Energy Drinks in India

PROSPECTS

Higher taxation set to lead to price rises

The prospects for energy drinks are likely to be negatively impacted by price rises following the decision to raise the GST on such products from 18% to 28%. The decision was made by the GST Council in September 2019 with the intention of removing the anomaly of caffeinated drinks being taxed at a lower rate than carbonates.

Concerns about caffeine a potential obstacle

Consumer concerns about consuming too much caffeine present an obstacle to the development of energy drinks. The latter part of the review period saw limits placed on caffeine content in energy drinks, as well as the requirement that the packaging states that one should “consume not more than 500ml per day” and prominently displays the warning: “Not recommended for children, pregnant and lactating women, and persons sensitive to caffeine”.

Reduced/no sugar variants expected to drive growth

Reduced/no sugar variants are set to drive growth in energy drinks over the forecast period. Demand for products such as Red Bull Sugarfree are expected to see demand rise as consumers migrate away from sugary drinks due to the increasingly negative image of sugar and concerns about conditions such as obesity, type 2 diabetes and heart disease.

COMPETITIVE LANDSCAPE

Red Bull sees off rivals

Red Bull continued to dominate energy drinks at the end of the review period. Benefiting from first mover advantage, Red Bull has seen off a number of competitors, with several brands making unsuccessful attempts to enter the category and subsequently withdrawing during the review period.

Potential major rivals emerging

While Red Bull’s dominance has proven too great a challenge for many rivals, the brand faced the prospect of more considerable competition at the end of the review period. In 2017, PepsiCo India Holdings launched Sting, which immediately became the second largest brand in the market.

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