Valencia Nutrition Ltd Management Discussions

Industry Structure and Developments

VNL is a Biotechnology Company with Nutraceuticals Focus. Present segment of production line is in the format of Beverage. Hence FSSAI Regulations, GST & Market Nuances of Beverage Market forms our ecology.

Market Segmentation

The India non-alcoholic beverage market is segmented based on product type, packaging, package size, distribution channel, region, and competitional landscape. Based on product type, the market is categorized into carbonated beverages and non-carbonated beverages. Based on packaging, the market is segmented into bottles, cans, and others (Tetra Pak, Pouches, etc.). Further, on the basis of package size, the market is segmented into below 250 ml, 250ml-1L, and above 1L. The market strategies are devised on regional market segmentation, divided among north, west, south, and east regions.

India Non-Alcoholic Beverages Market is segmented into following categories:

• India Non-Alcoholic Beverages Market, By Product Type:

1. Carbonated

2. Non-Carbonated

• India Non-Alcoholic Beverages Market, By Packaging:

1. Bottles

2. Cans

3. Tetra Pak

4. Pouches

• India Non-Alcoholic Beverages Market, By Package Size:

1. Below 250 ml

2. 250 ml-1L

3. Above 1L

• India Non-Alcoholic Beverages Market, By Distribution Channel:

1. Department Store

2. Supermarket/Hypermarket

3. Convenience Store

4. Online

5. Others

• India Non-Alcoholic Beverages Market, By Region:

1. North

2. West

3. South

4. East

India Non-Alcoholic Beverages Market (Carbonated Beverage & Non-Carbonated Beverage)

The India non-alcoholic beverages Market Size Value in FY2021 was USD8.69 billion and is expected to reach USD13.7 billion by 2027F, growing at a CAGR of 8.10% during the forecast period. In India, the non-alcoholic beverage market is mainly driven by increasing demand for non-fizzy drinks, rising GDP and per capita income, the surge in sales through e-commerce, etc.

Moreover, substantial marketing activities by various brands and significant endorsements by film stars are some of Indias significant drivers of non-alcoholic beverages. Furthermore, changing consumer tastes and preferences and consumer inclinations to consume food and beverages have led to an increase in the consumption of non-alcoholic beverages.

The non-alcoholic beverage market in India has made a lot of progress in the last few decades. After just a few Indian players in the 1970s and 1980s, the market saw the re-entry of many multinationals in the 1990s, including Coca-Cola and Pepsi. Since then, various Indian firms, as well as foreign multinationals, have attempted to gain a foothold in the rapidly expanding market.

Today, India is an important market for numerous players looking to establish a strong beverage brand. Owing to several macroeconomic factors, the Indian non-alcoholic beverage market is one of the fastest-growing globally.

In 2016, Prime Minister of India proposed to large beverage companies such as Coca-Cola and Pepsi to include 2% fruit content in aerated drinks, allowing farmers to cultivate more fruits while earning a profit. This type of initiative has pushed for the inclusion of natural fruits in the carbonated beverages sold in India.

Seeing that Indian consumers no longer consider aerated drinks to be a healthy option, the decision by Indias Prime Minister seems to have a significant impact on the nonalcoholic beverage market.

Under GST tariffs, fruit-pulp or fruit juice-based drinks draw a 12 per cent rate. On the other hand, aerated waters and carbonated drinks are charged 28 per cent GST along with 12 per cent cess. Most Domestic Players added Apple Juice Concentrate to their beverage and add just the flavour of respective fruit like Lichee, Orange, Lemon, Grape, etc. Under this bypass to Use of Fruit they presumed to fall under with self-justification of manufacturing "Fruit Based Beverage"

Every player was summoned to pay GST 28% plus Cess 12% with retrospective basis that led to wide scale disruption and closure of many regional brands.

With the onset of the second pandemic wave in April 2021, the non-alcoholic beverage companies confronted on-the- spot demanding situations because only a few shops remained open which hampered their delivery chain. Key enterprises delivered new beverages and improved door-to- door deliveries to pressure sales. Due to the disruptions in international delivery chains, the authorities established guidelines with the aim of implementing the stern FSSAI (Food Safety and Standards Authority of India) recommendations for excellent guarantee and control of quality of drinks. Indian producers of carbonated drinks witnessed their lowest demand during April and June 2021.