Chapter 15 (soft drinks)

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1 Soft Drinks

Transcript of Chapter 15 (soft drinks)

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Soft Drinks

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The Segment

Milk-Based Drinks

Fruit Juices and Nectars

Carbonated Soft Drinks

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Dominant Players

Carbonated Soft Drinks

• Coca Cola and PepsiCo• Almost equal market share

Milk Based Drinks

• Amul the clear market leader• More than 80% share

• Mother Diary, Gagan, Nandini also present

Fruit Juices and Nectars

• Dabur (Flagship brand Real)• Pepsico (Tropicana)

• Smaller players include Parle Agro (Frooti, Appy Fizz), Catch, Leh Berry

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Market Characteristics

Extremely competitive, market dominated by Pepsico and Coke

The total value of sales in this segment in the year 2006 were Rs 7000 crore

The growth rate of the consumption 22% p.a.

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Critical Success Factors

Brand strength

Distribution network

Bottling plants owned/efficient bottling

Advertising expenditure

Positioning, perceived value of product

Visibility at retail locations

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Pepsi’s Marketing Mix

Target segment – population in the age group 15–35 years

Positioned as a ‘cool’ drink for the youth and the ‘Gen Next’

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4Ps

Place• Introduction in A+ cities such as Chennai, Mumbai, Delhi and

move to the rest

• Pepsi started in Chennai and Coke in Mumbai

Price• Initial penetration strategy

• Prices move in tandem with oligopolistic nature of business

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Product• Product differentiation in terms of shape, bottles and cans,

colours and logos.

• Ultimately, difference in perception created

Promotions• Film stars and cricketers

• Sponsoring cricket tournaments

• Lifestyle products

4Ps

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Market Scenario

Market Size:

Rs.100 billion

CSDs make up 70% of it

MBDs 5% of the

market (Rs.5

billion)

Non-Carbonated Drinks

growth rate 30-35% per

annum

Of this, MBDs growth

more than 40% every

year

Sources:Infoquest, Fruit Juices in India, 2005

Datamonitor SoftDrinks in India to 2010, 2006

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Amul

Flavoured milk (Kesar, Elaichi, Rose), Cool Café, Cool Coco, Lassi, Buttermilk

80% market share

35% growth expected

85% of sales in small outlets

Shelf life 6 months

No refrigeration required

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Real Fruit Juices

Dabur Foods Division Pack sizes: 1ltr and 200 ml 6 months expiry, Tetrapak 40% market share 25% yearly growth Different distribution networks for

200 ml and 1 ltr variants Distributor promotions: 12+1 and

15+1 packs

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Comparison

BrandMajor selling

SKUsPack size Pack type Retail price

Distributor margin

Retailer margin

Amul

Flavoured milk (Kesar, Elaichi,

Rose)200 ml Glass bottle Rs 10 4.25% 10%

Buttermilk, Lassi 200 ml Tetrapak Rs 7/Rs 12 4.25% 10%

Cool Café, Cool Koko

200 ml Tetrapak Rs 12 4.25% 9%

Real

Orange, Mixed Fruit Juices

200 ml Tetrapak Rs 10 6.5% 15%

Orange, Mango Juice

1 ltr Tetrapak Rs 70 6.5% 15%

Activ: Orange-Carrot

1 ltr Tetrapak Rs 75 6.5% 12%

Tropicana

Juice: Orange 200 ml Tetrapak Rs 12 5% 12%

Nectar: Mango, Orange

200 ml Tetrapak Rs 10 6% 15%

Nectar: Orange 1 ltr Tetrapak Rs 60 6% 15%

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Market Characteristics - General

Consumption of RTDs on the rise

Have such drinks while on outings, hanging out, or as thirst quenchers

Consumption highly seasonal

Shift from CSDs to Juices and MBDs• Health concerns

• Pesticide controversy

Preference for Tetrapacks

Word of mouth plays a major role

Cost not a major factor

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Market Characteristics - MBDs

Has not made significant inroads in the market

Replacement for coffee or tea during summer months

More filling than fruit juices Preference for coffee and

chocolate flavours Do not stock MBDs at home Perception that they get spoiled

easily

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Market Characteristics - Juices

Fast growing segment Seen as a replacement for CSDs Orange and Mango flavours

liked the most Health consciousness

increasing, prefer no preservatives, sugar free versions

Prefer to store them at home, over CSDs and MBDs

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Conclusions

Carbonated drinks dominate the market

Increased health consciousness making Fruit juices, MBDs on a growth path

Pesticide controversies affected CSDs significantly

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Inferences

Fruit juice market witnessing high competition• Major players Dabur, PepsiCo hold almost 80%• Numerous smaller players trying to enter• The previous year saw a launch of more than 10 new brands

MBD market dominated by Amul• Large distribution network• Numerous variants• Established credence in milk-based segment• But still has tapped only a small segment of market

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Inferences

Scope for entry in the MBD segment

• Availability in the market not in tune with possible demand

• Amul lagging in brand promotions and creation of hype

Gradual change in consumer mindset

Ready to accept non-carbonated drinks

Distribution costs kept down by using packaging which negated the need for refrigeration

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Thank You!