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Energy drinks market in India: A big opportunity

11 NOV,2014 | Bangalore

Narayan Kulkarni

Energy drinks are widely consumed by adolescents as these claim to improve performance, endurance and alertness. Looking at the contents in the energy drinks and their benefits, the industry may like to relook at what the consumers really need.

Increased urbanisation, rising disposable income and growing health consciousness among the Indian youth has increased the demand for non-carbonated drinks called energy drinks. At the same time long and erratic working hours and the increasing occurrence of social gatherings are driving Indian consumers towards consumption of energy drinks which are primarily classified as non-alcoholic, caffeinated beverages and sports drinks. Over the past few years, the sale of energy drinks has been driven by changing consumer lifestyle and increasing demand for alcohol mixers.

The market size of energy drinks in India is estimated at about Rs 700 crore, growing 20-25% year-on-year. The carbonated drinks market is close to Rs 6,000 crore and is growing by 10-12% annually, says a report. According to Euromonitor International, with changing lifestyles and increasing paucity of time, urban consumers are relying on energy drinks to cope up with fast paced lifestyles. Most of them would continue to use energy drinks to boost stamina and energy levels. However, it noted that the high price of energy drinks would restrict its growth in tier II and tier III cities.

Sharing his thoughts on the market trends for energy drinks in India, Dr H Prathap Kumar Shetty, Associate Professor and Head, Department of Food Science and Technology, Pondicherry University, Puducherry, said, “India is one of the fastest developing consumer markets, especially for a product targeted towards the young and as well as young adults, mostly belonging to upper middle class. They are ready to try new products as well as ready to spend some quick buck on so-called energy boosting products. Energy drinks are one of those category of products which has entered Indian market in the recent past and penetrated the shelves much faster than products like soft drinks and got accepted by the population even in small towns very quickly.”

“The energy drinks market in India is at a nascent stage and it has huge potential for growth. There are many players in the market including Vedantika Herbals,” added Narayan Limbasiya, Director, Vedantika Herbals, a herbal health products manufacturer and supplier from Rajkot.

Currently the energy drinks market in India is dominated by multinationals with brands like Red Bull GmbH leading the market having off-trade value share of 69% during 2013. The other players in this space include Coca-Cola, PepsiCo, Monster Beverage, Spitz KG, Krungsiam Beverage (all multinationals), JK Ansell, K G Functional Beverages, Hector Beverages, Heinz India, Bisleri, Vedantika Herbals, Dabur, Goldwin Healthcare and XXX Energy Drinks (local). Euromonitor observed that although Red Bull remained the leader in terms of value share, it has been losing share to other late entrants including Monster and KS.

Amway, a global player in health and nutrition space, too entered the Indian energy drinks market in 2008 by launching XL Energy Drinks but withdrew from the market after struggling to make its presence felt among consumers in 2012. Red Bull continued to enjoy the first mover advantage (entered in 2002) and long established presence across the country.

Looking at the growth in this niche space, many young entrepreneurs are venturing by launching new range of products targeting young Indian teenagers.

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