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Energy Drinks Market Dynamics and the Role of PET Bottles in India’s Beverage Industry

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Pepsi Sting’s rise to prominence in the energy drinks market has coincided with the increased significance of PET bottles within the overall packaging landscape.

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 durable form of packaging.

Pepsi placed its bets on mass marketing their energy drinks

In 2017, PepsiCo entered with Sting energy drink, priced at INR 50 per 250 ml can, while Red Bull, the leading player, charged nearly double that for the same quantity. Realizing 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 INR 20, 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.

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 cans proved instrumental in extending the product’s reach while maintaining 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 250 ml SKU for INR 20 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 packaging landscape.

Macroeconomics and focus on affordability aid growth of PET bottles

Low unit packs drive the market because of inflation due to increasing raw materials, labour, and transportation expenses. Soft drink manufacturers prioritize smaller packaging sizes, notably the 200 ml and 250 ml options. The 250 ml 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 2.13 litres, representing potential. In the West, soft drink giants, including Pepsi 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 drink sector but also in the broader soft drink market.

PepsiCo & Coca-Cola focus on circular economy through recycled PET

Varun Beverages, the bottler for PepsiCo, is teaming up with Indorama to establish a PET recycling facility. Targeting a production launch by 2025, the company expects the facility to recycle nearly a quarter of its PET bottle demand.

Likewise, in 2023, Coca-Cola India introduced one-litre PET bottles for its bottled water line and 250ml and 750ml PET 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 program. This initiative focuses on PET collection and recycling, initially spanning 36 Reliance Retail stores in Mumbai and Delhi, with a target of gathering 500,000 bottles this year. The company anticipates expanding the program 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 soft drinks industry.

The writer is the Senior Research Consultant at Euromontitor.

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