CMD, Manpasand Beverages Ltd, Dhirendra Singh, speaks to Progressive Grocer about how the company’s focus on marketing its products to tier II and III cities as well as rural and semi-rural areas has paid off handsomely and helped establish it as a flagship brand in the beverages industry…
How do you look at beverage trends in the Indian market?
Today, consumers are much more astute about their food choices than before. They are more health conscious and prefer natural fl avours/ingredients as compared to synthetic ones. Th ey are more likely to shift preferences from carbonated drinks to fruit juices due to the rising health awareness and changing food habits. A consumer today is more experimental in food preferences.
Growth in nectars and juice drinks is estimated to be at a faster pace, vis-à-vis 100% juice, as higher prices and stressful lifestyles may restrict demand for the latter. Owing to this, we might see demand for fruit-based aerated drinks/beverages from the consumers. Lately, we have also seen the trend of a resurgence of traditional drinks. In the coming days, these factors will infl uence the beverage market in India.
What are the challenges that beverage manufacturers in the country face?
Beverage manufactures in Indian essentially come under the ambit of the Food Processing sector. The challenges faced by beverage manufacturers are more-or-less from this sector’s perspective. Th e sector is fundamentally dependent on agriculture, and faces the problems of wastage and outdated technology. The Government is trying to make the sector more competitive to meet the rising demands. It has taken a string of initiatives such as 100 per cent FDI in food processing, doubling storage capacity for agricultural produce, etc. Activation in the beverages segment is longer than compared to other FMCG products. Brands find it difficult to not only develop newer products but also withstand the competition. Moreover, around 70 per cent of the beverage market (this excludes alcohol) is catered to by local/ unorganised players, especially in the rural and semi-rural belts of the country where the majority of the population also resides.
What is your strategy to overcome the typical problems?
In a country like India, one has to always account for diversity and local flavours. Keeping this in mind, Manpasand Beverages started off with its flagship brand, Mango Sip. Based on mango, India’s favourite fruit, the brand is strategically focused on semi-urban and rural markets.
Leveraging distributor relationships has been one of our key marketing focus. The company offers a scheme to distributors and retailers to purchase cooling accessories such as fridges and iceboxes at discounted prices, which create a value proposition for the retailers. These accessories prominently display the company’s brands and provide a primary marketing and point of sales branding platform.
Tell us about your products and operations?
Manpasand Beverages has the unique distinction of being the sole listed company in Indian beverages sector. The company primarily focuses on mango-based drinks. Mango Sip, launched in 1997, is company’s fl agship product, contributing 80 per cent to revenues in FY16 (97 per cent in FY14). To diversify the portfolio, the company launched Fruits Up and Manpasand ORS as well as commenced the marketing of Pure Sip bottled water in July 2014.
Why was Mango Sip first made available only in the rural and semi-rural areas?
About 80 per cent of population in India lives in rural areas. We noticed a gap in fruit consumption in these areas. We sensed an opportunity there as there are very minimal differences when it comes to consumption behaviors in terms of rural versus urban. When we started in 1997, the major players (mostly MNCs) were present only in the big cities of India, leaving a gap for tier II and III cities as well as rural and semi-rural areas. We sensed an opportunity and experimented with our products in these areas. Also, we made our products available in Indian Railways, which is the lifeline of India in terms of transportation.
These moves paid off in terms of establishing Mango Sip (fl agship brand) and made Manpasand a credible name in the Indian beverage market (which mostly consists of bottled water, carbonated /aerated drinks, fruit juices, and others). Our key differentiator vis-à-vis global MNCs, which worked in Mapasand’s favour were lower price point, wider range of packs (PET and Tetra packs), and a strong rural focus.
How has the diversification panned out?
Under Fruits Up, Manpasand offers premium fruit juices and carbonated drinks in various flavours. Through Manpasand ORS, the company provides fruit drinks (apple and orange flavours) with energy replenishing qualities across north-east India. Fruits Up is currently available in mango, guava, litchi, orange and mixed fruit flavours. Without any synthetic base, Fruits Up is made up of natural ingredients and contains more fruits content – 5-10 per cent in the carbonated form and 16-17 per cent in the premium juice range.
Earlier this year, the company developed another healthy product called Coco Sip – 100 per cent natural packaged tender coconut water – targeting the huge untapped coconut drink segment as most of the coconut drink market in India is catered to by the unorganised players and non-branded products.
In addition, we plan to aggressively expand our capacities during FY16–18. We recently completed setting-up a new manufacturing facility in Ambala, in the state of Haryana.
Are there any white spaces or missed opportunities for your company?
Not really; as the beverage market (excluding alcohol) in India is still emerging. Th e per capita consumption of soft drinks stood at ~10 liters per annum compared to ~160 liters in the US in 2015, indicating a significant growth potential. So if anything, we have a vast untapped market to capture and learn as we progress.
What will be your strategic priorities?
Since our listing on the Indian Stock Exchange in 2015, we have adopted an aggressive expansion strategy where our main focus is to penetrate the urban market. We have been forming key alliances with various domestic and global companies to further this ambition. The company has tied up with leading food & restaurant chains including Havmor, Barista, Baskin & Robbins, Metro Cash & Carry, etc, along with 2,000 modern retail format stores and is in advance talks for tie ups with many multinational food chains and retailers such as Reliance.
While we continue to increase our significant presence in the rural and semi-rural markets, we have also started aggressively tapping into the urban markets where our presence was minimal until recently. We are also targeting to double our distribution networks.
How do you see the market developing?
The market size of beverage industry in India is estimated to be worth around Rs. 65,000 crore and this market is estimated to grow at CAGR of more than 20 per cent. The Indian packaged juice industry size is about Rs. 8,000 crore and it has been growing at more than 30 per cent per annum in last few years and will maintain that pace in future as well. The per capita consumption of beverages in India is still very low compared to the US and other developed economies.
In the coming days, factors such as rising income of the people in emerging markets, demographic shift in terms of more young people in the economy, changes in the lifestyle and rising health consciousness will give a further boost to this trend.