India: Affordable PET bottles turbocharge energy drinks

2024-07-16 2:23 min Facts & Figures, India

Euromonitor International London, United Kingdom

Historically, energy drinks have long been regarded as a premium offering in India, with Red Bull reigning supreme. Since its debut in 2009, Red Bull has maintained its stronghold over the category. Metal beverage cans used to be the preferred packaging choice, especially for premium brands, as they continue to extend their reach through this form of packaging.

Pepsi places its bets on mass marketing its energy drinks to democratise the category

In 2017, PepsiCo entered with Sting energy drink, priced at INR50 per 250ml can, while Red Bull, the leading player, charged nearly double that for the same quantity. Realising the need for affordability to attract a broader consumer base and mine untapped potential in the category, particularly in rural areas, PepsiCo acted. In 2020, it introduced Sting in a 250ml PET bottle priced at INR20, focusing on accessibility. Coca-Cola followed suit in 2022, launching Thums Up Charged Berry Bolt, now changed to Charged, leveraging the strength of its established Thums Up carbonates brand. Both companies benefit from their extensive distribution networks, allowing them to reach consumers in urban and rural areas.

(Source: Euromonitor International)

The off-trade energy drinks volume market grew at a CAGR of 97% over 2018-2023. Sting's ascent to the top leadership position was driven by its shrewd pricing strategy. The decision to offer the product in PET bottles rather than solely in aluminium beverage cans proved instrumental in extending the product's reach with an economical price point. Furthermore, the strategic partnership with Varun Beverages for bottling provided a significant advantage over Red Bull, which imports its products, allowing Sting to control costs and mitigate price hikes during inflation. Introducing the 250ml SKU for INR20 proved to be an ideal move, enhancing market penetration by making it both affordable and portable, thus facilitating on-the-go consumption. As Sting rose to prominence in the energy drinks market, so too did the significance of PET bottles within the overall Indian energy drinks packaging landscape.

(Source: Euromonitor International)

Macroeconomic factors and the resultant focus on affordability continue to aid the growth of PET bottles

Small pack sizes drive the market because of inflation due to increasing raw materials, labour, and transportation expenses. Soft drinks manufacturers prioritise smaller packaging sizes, notably 200ml and 250ml. The 250ml variant, predominantly packaged in PET bottles, is set to expand. The off-trade volume per capita consumption of energy drinks in India is 0.4 litres, while globally it is 2.1 litres, representing potential. In the West, soft drinks giants, including PepsiCo and Coca-Cola, chose a value-over-volume approach to combat inflation. In India, their emphasis is on economies of scale by catering to the extensive consumer base and leveraging local bottling units, a departure from the global strategy. With Coca-Cola making strides with its Charged brand and Monster Energy poised to introduce a budget-friendly option soon, the use of PET bottles is expected to continue growing over the coming years, not only in the energy drinks sector but also in the broader soft drinks market.

(Source: Euromonitor International)

PepsiCo and Coca-Cola increase their focus on circular economy through recycled PET (rPET)

Varun Beverages, the bottler for PepsiCo, is teaming up with Indorama to establish a PET recycling facility. Targeting a production launch by 2025, Varun Beverages expects the facility to recycle nearly a quarter of its PET bottle demand. Likewise, in 2023, Coca-Cola India introduced 1-litre rPET bottles for its bottled water line and 250ml and 750ml rPET bottles for its carbonated beverages through partnerships with bottling partners, Moon Beverages Ltd and SLMG Beverages Ltd. In January 2024, Coca-Cola India strengthened its commitment to the circular economy by partnering with Reliance Retail to launch a pilot programme. This initiative focuses on PET collection and recycling, initially spanning 36 Reliance Retail stores in Mumbai and Delhi, with a target of collecting 500,000 bottles this year. The company anticipates expanding the programme to 200 stores by 2025. Given that these are the leading players in the soft drinks market and the sole providers of energy drinks in PET bottles, these joint efforts are poised to impact PET bottle recycling substantially. All this development will ensure that PET remains a significant packaging type in the Indian soft drinks industry.

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India: Affordable PET bottles turbocharge energy drinks

Pepsi places its bets on mass marketing its energy drinks to democratise the category

Macroeconomic factors and the resultant focus on affordability continue to aid the growth of PET bottles

PepsiCo and Coca-Cola increase their focus on circular economy through recycled PET (rPET)

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