Cola, beverage & dairy firms eye 25% growth this summer

Capitalising on the soaring temperature, FMCG firms selling juices, fizz drinks, ice creams and milk-based beverages, including Parle Agro, ITC Foods, Mother Dairy, Coca-Cola, and Rasna have ramped up the production and stocks of low-unit packs (between Rs 5- Rs 10) to drive consumption and volume growth. After a tepid 2023 due to a weak summer season, the firms are expecting high demand and at least 25% sales growth year-on-year this summer.

“We expect the demand towards our dairy products to strengthen by 25-30% over the last season’s demand,” Manish Bandlish, MD, Mother Dairy (fruit and vegetable) told FE. Mother Dairy’s smaller SKUs start at a convenient price point of Rs 10 and include ice cream, curd and fresh milk. “We see smaller SKUs (stock keeping units) as a proven strategy to resonate with consumers who prioritise value, quantity and quality produce, especially during the summer season. The strategy not only helps in enhancing penetration but also expanding markets,” said Bandlish.

“Low unit price packs encourage impulse purchases, boosting overall sales and consumption during peak seasons like summer. We anticipate a significant increase in sales volumes of smaller SKUs, with an expected growth rate of 25-30% and anticipate a corresponding surge in sales of fresh dairy products, driven by consumer demand for convenient and value-driven options,” said Ravin Saluja, director, Sterling Agro (Nova Dairy).

Anticipating a shift in consumer preferences towards refreshing dairy products like dahi, lassi, and chach, he added that while sales of high-fat products may experience a slight decline, the demand for fresh dairy offerings due to the soaring temperatures will witness a notable uptick.

Betting on its high-octane summer campaigns including the return of the iconic ‘Yeh Dil Maange More’, PepsiCo India’s spokesperson said that “it is the most favourable season” for its brands including Pepsi, 7up, Mirinda, Mountain Dew, Sting, Slice, Nimbooz, Gatorade & Tropicana. Coca-Cola India, for its part, is ramping up production and has adopted a segmented approach, staying attuned to market dynamics and consumer preferences.

With its ambient portfolio consisting of smoothies, natural juices, coconut water and a separate dairy portfolio, ITC Foods’ dairy and beverage arm has amped up its manufacturing and distribution ahead of the season. Sanjay Singal, COO, ITC Foods’ dairy and beverage, said, “Last year, Q1 was a disaster, although given an extended summer this year, we should be able to grow in double digits basis the strong portfolio—and that’s the bare minimum expectation we should have”.

The company is targeting rural geographies with a 5,000 or 10,000 population through its 125ml fruit juices (under B Natural) SKUs at Rs 10 and has expanded its reach in the rural markets of UP, Andhra Pradesh, and Rajasthan, among others. These products are available in one-third of the ITC Foods’ a million and a half plus outlets and the company is looking at adding more outlets for its fresh dairy products.

Quenching the thirst

The volume growth in the food sector during the October-December quarter stood at 5.3%, down from 8.7% in the July-September quarter of ’23, according to NielsenIQ. Analysts believe volume growth is expected to see improvement starting this month on the back of an uptick in consumption following a ‘hotter-than-usual summer’, election season and projections of normal monsoons by IMD.

“Recovery in rural has begun but continues to be slow. Inflation is coming under control, but multiple factors could delay a further drop in inflation. In that context, price-sensitive consumers, particularly in the lowest strata, have changed their behaviour. We’re now seeing a higher frequency of purchase at a lower drop size or spend per purchase. This is an opportunity to adapt and continue to push volume lead growth across categories. The challenge for many categories will be their ability to find efficiencies in the supply chain to do this profitably,” said Ankit Kapoor, head – marketing & international business, Parle Agro.