Pioma Industries, the maker of popular soft drinks concentrates (SDC) brand Rasna, is gearing up to launch an ‘Indie Cola’ brand to take on popular cola brands such as Pepsi, Coca-Cola, and Thumbs Up.
The company has appointed three franchises for the manufacturing of the product and is test- marketing it in several locations in Maharashtra, Gujarat, and Bengaluru. It was eyeing a foray by summer. However, the second wave of COVID-19 disrupted its plans. It plans to introduce the product to the rest of the country in a month. Full-fledged marketing activities would commence in the summer season next year.
The Rasna maker has positioned the product in the health segment, and it will be peddling it on the ‘made in India’ plank.
“There is a huge opportunity for an Indian cola, made for India, by India, in the country,” Piruz Khambatta, Chairman and Managing Director, Pioma Industries, told. According to Khambatta, a huge amount of money goes abroad in the form of royalties and franchise fees earned by multinational cola makers, but given the simple formulation of the product, it can be made in India, too.
However, he adds that a product will not sell just because it is ‘made in India’; it has to deliver on quality also. “Hence, we have made sure the product is free of harmful ingredients usually found in cola drinks and it is made from real fruit.”
Given its healthy features, the company will be selling the product at a slightly higher premium to and a 1-litre bottle will be priced about Rs 65, in comparison to the 1.25-litre of Coca-Cola, priced at Rs 65.
The company will initially be launching the product in the rural markets through general trade and then will expand to modern trade and e-commerce platforms in larger cities and towns.
Banking on nostalgia
Launched in 1979, Rasna was the go-to drink in the Indian market before the likes of Pepsi and Coca-Cola entered the country. It was also one of the top advertisers on Doordarshan, and its iconic ‘I love you Rasna’ advertisement, featuring a young girl, still triggers much nostalgia in the consumer’s mind.
While the company ruled the soft drinks segment for more than a decade, the entry of multinationals like PepsiCo and The Coca-Cola Company, shook its hegemony. The brand had as much as 50 percent share (in value terms) in the non-aerated drinks market in the 80s, according to industry estimates. However, in the late 90s, as the carbonated drinks flooded the market and unleashed aggressive marketing campaigns, the overall market for soft drinks concentrates witnessed stagnation.
Sample this: today the market for soft drinks (including carbonated drinks) is sized at over Rs 26,000 crore, according to Statista. The market for soft drink concentrates stands at Rs 1,260 crore, according to industry sources. PepsiCo and The Coca-Cola Company, as per a Crisil report, have a combined 80 percent market share in the non-alcoholic beverages market through their brands such as Pepsi, Tropicana, Mountain Dew, Coca-Cola, Thumbs Up, Fanta, Sprite, Minute Maid etc.
The SDC market, however, is still growing and Rasna has maintained its leadership. Today, the company commands over 22 percent share in the SDC market in volume terms and 42 percent in value terms. Hamdard Wakf Laboratories, with its Rooh Afza and HUL with Kissan, are other major players in the segment (as shown below).
The SDC market, according to industry sources, witnessed value and volume growth of 7 percent and 3 percent, to reach Rs 1,260 crore and 470 lakh litres, respectively in 2020.
“SDC players have realigned their strategies to focus on the rural market, which is more cost-conscious and prefer SDC products over higher-priced cola drinks,” said Rajat Tuli, partner, retail and consumer practice, Kearney.
“The companies in the segment are also constantly innovating in terms of flavours and packaging to stay ahead of the curve,” he said.
Rasna, too, has adopted a similar strategy and has launched several new products and categories in the last few years. The company is also trying to build a wellness range that includes products such as honey-based milk additives, honey and drinks in Indian flavours such as Aampanna and Shikanji under the Rasna Native Haat range. It also plans to launch chyawanprash in the market soon.
“Our wellness portfolio currently contributes about 15 percent of our turnover and we plan to increase this to 25-30 percent,” said Khambatta. Its brand, Rasna, however, remains at the core of its launches and marketing campaigns.
The company, earlier this year, launched a digital campaign #LoveURasnaRecipes and tapped influencers to encourage consumers to try different recipes using Rasna.
Health over fizz
After clocking growth for several years, the soft drinks makers, led by PepsiCo and The Coca-Cola Company, saw their revenues decline by 10 percent in fiscal 2021, according to a note by Crisil Ratings in May. The adverse impact came on the back of a decline in out-of-home consumption of products, which constitutes about 20-25 percent of sales in the category.
Meanwhile, SDC performed well during the period, being a category that is largely consumed at home.
While the soft drinks segment has witnessed recovery with the ebbing of the second wave, experts opine that the ‘rise in consumers consciousness towards health’ might impact its growth in the future, while propelling the SDC category.
“The ongoing changes in lifestyle owing to developments in the food and beverage sector have majorly augmented the demand in the SDC industry,” said Rajat Wahi, Partner, Deloitte India.
According to Wahi, soft drinks with cola contain large amounts of caffeine and given increased health awareness among consumers. It is poised to support the growth of non-cola concentrates. “Consumers are becoming more aware of their health, so the demand for the segment is set to decrease and demand for organic drinks will increase during the period.”
It seems companies like Rasna are gearing up to tap this growth in demand by launching organic variants in the Indian market.