Consumers looking to cut beverage costs leave juice companies dehydrated

India’s packaged juice market has reported its steepest decline in the June quarter, with consumers opting for lowerpriced beverages such as soft drinks and milk-based brands.

Industry executives from Pepsi-Co, Dabur and ITC, which dominate the organised juices market, attributed the decline to multiple reasons that include high prices, the late onset of summer in the northern consumer belt, and increased competition.

Nielsen research data, sourced from industry, show that the 100% juices and nectars category declined 3.1% in the April-June quarter, compared with 18% growth in the corresponding year-ago quarter by way of sales.

Similarly, the number of packs sold in the first quarter of FY20 has fallen 4.9%, compared with 20% growth in April-June 2018.

“All players are now competing for the same but shrunk consumer wallet,” packaged foods and personal care maker Dabur’s chief executive Mohit Malhotra said. Dabur sells juices under the Real brand, and has bucked the trend, the data showed.

“The juice industry has been witnessing strong headwinds and increased competitive intensity from milk-based players,” Malhotra added.

Consumption has slowed, driven by softening demand for essential- and impulse-food categories across all food and non-food categories, including juices, salty snacks, biscuits, and tea.

Consumer facing firms say growth forecasts are lower than earlier projections, as consumers are down-trading to lower-priced products despite health concerns. Diversified group ITC, which derives over 25% of its revenues from newer FMCGbusinesses, confirmed the decline in the juices and nectars category on the basis of Nielsen data.

“There has been an overall decline in the juices and nectars category in general this summer, with growth being pegged at -3.1%, according to Nielsen. One possible reason could be that in north India (which accounts for a lion’s share of the category nationally), summer kicked in late this year in the latter part of April,” said an ITC spokesperson.

ITC said its internal estimates indicate that its packaged juice brand, B Natural, has witnessed double-digit growth.

Last month Nielsen revised its growth forecast for the FMCG sector to 9-10% in 2019 from its previous outlook of 11-12%, citing a sharp rural slowdown.

PepsiCo’s Tropicana, which competes against Dabur’s Real, said it does not comment on Nielsen figures. “One often sees a lag in sales reporting for the industry, which normally gets corrected over a 12-month moving average period,” a PepsiCo spokesperson said. He added that as per its estimates, Tropicana has grown in double digits in the quarter.

Separately, companies are addressing the issue by launching smaller packs priced at ?10. On an individual brand basis, Dabur said its juice business grew by over 3% through the introduction of a product at the ?10 price point, addition of capacity of smaller packs to straddle the rural route to market, and enhanced penetration of packaged fruit juices in rural India.

A spokesperson for Del Monte said its retail growth in the juice segment in Q1 was ‘distinctly’ better than in the corresponding quarter of previous year.

Source:- https://retail.economictimes.indiatimes.com/news/food-entertainment/personal-care-pet-supplies-liquor/consumers-looking-to-cut-beverage-costs-leave-juice-companies-dehydrated/70548736