Industry Analysis

Pestle of FMCG beverage industry

Political:

The Indian government has implemented various policies and regulations that affect the FMCG
beverage industry, such as import duties, excise taxes, and labelling requirements.

The government has also been promoting the manufacturing of goods in India through initiatives
such as Make in India, which can benefit the domestic beverage industry.

The Indian government has introduced the Goods and Services Tax (GST) which has simplified the tax
structure for FMCG beverage companies and has made it easier for them to do business.

The government has also launched various schemes and initiatives to boost the agriculture sector,
which is a key source of raw materials for the beverage industry.

Economic:

The FMCG beverage industry in India is heavily influenced by economic factors such as inflation,
exchange rates, and consumer spending patterns.

India's growing middle class, increasing disposable incomes, and changing lifestyles have created a
huge market for FMCG beverages.

However, the industry is also affected by price sensitivity, which means that consumers may switch
to lower-priced alternatives during periods of economic uncertainty.

The FMCG beverage industry in India is highly competitive, with numerous domestic and
international players vying for market share.

The industry is also affected by changes in global commodity prices, particularly for sugar and tea.

The COVID-19 pandemic has had a significant impact on the industry, with disruptions to supply
chains, changes in consumer behaviour, and increased costs of production.

Social:

In India, culture and tradition play a major role in consumer preferences for FMCG beverages, such
as tea and traditional drinks like lassi.

However, there is also a growing trend towards health and wellness, which is leading to increased
demand for healthier beverage options such as herbal teas and low-sugar drinks.
India is a diverse country with a wide range of regional preferences for beverages, which can vary
significantly across different parts of the country.

There is a growing trend towards premiumization, with consumers willing to pay more for high-
quality and unique beverages.

The industry also faces social challenges such as alcohol consumption, which can affect the sales of
non-alcoholic beverages.

Technological:

Advancements in technology have led to the development of new FMCG beverage products and
improved manufacturing processes in India.

E-commerce platforms have made it easier for FMCG beverage companies to reach consumers in
remote areas, leading to increased sales.

FMCG beverage companies in India are increasingly adopting digital technologies such as artificial
intelligence, big data, and social media to reach consumers and drive sales.

There is also a growing trend towards functional beverages, which offer specific health benefits and
are often marketed using technological innovations such as QR codes and augmented reality.

Legal:

The Indian government has implemented various regulations to protect consumers' health, such as
food safety standards and regulations on the use of certain ingredients in FMCG beverages.

Companies in the FMCG beverage industry must comply with these regulations to continue
operating in the market.

The FMCG beverage industry in India is subject to various intellectual property laws, such as patents
and trademarks, which can impact innovation and competition.

The government has also introduced regulations such as the ban on single-use plastics, which has led
to increased demand for sustainable beverage packaging.

Environmental:

Sustainability and environmental concerns are becoming increasingly important in the FMCG
beverage industry in India, with consumers demanding more environmentally friendly packaging and
production processes.

Companies that fail to adopt sustainable practices may face backlash from consumers and may
struggle to compete in the market.
The FMCG beverage industry in India is under increasing pressure to adopt sustainable practices,
such as reducing water usage and carbon emissions.

Consumers are increasingly aware of the environmental impact of their consumption choices and
are demanding more sustainable options, particularly for packaging.

Overall, the FMCG beverage industry in India is influenced by various factors, including government
policies, economic trends, social preferences, technological advancements, legal regulations, and
environmental concerns

Porters analysis of beverage industry

Threat of New Entrants:

The FMCG beverage industry in India has a relatively low barrier to entry, which means that new
players can easily enter the market. However, established players have a strong brand image and
distribution networks, which can make it difficult for new entrants to gain market share.
Furthermore, new entrants will need to invest heavily in marketing, research and development, and
distribution to compete with established players.

Bargaining Power of Suppliers:

The FMCG beverage industry in India relies heavily on raw materials such as tea, coffee, sugar, and
fruit juices, which can be subject to fluctuations in price and supply. The bargaining power of
suppliers can be high, particularly for niche or specialty ingredients. However, large FMCG beverage
companies have the advantage of scale, which can enable them to negotiate lower prices and secure
reliable supply chains.

Bargaining Power of Buyers:

The bargaining power of buyers in the FMCG beverage industry in India is relatively high due to the
large number of players and the availability of substitute products. Consumers have a wide range of
choices, which means that FMCG beverage companies must constantly innovate and offer high-
quality products to remain competitive. Moreover, buyers are often price-sensitive, which can
impact profit margins.

Threat of Substitutes:

The threat of substitutes in the FMCG beverage industry in India is high due to the availability of
alternative products such as tap water, home-brewed tea and coffee, and other non-alcoholic
beverages. FMCG beverage companies must differentiate themselves by offering unique products or
value propositions to retain customers.
Rivalry Among Existing Competitors:

The FMCG beverage industry in India is highly competitive, with numerous domestic and
international players vying for market share. The competition is based on price, quality, innovation,
and brand image. Established players have the advantage of scale, distribution networks, and brand
recognition, while smaller players can compete by offering niche or innovative products. The
industry also faces competition from non-alcoholic beverage categories, such as carbonated soft
drinks, packaged juices, and energy drinks.

Overall, the FMCG beverage industry in India is a challenging and dynamic industry that requires
constant innovation, investment, and differentiation to remain competitive.