size more than doubling. This has also helped
the major brands compete more effectively with their traditionally less
expensive local rivals.
PET is the fastest-growing type of packaging, its use increasing by some 36
per cent in 2002 alone. PET's share of total soft drinks packaging also
increased from 20 per cent to 24 per cent with further inroads expected in
2003.
Imported brands in general are becoming more readily available on store
shelves offering consumers greater choice. There is also considerable scope
for the introduction of new flavours in response to ethnic preferences. In
addition, the success of smaller pack sizes in the carbonates sector is likely
to provide fresh impetus for low cost packaging particularly as the major
producers look for ways of competing with lower priced local suppliers.
Weather permitting, the overall market is expected to continue growing in
2003, but with a predicted increase of around 8 per cent, this will be far less
frenetic than in 2002.
Major Market Players:
Coca Cola: Coca-Cola India Pvt. Ltd maintains its leading position. Coca-
Cola India Pvt Ltd maintained its leading position in soft drinks in India,
followed by PepsiCo India Holdings Pvt Ltd in 2006. Whilst the retail
volume shares of Coca-Cola India and PepsiCo India slipped in 2006, as a
result of the growing health concerns caused by the aftermath of the
pesticides controversy, both maintained a comfortable lead over the other
manufacturers. Parle Bisleri Ltd has steadily gained shares from the
carbonates giants over the review period, to emerge as the third ranked
company in 2006. The battleground for beverages has moved from
carbonates to bottled water and fruit/vegetable juice, with manufacturers
turning their attention towards these healthier beverages, as consumer
interest continues to surge forward. A number of new players have entered
fruit/vegetable juice and bottled water, vying for a slice of the growing pie.
Future soft drinks growth to come from healthier beverages. Soft drinks is
expected to grow at a healthy pace over the forecast period. Much of the
demand for soft drinks is expected to be for healthier beverages. With
consumer preferences shifting towards healthier options worldwide, India is
following suit. A growing consumer awareness about healthier soft drinks
and the effects of the pesticides controversy mean that consumers are likely
to opt for healthier alternatives over the forecast period. Thus, sales of
carbonates are expected to stagnate over the forecast period while
fruit/vegetable juice and bottled water are projected to experience robust
growth. Functional drinks and RTD tea are expected to reproduce the
dynamic growth of 2005-2006, albeit from a low base.
Pepsi: Pepsi gained popularity following the introduction in 1934 of a 12-
ounce bottle. Initially priced at 10 cents, sales were slow, but when the price
was slashed to 5 cents, sales went through the roof. With twelve ounces a
bottle instead of the six ounces Coca-Cola sold, Pepsi turned the price
difference to its advantage with a slick radio advertising campaign, featuring
the "Pepsi cola hits the spot / Twelve full ounces, that's a lot / Twice as
much for a nickel, too / Pepsi-Cola is the drink for you,", encouraging price-
watching consumers to switch to Pepsi, while obliquely referring to the
Coca-Cola standard of six ounces a bottle for the price of five cents (a
nickel), instead of the twelve ounces Pepsi sold at the same price. Coming at
a time of economic crisis, the campaign succeeded in boosting Pepsi's status.
From 1936 to 1938, Pepsi Cola's profits doubled.
Pepsi's success under Guth came while the Loft Candy business was
faltering. Since he had initially used Loft's finances and facilities to establish
the new Pepsi success, the near-bankrupt Loft Company sued Guth for
possession of the Pepsi Cola Company. A long legal battle then ensued, with
Guth losing. Loft now owned Pepsi, and the two companies did a merger,
then immediately spun the Loft Company off.
In 1975, Pepsi introduced the Pepsi Challenge marketing campaign where
PepsiCo set up a blind tasting between Pepsi-Cola and rival Coca-Cola.
During these blind taste tests the majority of participants picked Pepsi as the
better tasting of the two soft drinks. PepsiCo took great advantage of the
campaign with television commercials reporting the test results to the public.
In 1996, PepsiCo launched the highly successful Pepsi Stuff marketing
strategy. By 2002, the strategy was cited by Promo Magazine as one of 16
"Ageless Wonders" that "helped redefine promotion marketing."
Relevance of the Study:
We will come to know about the service & responsibility towards customers
of soft drink retail sectors. Customers buying behaviour & retailers selling
behaviour will be provide by this study. The study will help to analyse the
customer’s exact needs & wants. The Soft Drinks in India industry profile is
an essential resource for top-level data and analysis covering the soft drinks
industry. It includes detailed data on market size and segmentation, plus
textual analysis of the key trends and competitive landscape, demographic
information, and descriptions of the leading companies like Pepsi & Coca-
Cola.
Scope of the Study:
The report talks about the soft drink retail industry in our country, like
industry performance, future prospects, growth opportunities, etc. The
forecast given in this report is not based on a complex economic model, but
is intended as a rough guide to the direction in which the market is likely to
move. This forecast is based on a correlation between past market growth
and present market growth. The report provides a keen insight of soft drink
industry in India by analyzing various market segments and retail formats
present in the industry. It helps clients to understand the various types’
products available in soft drink industry and their future scope. The
overview on opportunities and future forecast on the soft drink retail
industry helps the clients analyze the future course of direction and major
growth areas of the industry. The project contains an executive summary and
data on value, volume and segmentation of market in India. It provides
textual analysis of the industries prospects, competitive landscape and
leading companies with a two-year forecast of the soft drink industry. It is
supported by the key macroeconomic and demographic data affecting the
market by including the detail information on market size, measured by both
value and volume of market shares which are covered by manufacturer
and/or brand.
Chapter-2
Research
Methodology
PROBLEM FORMULATION
RESEARCH METHOD
RESEARCH DESIGN
SELECT DATA COLLECTION TECHNIQUE
SAMPLING DESIGN
DATA COLLECTION
DATA ANALYSIS AND INTERPRETATION
RESEARCH REPORT
Research Process:
Research makes progress possible. Research is the systematic design,
collection, analysis and reporting of data. Research comprises of defining
and redefining problems, formulating hypothesis, collecting, organizing,
evaluating data, making deduction and reaching to conclusion whether they
fit into the formulation of hypothesis. Marketing research is used to know
the wants of the customer and also to fulfill the needs of the customer.
Above all is the process of research, discussed briefly in the following
mentioned steps:
Problem Formulation:
We have done this research on the basis on soft drink industry in
Nagpur market. The information has been collected from both
primary sources and secondary sources. Primary sources like the
individuals (students, businessmen, retail outlets & shop kiosk).
And secondary sources like govt & trade report, company records,
sales force reports. According to Indian market scenario Coca-Cola
is the leading company and Pepsi is at second position. We have
collected data in a same ratio from each segment mention above so
that research has carried right information.
Research Method:
It is the most relevant requirement for any market researcher. Research
Methodology is totally based on problem of research what we have already
have defined. Research Methodology always depends on the following
points:
A) The increasing complexity of the Business Environment
Technological changes.
Research & Development.
Product changes.
IT changes.
B) Increase complexity of decision maker.
Research Design:
It is a model, indicates a plan of action to be carried out in
connection of this research. It provides only the guideline to the
researcher to move forward. I have developed the research design
on the basis of data which have been collected. Research design is
the conceptual structure within which research is conducted; it
constitutes the blue print for the collection, measurement and
analysis of data. As such the design includes an outline of
researcher work from the writing of hypothesis and the operational
implementation to the final analysis of data.
Data Collection Techniques:
a) Primary source: Data has been mainly collected form primary sources.
The method was combination of direct personal interview backed by
questionnaires method i.e. a questionnaire being drafted and data being
collected by meeting soft drink retailers directly.
b) Secondary source: Data have obtained regarding the information relates
to soft drink industry profile i.e. industry growth, present status of
industrial background, govt & trade report, company records, sales
force reports etc.
Formulation of Hypothesis
Consumer preference of soft drink industry in India is growing day by day &
as well as in Nagpur also. On the basis of my work I have assumed that in
Nagpur, Coca Cola is the most preferable brand in soft drink industry and
second preferable brand is Pepsi.
Data Analysis & Interpretation:
Both quantitative and qualitative methods of data analysis have been used.
The percentage of respondent in each category for each attribute has been
taken to obtain meaningful information from data.
Interpretation means drawing interference from the collected facts
after analytical study. Here, ‘Percentage (%) technique’ has been used to
interpret the data.
Sampling Design:
Sampling Universe
The sampling universe is Nagpur City.
Sampling Unit
An individual situated in the universe.
Sample Definition
Students, Businessmen, Service Retail outlets and Shop kiosk etc.
Sample Size
Sample size taken for consumer is 100.
System Sampling
The sampling method followed in non-probability sampling.
Judgement Sample
Selection of individual who are good prospects for accurate information.
Sampling Tool
Questionnaire for consumer.
Chapter-3
Data Analysis
Table 1:
Showing classification of the Respondents on the basis of their Occupation:
Occupation No. of Respondents (%)
Students 36
Retail shop 17
Shop kiosk 22
Self employed 10
Working employees 15
Table 2:
Showing
classification of
the Respondents on the basis of their preference of Brand:
Brand Name No. of Respondents (%)
Pepsi 45
Coca Cola 54
Others 1
Table 3:
Showing classification of the Respondents on the basis of their factors
before purchasing Soft Drink:
Factors influencing Purchase No. of Respondents (%)
Brand Image 30
Taste 15
Product Range 37
Availability 18
Table 4:
Showing classification of the Respondents on the basis of factors to create
Brand Image:
Factors to create Brand Image No. of Respondents (%)
News Papers 23
Magazines 17
T.V 35
Celebrity promotion 25
Table 5:
Showing classification of the Respondents on the basis of their suitable
consumable time of Soft Drink:
Soft drink consumable time No. of Respondents (%)
Frequently 65
having foods 10
Partying 25
Table 6:
Showing classification of the Respondents on the basis of how their
Purchase Decision differs:
How differ Purchase Decision No. of Respondents (%)
Occasions and festivals 23
Some new product is in 18
Availability of product 22
Current market trend 37
Table 7:
Showing classification of the Respondents on the basis of their Taste of
Flavors:
Flavors No. of Respondents (%)
Regular flavours 69
Special flavours 31
Table 8:
Showing classification of the Respondents on the basis of their Quality of
the Product:
Product Quality No. of Respondents (%)
Excellent 22
Very good 43
Good 29
Average 6
Table 9:
Showing classification of the Respondents on the basis of Changes of
following companies’ product:
Companies name No. of Respondents (%)
Pepsi 57
Coca Cola 43
Chapter-4
Recommendation & Suggestion:
From the analysis of the data and information gathered in the market Survey
conducted through questionnaire and personal interview it was found that in
the soft drink segment, consumer preference of Coca Cola is better than
Pepsi just because of Coca Cola’s wide product range & availability of the
product in Nagpur market. According to the distributor’s point of view,
margin of Coca Cola is higher than Pepsi as well as applicable for retailers
also.
According to me, if Pepsi want to increase their consumer preference they
should provide better service to retailers as well as consumers in terms of
availability of product in market & wider product range than now. Consumer
preference of Coca Cola is better because they owned some brand which has
very good brand image in India.
Quality & taste of Coca Cola’s product got better response from
respondents as compare to Pepsi.
Chapter-4
Conclusion:
Thus it can be concluded that soft drink industry in India is growing day by
day. According to the my research I have observed that consumer preference
as well as market share of Coca Cola is higher than Pepsi in Nagpur market.
This thing also applicable for all over the Indian market also. My hypothesis
was based on the consumer preference of Pepsi & Coca Cola. I have
assumed that in Nagpur, Coca Cola is the most preferable brand in soft drink
industry and second preferable brand is Pepsi. After gathering all the facts &
figures I am concluding that consumers preference of Coca Cola is better
than Pepsi.
Bibliography:
BOOKS
1. Kothari C.R. – Research Methodology Methods & Techniques, Delhi.
2. Kotler Philip & Keller Kevin Lane – Marketing Management, 12th
edition, Prentice Hall of India Private Limited, New Delhi.
MAGAZINES
1. Business World
2. India Today
3. Sports Stars
WEBSITES
1. www.google.com
2. www.askjeeves.com
3. www.pepsico.in
4. www.cocacola.co.in
5. www.nagpurkhoj.com