Introduction to Soft drinks

Soft drink is the name commonly given to a nonalcoholic beverage that is consumed cooled
or chilled, as opposed to a hot beverage, like tea or coffee. Soft drinks fall into several
categories distinguished by the industry as carbonates, still drinks, juices, dilutables and
bottled waters. A carbonate also called a carbonated soft drink (CSD), is a fizzy drink
containing gaseous carbon dioxide, commonly called soda pop in the U.S.Still drinks are
noncarbonated soft drinks, and they consist of a piethora of varieties, such as fruit drinks,
energy and sports drinks and health beverages, just to name a few. In the last decade or two,
bottled waters have become very popular whether still or carbonated flavored or non
flavored, with or without natural sugars. Usually these are prepared from natural spring
waters or from other subterranean water sources and have high mineral contents either
naturally or added during manufacture. Dilutables is the name given to concentrated syrups,
squashes, and cordials that are reconstituted with water by consumers to prepare beverages in
ready to drink (RTD) forms.1

SPRITE – SOFT DRINK

Low involvement Purchase and Brand Personality
Sprite, Coca-Cola’s clear lime soft drink was launched in India in 1999 and has since been
on e of the fastest growing brands in the Indian soft drink market. Sprite has emerged as the
market leader in the Lime category of soft drinks. It holds this position the world over and is
in fact the third most sold carbonated soft drink after Pepsi and Coke; it is sold in over 188
countries. The brand has been able to create tremendous popularity and a strong and
compelling brand image in diverse environments.

SPRITE – THE PRODUCT

Sprite is a lemon lime flavored, carbonated, light soft drink of slightly sour and acidic taste.
More than the product itself, the packaging is considered one of the most distinctive in the
industry; the flagship SKU is made available in a bright green bottle, with bubbles decorating
its surface, which symbolizes and reinforces the refreshing nature of the product. The new
variant of Sprite is Sprite ice.2

Market Trends
1
Maurice Shachman, The soft drinks companion (2005), CRC Press LLC
2
Ramanuj Majumdar, Consumer Behavior: Insights From Indian Market (2010) by PHI
Learning Pvt Ltd New Delhi, Pg. no 307
Growth back of track:
Soft drinks emerged stronger after the famous pesticides contamination controversy in 2003.
Coca-Cola India and PepsiCo India shrugged off the controversy by bringing out effective
counter arguments in their advertisements that reposed trust in their brands. Moreover, series
of initiatives, such as reduction in pack sizes, introduction of new flavours, and taking the
advantage of growing number of children and their natural preference for carbonated drinks,
the total quantum of soft drinks sales registered a growth of 16% in 2003-04.

As health and wellness have emerged as new elements of focus in Indian society, some soft
drinks products also capitalized on this trend. Fresh fruit and vegetable juice started on the
purity and health aspect as their positioning platforms. They gained sharply in both total
volume and value, at the cost of carbonates and artificially flavored drinks. Increased
disposable income, higher pocket money among youth, imitation of western lifestyles, and
aggressive promotion enabled sale of branded frit and vegetable juices to reach over 100
million liters in volume.3

3
. Ramanuj Majumdar, Production Management in India, Third Edition, Prentice Hall of
India Pvt Ltd. New Delhi, pg. no 222
TRAVAILS OF THE SOFT DRINKS INDUSTRY IN INDIA

- Dr. Abha Chatterjee

The multinational soft drink industry in India has known many ups and downs ever since the
Coca-Cola Company left in 1977. The newly elected Janata Party requested the company to
share its secret formula and to divest 60 percent of its business. They refused to comply and
chose to leave instead.

The company returned to India after 16 Years, in 1993. In 1991 an MOU had been signed
with BIL(Britannia Industries Limited) but had to be reconsidered over an export oriented
clause. Thus it was with a 100 per cent unit that Coca-Cola was granted permission to enter
India in October 1993.

Meanwhile, Pepsi was the focus of much attention and controversy during the late 1980’s and
early 1990’s. The Pepsi Foods Limited project was cleared in 1988 as a joint venture of
Pepsi, Punjab Government owned Agro Industries Corporation (PAIC) and Voltas India
Limited. Under this venture, Pepsico made several commitments, amongst which were:

• That 50,000 jobs would be provided, with 25000 jobs created in Punjab alone.

• 74 per cent of the investment would be limited to food and agro processing with only
25 percent limited to soft drink manufacturing.

• Export of 50 per cent total value of the product – fruits and vegetables.4

4
Laura P Hartman and Abha Chatterjee, Perspectives in Business Ethics (Special Indian
Edition), 3rd Edition, Tata McGraw-Hill, Pg. no 158
SWOT Analysis of the Indian Soft Drink Industry

STRENGTHS WEAKNESSES
• Carbonated Soft drinks growth 10 • Weak infrastructure (especially
– 15%. Cooling).

• Estimated Per capita Consumption • Small retailers, less Shelf space.

to increase to 6-8 bottles.
• Heavy Excise Duty (40%).

• Cans have to be imported at high

OPPORTUNITIES
• Low per Capita consumption.
• Growing rural market.
• Rising Disposable incomes.
duty rates.
• Problems of Empties.
THREATS
• Political Uncertainty
• Coca-Cola and Pepsi indulging in
Internecine Competition.

• Changing consumer trends-more

intensive influx of western culture
and lifestyle values – through
satellite TV.

Source: Managing Innovation and New Product Development, Mukesh Chaturvedi and
Aseem Kumar Manmohan Rahul (2009). PHI Learning pvt. Ltd. New Delhi. Pg. no 224