Non-alcoholic Beverages Market in India 2023-2028

Several factors contribute to the expansion of the non-alcoholic beverage industry in India. Firstly, there is a growing awareness of the importance of a healthy lifestyle and overall wellness. Additionally, the increasing disposable income of the population has resulted in more individuals incorporating soft drinks and fruit juices into their meals. Furthermore, the promotional efforts of major brands, often featuring endorsements from popular film stars, also contribute to the increased consumption of non-alcoholic beverages in India. A recent survey by Research and Markets revealed that a significant 81% of Indian consumers express boredom with traditional cola drinks and are open to exploring new beverage options. Consequently, the market has witnessed the introduction of various non-alcoholic beers, as well as low sugar-based beverages, to cater to this changing consumer preference. The non-alcoholic beverages market in India was valued at INR 1,376.70 Bn in FY 2023 and is expected to reach INR 1,986.31 Bn by FY 2028, expanding at a CAGR of ~7.29% during the FY 2024 - FY 2028 forecast period.

Segment insights:

Carbonated and non-carbonated beverages are two markets for non-alcoholic beverages. The carbonated beverages market segment was valued at INR 474.96 Bn in FY 2023 and is expected to reach a value of INR 601.85 Bn by FY 2028, expanding at a CAGR of ~4.87% during the FY 2024 - FY 2028 period. The non-carbonated beverages segment in India was valued at INR 901.74 Bn in FY 2023. It is expected to reach INR 1,384.46 Bn by FY 2028, expanding at a CAGR of ~8.42% during the FY 2024 - FY 2028 period.

Because of the non-carbonated beverages segment's rapid expansion, the carbonated beverages segment is predicted to lose market share during the forecast period. Non-cola aerated drinks, particularly fruit drinks, have become increasingly popular in recent years. Leading manufacturers are altering their business plans to address consumers' concerns about their health. The non-carbonated beverage market has experienced exponential growth due to rising consumer health consciousness and enhanced accessibility.

Porter’s 5 Forces:

In the non-alcoholic beverage industry in India, the threat of new entrants is medium due to the influence of brand image and customer loyalty. New brands, such as Paper Boat and Sting, have successfully entered the market with innovative segments. The bargaining power of suppliers is high, given the shortage of raw materials, particularly during unseasonal weather conditions. This poses a challenge for small production units to compete with industry giants. With numerous buyers and many similar products, individual buyer bargaining power is relatively low. The threat of substitutes is medium, with major players like ITC and Nestle introducing low-sugar products to compete with new brands. Increasing demand for fruit pulp-based products further influences consumer preferences.

Market Influencers:

Drivers:

The growth of the non-alcoholic beverages market in India is fueled by rising public interest in reducing alcohol intake for health reasons and the perception shift that non-alcoholic options are sophisticated and enjoyable. Innovative, flavorful non-alcoholic drinks cater to diverse tastes, appealing to teenagers and young adults who prioritize a balanced diet. Brands actively engage with the Gen Z demographic through music events, leveraging social media for exposure and connection with youthful audiences. In Tier-I and Tier-II cities, population growth, affordability, urbanization, and private labels like Paper Boat drive market expansion. Innovations in packaging and health-focused drinks contribute to increased sales volume.

Challenges:

The non-alcoholic beverages market in India faces challenges due to irregular weather patterns, impacting demand for cold beverages. Initiatives to extend consumption beyond the traditional summer season and concerns over health effects of energy drinks contribute to market stagnation. Awareness of the harmful effects of sugar-loaded drinks leads to a decline in carbonated soft drink demand, with increased interest in low or no-sugar variants. Penetrating the rural market poses difficulties, and providing chilled drinks is challenging due to limited storage infrastructure.

Competitive insights:

Major market players like Dabur Limited have introduced their lineup of immunity-boosting vegan-friendly drinks like Dabur Giloy Neem Juice, Dabur Amla Juice, and Dabur's ImuDab Syrup in response to the rising demand for healthy functional drinks following the onset of COVID-19.