Soft-drink makers’ second wave causes flattening of fizz: Crisil

Asian News International

Mumbai (Maharashtra) [India], May 22 (ANI): India’s non-alcoholic beverages industry, headed by cola giants Pepsi and Coca-Cola, is not expected to reach pre-pandemic levels this fiscal year, according to Crisil Ratings.
Despite some recovery after an estimated decrease of 20% last fiscal, revenue will still be 10% below the fiscal 2020 mark.

Credit profiles of players, however, remain strong due to their cost-control measures, strong balance sheets and ample liquidity.

Crisil said an analysis of 13 bottlers of Pepsi and Coca-Cola, which account for more than 50% of the market, shows this.
Pepsi and Coca-Cola have a combined market share of over 80% in India’s non-alcoholic beverages industry. The manufacturing operations are either owned by them or are done through third-party bottlers in different regions of the country.

Last fiscal, a strict nationwide lockdown and subsequent restrictions from April to September severely affected peak season demand as summer months alone account for two-thirds of annual cola sales. A redux is now looming.

Nitesh Jain, Director at Crisil Ratings, said beverage sales volumes will be negatively impacted in the peak season again due to localised lockdowns and restrictions on movement to contain the second wave of pandemic.
This will particularly affect out-of-home consumption (hotels, restaurants and cafe segments constituting 20 to 25 per cent of overall sales) of beverages in the first quarter.
Although these restrictions are staggered across regions and are less severe this time, full-year revenue may still be 10% below pre-pandemic levels.

Operating profits may be more resilient, driven by the continuation of cost-control measures and improving product mix.

Demand for high-margin carbonated soft drinks (CSD), which forms two-thirds of the beverage portfolio of players, was less affected during lockdowns compared with juices and bottled water.
This is due to higher in-home consumption of CSD, driven by increasing access to refrigeration. (ANI)

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