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Parle Agro banks on aerated fruit drinks to drive growth

LiveMint logoLiveMint 30-08-2017 Soumya Gupta

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 non-carbonated drinks. The beverage category has a lot of sub-segmentation 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.

Since its launch, Frooti Fizz has already reached 500,000 outlets nationally, while Appy Fizz is available in 1.5 million outlets, Chauhan said.

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