Bottlers for major beverage companies such as PepsiCo and Coca-Cola India are expecting a weak September quarter due to an extended monsoon season. The prolonged rainfall in several states, including Maharashtra, Gujarat, and Kerala, has hurt demand, particularly during the festive period. Analysts predict that volume growth for the September quarter will be flat, marking the second straight quarter of slow sales after unseasonal rains affected summer sales.
The extended monsoon season is expected to last until the first week of October, which may impact beverage sales during the Dussehra festival on October 2. However, sector experts believe that the December quarter will see better sales due to the festive and wedding season, as well as the benefits of GST cuts. Paritosh Ladhani, joint MD of SLMG Beverages, Coca-Cola India’s largest independent bottler, noted that the 40% increase in rainfall during this monsoon season has affected demand, but the company is preparing for a better December quarter.
Varun Beverages, the bottler for PepsiCo in India, also reported soft demand in the September quarter due to above-normal rainfall in many parts of the country. However, the company is preparing for a favorable consumption environment in the December quarter with new product offerings and promotional packs. Both SLMG Beverages and Varun Beverages are counting on higher consumption of juices, dairy, and water segments, which now attract a 5% GST rate.
The companies are also facing competition from Reliance Consumer, which has launched its Campa Sure and Independence water brands at lower price points. However, both SLMG and Varun Beverages believe that the competition will expand the market, and they will respond accordingly. In the soft drinks segment, the relaunch of Campa Cola in 2023 at a lower price point forced incumbents to make price and volume adjustments. Overall, the beverage industry is expecting a slow September quarter, but is hopeful of a rebound in the December quarter due to favorable market conditions.