Beverage Industry

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 Beverage Market
Indian Beverage Market

Global Beverage Market Consideration Factors

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Indian Beverage Market Entry Strategy

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 Global Beverage Industry

• Beverage industry include:

Bottled water, juice, sparkling and still drinks, syrups,
nectars, ready-to-drink and regular teas and coffees, dairy
drinks, energy drinks, sports drinks, fruit powders, and
alcoholic drinks such as beer, wine, cider and spirits.

• The industry experienced a CAGR of 2.3% for the period

spanning 2007-2016.

• Industry consumption volumes increased with a CAGR of

2.4% between 2006 and 2016, to reach a total of 916,040.5
million litres in 2011.

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 Global Beverage Market

60.0%

50.0% 48.6%

40.0%
Coca Cola Company 30.9%
Leads the global 30.0%
beverage market with 20.5%
its presence all over 20.0%
the globe
10.0%

0.0%
Coca Cola Pepsi Co. Others
 Global Beverage Market

Carbonated
Alcoholic
9.2% 0.8% Soft Drinks
Asia Beverages
19%
22%

Middle East + 7.9%

North Africa
Africa Fruit Juices
3%

North America 47.2%

Tea
17.2% 8%
Latin America

East Europe
Botteled Water
West Europe 27%
8.7%
Coffee
4.0% 5.0% 21%

Present Global Beverage Market- By Region Present Global Beverage Market- By Product

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 Indian Food & Beverage Market

• The Indian food and beverage market is the world’s sixth largest.
• The Indian food and beverage market is expected to reach INR 61 lakh crore (US$ 915 billion) by
2020.
• India, with its population of 1.2 billion, is one of the largest consumer markets in the world.
• It is also demographically one of the youngest with around 50% of its population below the age of
25 and around 65% below the age of 35.
• The majority of Indian consumption of food and beverages is driven by people between the ages
of 18 and 40.
• The appetite of the young Indian population has been a key driver in industry growth.
• Indian consumers are now more mindful about what they are consuming.
Also they have to keep in mind that India is a price sensitive market

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 Indian Beverage Market

Alcoholic
Beverages
Carbonated Soft
11%
Drinks
23%
Botteled Water
• Indian Beverage Market is 9%
Dominated by local drinks such as
Tea and Coffee

• Consumption of canned fruit juices

and bottled water have increased
over the years due to adoption of
Fruit Juices
healthy life style Coffee
13%
20%

Tea
24%
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 Indian Beverage Market

50
45.97

40 37.18
Value in Billion US Dollars

26%
30.76 36%
30
25.99
22.38
19.82
20 18%

10 32%

0
2015 2016 2017 2018* 2019* 2020* North East West South

Indian Beverage Market- Revenue & Projections Beverage Consumption – Region Wise
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 Major Players In Indian Market

34%

45%

22%

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 Consideration Factors
For
Beverage Industry

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 PESTAL Factors- Beverage Industry

Political Economic Technological Environmental

Social Factors Legal Factors
Factors Factors factors Factors

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 Political Factors:

• The attitude of the government and the people of the host country before a company
decide to commit resources.

• Attitude of nationals of a country towards foreign companies, products and citizens have
to be seriously considered. Nationals of countries who have been dominated by foreign
powers in the past are wary of anything foreign.

• Demonstrate long term interest among people of the country by becoming actively
involved in their well being, besides selling products to them.
Political
• Streamlined procedures, absence of bureaucratic hurdles, subsidies and incentives.
Factors
• Governments willingness in inviting foreign partners in developing their countries.

• Political stability

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 Economic Factors:

• Market potential in terms of revenues that can be generated, access to the market
in terms of the host country being warm to investments by multinational companies,
and potential competition and dynamics of the industry in the prospective market.

• The revenue and profit potential of a market can be judged on the basis of initial
investment required in establishing the operations, the gestation period, the
industry structure, and the number and degree of obstacles that the company must
face besides competition.

Economic • Different market segments in terms of products and target consumers.

Factors
• Good and developed sales distribution channel network

• Better financing, lower interest rates, availability of cheap labor.

• Market offers a diversified mix of key customer product / service users, financially
stable customers, relatively consistent purchase loyalty and is supported long term
by fundamental economic and demographic growth

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 Social Factors:

• Countries are different from one other in terms of language spoken, religion practiced, food
eaten and in many other ways.

• These differences are very real and significant, and marketers should consider how these
differences can hinder or facilitate the marketing efforts of the company in the new market.

• Products which are related to the way people live may have to be altered significantly or will
not find acceptance at all

• Even marketing and other business have to be tailored to suit the social and cultural nuances
Social of the country.
Factors
• Some marketers initially sell their products to markets that are culturally similar, while some
may look for similarities among consumers across various countries where they operate.
Adapting a marketing mix, will suit the best.

• Simple changes such as translation of messages into different languages, or can involve
creating completely different marketing mixes for various markets that the company operates
in.

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 Technological Factors:

• Research and Development activities

• Efficient and most modern technology

• Impact of emerging technologies and its acceptance

• Impact of technology transfer

Technological
factors

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 Environmental Factors:

• Climate change and water scarcity

• Raise in agricultural commodity prices and increase in price volatility by decreasing yields.

• Increase processing costs through operational disruptions and treatment costs.

• Creation of food safety challenges and conflicts with local communities over resource use
• Building of corporate and supply chain resilience to potential risks.

Environmental • Recycling, depletion of the resources, pollution etc.

Factors

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 Legal Factors:

• The partner (if any, going for JV or strategic alliances) company’s historical record and its
professed attitude towards foreign investments and properties should also be considered.

• The Tax Structure

• Other legal systems and procedures

• In many countries, there is lot of government interference in the functioning of

businesses. And despite liberalization of trade, much protectionism is granted to domestic
companies in several developed and developing countries across the world
Legal
Factors

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 Moderate

Economic

Moderate High
Socio-
Legal
Cultural
Effect of PESTAL
Factors on the Factors
Effect on
Beverage Business Business
Low High
Technological Environmental

Political

18 Moderate
 Market Forces Analysis
Threat Of Buyer HIGH
Low switching cost, price sensitive
market provides lots of options to
distributors thus poses a great threat

LOW Medium
Threat of New Entrant Threat of Substitute

Amount required for entering Beverage Industry Stiff market competition,

market is very high, setting up an availability of large number of
efficient sales and distribution beverages makes it very difficult
channel is very difficult. to have a brand loyalty
Thus making it highly unlikely
Threat of Supplier
Medium
The sourcing of quality raw material
and ingredients ensure the quality
product. A lot of suppliers makes it
easy to control the threat.
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 Entry Strategy

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 • Direct Exporting
• Indirect Exporting
Non Equity Based

Ways of
• Management Contract
Entering a Mixed Mode • Contract Manufacturing
• Franchising
New • Licensing

Market • Wholly Owned Subsidiary

• Joint Venture
Equity Based • Strategic Alliance

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 Non Equity Based
InDirect Export Direct Export

Exporting of goods and services through various Exporting of goods and services by the producing
home-based exporters firm
• Manufacturers’ export agents • Sales company option
• sell for manufacturer • Business established to market goods and
• Export commission agents services
• buy for overseas customers • Internet has made direct exporting much easier
• Export merchants • Cost of trial low
• purchase and sell for own accounts
• International firms
• use the goods overseas
• Commission to export agents, commission
agents, export merchants

• Foreign business can be lost if exporters

decide to change their sources and supply

• Firm gains little experience from

transactions

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 Mixed Mode

Contract Management
Licensing Franchising
Manufacturing Contract
• A contractual • Form of • Arrangement in • Arrangement by
arrangement: licensing in which one firm which one firm
one firm sells which one firm contracts with provides
access to its contracts with another to management in
patents, trade another to produce all or specific
secrets, or operate a products to its areas to another
technology to certain type of specifications firm
another business under but assumes
• Licensee pays an established responsibility for
fixed sum and name according marketing
sales royalties to specific rules
(2%-5%)

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 Equity Based Mode
Wholly Owned Subsidiary
• Build a new plant (greenfield
investment)
• Acquire a going concern
• Purchase distributor, to obtain
a distribution network familiar
with products
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Joint Venture Strategic Alliances…
• Cooperative effort among two • Partnerships between
or more organizations that competitor, customers, or
share common interest in suppliers that may take
business enterprise various forms
• corporate entity formed by • Aims to achieve
international company and • Faster market entry and
local owners start-up
• corporate entity formed by • Access to new
two international companies • Products
for the purpose of doing
• Technologies
business in a third market
• Markets
• a corporate entity formed by
a government • Cost-savings by sharing
• Costs
• Resources
• Risks
 Thanks

By:-
Amit Kumar Singh
25 7023002051