Parle Agro banks on aer­ated fruit drinks to drive growth

Mint ST - - CORPORATE - BY SOUMYA GUPTA soumya.g@livemint.com MUM­BAI

With the suc­cess­ful launch of Frooti Fizz, Parle Agro Pvt. Ltd is now banking on the fruit-based fizzy drinks mar­ket to fuel growth, a top com­pany ex­ec­u­tive said.

“Al­though we did ex­ten­sions of Frooti in the past, a long time ago, but Frooti Fizz is the most suc­cess­ful ex­ten­sion so far,” joint man­ag­ing di­rec­tor Na­dia Chauhan said in an in­ter­view. “We did Appy Fizz 10 years ago, we cre­ated the sparkling fruit-based bev­er­age, a Rs600-700 crore mar­ket. We have more than 90% mar­ket share.”

Chauhan said that with the suc­cess of Frooti Fizz, the firm may be able to ex­pand this mar­ket to Rs4,000 crore in the next five to eight years. Parle Agro, whose big­gest and old­est brand is Frooti, had in­tro­duced other vari­ants of the drink in the past, in­clud­ing raw mango and pineap­ple, but it even­tu­ally came to be as­so­ci­ated with man­goes. That made set­ting up a new ex­ten­sion chal­leng­ing, Chauhan said.

“How do you in­no­vate in the mango bev­er­ages cat­e­gory? More than 95% of fruit-based bev­er­ages in In­dia are based on the mango,” she said.

Frooti Fizz, launched in March this year, came soon after the Food Safety and Stan­dards Author­ity of In­dia an­nounced new def­i­ni­tions for car­bon­ated fruit bev­er­ages.

Ac­cord­ing to these, car­bon­ated bev­er­ages with 5-10% of fruit juice are clas­si­fied as car­bon­ated fruit bev­er­ages, and not co­las.

“I don’t think this is just about car­bon­ated ver­sus non­car­bon­ated drinks. The bev­er­age cat­e­gory has a lot of sub­seg­men­ta­tion wait­ing to hap­pen, just like it has been in the pack­aged foods mar­ket. In­stead, (the dif­fer­en­ti­a­tion) will be about syn­thet­ics ver­sus wa­ter. Con­sumers pre­fer a nat­u­ral fruit-based sparkling drink rather than a syn­thetic sweet­ened car­bon­ated wa­ter drink,” Chauhan said.

The car­bon­ated drinks mar­ket, val­ued at Rs25,000-30,000 crore, is ex­pect­ing its slow de­cline to ac­cel­er­ate as the tax bur­den on the sec­tor rises with the new GST regime. Un­der the new GST regime, car­bon­ated drinks in­clud­ing Pepsi and Coca Cola will have an ad­di­tional 40% sin tax on them.

“The im­ple­men­ta­tion of the GST bill is ex­pected to boost the av­er­age unit price of soft drinks, with the av­er­age unit price of cola car­bon­ates set to rise by be­tween 1% and 2%, which is not good news for soft drinks man­u­fac­tur­ers at a time when they are fac­ing stiff com­pe­ti­tion from com­pa­nies man­u­fac­tur­ing health and well­ness bev­er­ages,” said global con­sumer re­search firm Euromon­i­tor in a re­port on In­dia’s soft drinks mar­ket dated April 2017.

Be­sides, juice-based car­bon­ated drinks are gain­ing trac­tion es­pe­cially after Prime Min­is­ter Naren­dra Modi, in a Septem­ber 2014 speech, ex­horted soft drink mak­ers to add at least 5% fruit juice to their bev­er­ages to help In­dian farm­ers, Euromon­i­tor said.

“Juice and juice-based car­bon­ates re­mained among the most im­por­tant pri­or­i­ties for In­dia’s lead­ing soft drinks com­pa­nies in 2016,” it said in the re­port cited above.

Parle Agro joint man­ag­ing di­rec­tor Na­dia Chauhan.

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