India Soft Drink Market Outlook to 2028

India Soft Drink Market Overview

• The India soft drink market was valued at USD 8.9 billion in 2023, exhibiting a CAGR of 6.82% from 2018 to 2023. Key growth drivers include increasing urbanization, rising disposable incomes, and a growing youth population with a preference for ready-to-drink beverages.
• The key players in the India soft drink market include Coca-Cola India, PepsiCo India, Parle Agro, Dabur India, and ITC Limited. These companies dominate the market with their wide range of product offerings, extensive distribution networks, and strong brand presence.
• In 2023, Coca-Cola India announced a significant investment of USD 1 billion over the next five years to expand its production capacity and enhance its product portfolio. This investment is expected to boost the company's market share and meet the growing demand for soft drinks in India.

India Soft Drink Current Market Analysis

• India’s urban population increased from 34.0% in 2018 to 37.4% in 2023 according World Bank. Rapid urbanization has changed consumption patterns, with urban consumers showing a preference for convenient and ready-to-drink beverages due to busy lifestyles.
• The soft drink market has had a substantial impact on the Indian economy by creating employment opportunities, promoting ancillary industries such as packaging, and contributing to the GDP through direct and indirect means. The beverage sector contributes 3% to India’s GDP, supporting over 1 million jobs in manufacturing, distribution, and retail (Confederation of Indian Industry, CII).
• The Northern region of India dominates the soft drink market due to its large population, higher disposable incomes, and a greater preference for chilled beverages in the hot climate. The Northern region accounted for approximately 35% of the total market share in 2023.

India Soft Drink Market Segmentation

By Product Type: In 2023, India Soft Drink Market is segmented by product type into carbonated drinks, fruit juices, bottled water and functional beverages.Carbonated drinks have a dominant market share in India under the segmentation product type, it is due to their engrained presence and continuing popularity among consumers. Brands like Coca-Cola and Pepsi have established strong brand loyalty over the years, contributing to the dominance of this segment.

By Distribution Channel: In 2023, India Soft Drink Market is segmented by distribution channel into supermarkets, convenience stores, online retailers and others.Supermarkets and hypermarkets command a dominant market share in India under the segmentation distribution channel, due to their extensive product offerings, attractive promotional deals, and convenient shopping experiences. Consumers prefer these channels for their one-stop shopping convenience and access to a wide range of soft drink options.

By Packaging: In 2023, India Soft Drink Market under the segmented by packaging into pet bottles, cans, glass bottles and others. PET bottles hold a dominant market share owing to their convenience, affordability, and recyclability. They are preferred by both consumers and manufacturers for their lightweight nature, shatter resistance, and eco-friendly.

India Soft Drink Market Competitive Landscape

• PepsiCo's Investment: In 2022, PepsiCo India invested USD 75 million in a new manufacturing plant in Uttar Pradesh. This plant spans 29 acres and aims to create over 1,500 jobs, enhancing production capabilities and supporting regional agricultural supply chains.
• Dabur's Expansion: In 2023, Dabur India expanded its health drink portfolio by launching four new health drinks fortified with vitamins and minerals, targeting the wellness-conscious segment. This expansion aligns with a 30% increase in the consumption of health-related products over the past two years, as reported by the Ministry of Health and Family Welfare​.
• Bisleri's Initiative: In 2022, Bisleri International launched a campaign promoting recycled PET bottles, partnering with local municipalities to establish 500 plastic collection centers across major Indian cities. Bisleri committed to recycling 12,000 tons of plastic annually.

India Soft Drink Industry Analysis

India Soft Drink Market Growth Drivers

• Expansion of Cold Chain Logistics: The expansion of cold chain logistics in India has significantly improved the distribution and storage of perishable beverages, including soft drinks. In 2023, India's cold storage capacity reached 39.4 million metric tons. This infrastructure development ensures that soft drinks remain fresh and appealing, particularly in remote and rural areas.
• Growth of E-commerce Platforms: The growth of e-commerce platforms has revolutionized the way consumers purchase soft drinks in India. Online grocery delivery services have made it easier for consumers to access a wide variety of beverage options from the comfort of their homes. In 2023, online sales of soft drinks accounted for 10% of the total market, with a volume increase of 45 million liters compared to 2022.

India Soft Drink Market Challenges

• Fluctuating Raw Material Prices: The soft drink industry is highly dependent on raw materials such as sugar, carbon dioxide, and various flavorings. Fluctuations in the prices of these raw materials can significantly impact production costs and profitability. The price of sugar in India saw a substantial increase from INR 32 per kilogram in 2018 to INR 38 per kilogram in 2023, affecting the cost structure of soft drink manufacturers.
• Competition from Local and Regional Brands: The soft drink market in India faces intense competition from local and regional brands that offer products at lower prices. These brands leverage their deep understanding of local tastes and preferences to capture significant market share. For instance, brands like Bovonto in Tamil Nadu and Sosyo in Gujarat have strong regional followings.

India Soft Drink Market Recent Developments

• ITC's Acquisition of Local Juice Brand (2023): ITC Limited acquired the local juice brand B Natural in 2023 to expand its beverage portfolio and strengthen its presence in the non-carbonated drinks segment. The acquisition, which cost ITC less than Rs 80 crore, allows the company to diversify its product offerings and tap into the growing demand for natural and healthy beverages in India.
• Parle Agro's Sustainable Packaging Initiative (2023): In 2023, Parle Agro took a significant step towards sustainability by introducing biodegradable packaging for its products. This initiative includes the use of 100% recyclable PET bottles and paper-based packaging materials, designed to decompose naturally. This initiative has positioned Parle Agro as a leader in sustainable practices within the Indian soft drink market, attracting environmentally conscious consumers.

India Soft Drink Market Future Outlook

By 2028, the Indian soft drink market is poised for significant growth, driven by several key factors including rapid urbanization, rising disposable incomes, and evolving consumer preferences. As more people move to urban areas and have higher spending power, the demand for convenient and diverse beverage options is expected to increase, fueling the market's expansion.

Future Trends

• • Shift Towards Healthier Beverages: The growing health consciousness among Indian consumers is driving a shift towards healthier beverage options. There is an increasing demand for low-calorie, sugar-free, and natural ingredient-based drinks. This trend is prompting major soft drink manufacturers to innovate and expand their portfolios to include healthier alternatives.
  • Growth of Functional Beverages: Functional beverages, such as energy drinks, sports drinks, and probiotic drinks, are becoming increasingly popular in India. The market size for functional is expected to grow significantly which will directly benefit India Soft Drink Market.