Harsh summers, cola price wars play spoilsport for Dabur’s juice portfolio
Illustration: Ajay Mohanty
Extremely high temperatures across northern parts of India and reduced cola drinks prices have negatively impacted the sales of Dabur’s juice portfolio in the first quarter.
The Indian fast-moving consumer goods (FMCG) major reported its Q1 results on Thursday. While net profit rose 7.8 per cent to Rs 500 crore, revenues increased 7 per cent to Rs 3,349 crore.
The company’s food and beverages business reported a growth of 21.3 per cent. While the overall beverages revenues saw a growth of just 2.8 per cent, the juices and nectar segment remained muted.
“While market share in the juices and nectar segment improved by 330 basis points, it has been muted. This is because of cola price wars, which started with the entry of a third player,” Mohit Malhotra, chief executive officer, Dabur India, told investors during a post-results earnings call on Thursday.
Reliance Consumer Products, which launched Campa in the market in 2023, brought a third player in the Rs 50,000 crore cola market. Priced at Rs 10 for a 200 ml pack, the company triggered a pricing war, compelling the market leader and the second player to also cut prices.
“The price gap between nectar and cola went from 2.2x to 3.2x now, which is making colas more attractive to consumers. Dabur is ramping up capacity for fizz, drinks and coconut water,” analysts at Elara Capital said in a note.
Under its beverages segment, Dabur saw a 21 per cent growth in the ‘100 per cent juice’ category, 19 per cent in drinks, and 100 per cent growth in carbonated fruit drinks.
“With colas becoming cheap, consumers are trading out of nectar into cola. The summer season has accentuated this problem because the consumer wants more hydration and more refreshment rather than nourishment and health. So, it’s a dual impact that we are facing,” Malhotra added.
Meanwhile, PepsiCo’s Tropicana lost market share from 19 per cent to 17 per cent currently, while Coca Cola’s Minute Maid lost 100 basis points and ITC’s B Natural lost 280 basis points, Malhotra told investors citing NIQ data.
According to market research firm Kantar, bottled soft drinks breached an annual penetration of 50 per cent.
“Following up on a massive 41 per cent household growth in moving annual total (MAT) March 2023, the category continued to add more households and expanded 19 per cent in MAT March 2024,” it said.
Moreover, the average household has expanded its consumption by 250 ml in the last two years, Kantar added.
Both cola giants – Coca Cola and PepsiCo – witnessed a strong summer quarter in the country. While Coca Cola reported double-digit volume growth in the June quarter, PepsiCo said that its beverage unit volume grew 2 per cent in the second quarter, primarily reflecting double-digit growth in India.
First Published: Aug 02 2024 | 7:22 PM IST