NON-ALCOHOLIC BEVERAGE MARKET
Global Scenario
The non-alcoholic beverages market size is projected to generate USD 1.22 trillion by 2025 and is projected to reach
USD 1.62 trillion by 2030, advancing at a 5.82% CAGR at a global scale. When seen in contrast with the global
nominal GDP, which is forecast to rise at a CAGR of 4.9% between CY2025 and CY2029, the sector shows positive
cues. This growth trajectory is driven by a combination of increasing consumer health consciousness, regulatory
approvals favoring natural ingredients, and rapid product innovation across nine distinct beverage categories.
Energy drinks and plant-based alternatives are emerging as the fastest-growing segments, as consumers
increasingly prioritize beverages offering functional health benefits. Simultaneously, traditional carbonated beverages
are expanding their market presence through the introduction of premium, smaller-packaged products designed
to cater to evolving consumer preferences. .
Source: IMF
This shift in consumer behavior is further evidenced by the rising popularity of no- and low-alcohol beverages,
particularly among millennials. A study by IWSR reveals that, between 2022 and 2024, the number of consumers
opting for no-alcohol products increased by 61 million across ten key countries, including the United States, United
Kingdom, and Canada.
Per capita consumption of carbonated soft drinks (CSD) is signalled at a global average of 31 litres. North
America continues to hold the largest market share, driven by mature consumer markets and high disposable
incomes, and this is evident by the highest per capita consumption figures in Mexico and USA.
Source: ACMIIL Research
Given its low per capita consumption in comparison to worldwide standards, India promises an enormous
potential in the CSD market. According to recent research, India consumes roughly 7 liters of CSD annually per
individual, which is much less than that of other emerging markets like Brazil (~76 liters). This glaring disparity
draws attention to the Indian market's unrealized potential.
Indian Overview and growth drivers
From CY18 to CY24E, the soft drink industry in India had volume and
value CAGR of 10.5% and 19.0%, respectively. It peaked during the
2020-2023 period with volume and value growth CAGR at 21.2% and
34.8% each, impacted by the low base during the Covid-19 disruption.
However, the Indian soft drinks industry navigated a challenging landscape
in 2023-24, which is why a dip in the growth numbers. Despite being a
traditionally high growth market driven by increasing urbanization, a
growing middle class, and evolving consumer preferences, demand
remained subdued due to the unseasonal rains in several parts of the
country, particularly during the peak summer months, a critical period for
the sector.
Looking ahead, the industry remains cautiously optimistic. Volume and
Source: JM Financials
value
respectively, during the CY24–CY29 period. CAGR
High for thetemperatures,
summer segment are predicted to be 9.9% and
robust distribution 13.4%,
network, coupled
with strategic marketing campaigns and an expanding portfolio of products, is expected to drive growth in the
Indian soft drinks market. The adoption of sustainable packaging and the introduction of low-sugar and no-sugar
variants and value-for-money packs continue to align with evolving consumer preferences, creating a strong
foundation for long-term growth.
We link the growth drivers to some macroeconomic indicators of the Indian economy. In 2024, India continued to
demonstrate strong economic performance, maintaining its position as one of the world’s fastest-growing major
economies. The International Monetary Fund (IMF) maintained India’s GDP growth forecast at 6.5%, reflecting
confidence in the nation’s economic trajectory. This stable outlook is supported by strong private consumption,
particularly in rural areas, and substantial public infrastructure investments. The foundation of India’s consumption
landscape food and beverages has grown
steadily, increasing from INR 31.9
trillion in FY2019 to INR 48.4 trillion
in FY2023. However, the rising
affluence among Indian households is
reshaping consumption priorities and
driving demand for premium
experiences, branded goods, and
wellness services. With higher
disposable incomes, consumers are
increasingly spending on-the-go beverage
options, enhancing demand for a
diverse range of products. Additionally,
growing participation of women joining
the workforce is contributing to higher
household incomes, further enhancing
Source:MOSPI, IMF
consumer spending capacity.
Other growth drivers can be discussed as follows-
Youth Demographic: India’s large young population is a significant driver of demand for trendy and innovative
beverages. Young consumers are more inclined to experiment with new flavors, limited-edition variants, and
international brands, making this demographic critical for industry growth. This is supported by the macro
numbers which shows how India’s demographic dividend continues to drive economic transformation, with the
working-age population projected to rise to 69% by CY2029. The 15-64 years segment is reshaping consumption
priorities, fueling demand for premium essentials such as organic groceries, advanced healthcare solutions, and
high-end real estate with integrated luxury amenities.
Source:UN World Population Prospects 2024
Unlocking Growth in Rural India: Rural India presents significant opportunities for growth, offering a vast,
untapped market. Strengthening last-mile distribution networks, introducing smaller and more affordable
SKUs, and launching localized marketing campaigns are strategies that can drive deeper penetration and unlock
new growth avenues. Additionally, expanding chilling infrastructure, such as Visi Coolers, to underserved
locations remains crucial. Improved access to cold storage ensures better availability of chilled beverages, enabling
brands to cater effectively to consumer demand in rural and remote areas while driving consistent growth.
Market Segmentation
Market can be divided into 3 segments broadly, with 6 sub-segments. Analysing the growth of each segment
individually:
A. Non-carbonated Drinks -
1. Energy Drinks - The energy drinks category is expected to witness the fastest growth in future, primarily
driven by increasing demand from the younger demographic. Additionally, the rising popularity of energy
drinks as mixers for alcoholic beverages further fueled the category's expansion. Over the long term, low-
calorie innovations and distinctive flavors are expected to sustain the growth momentum of the segment.
2. Sports Drinks - Due to rising consumer interest in fitness, health, and hydration requirements, the sports
drink category had a 10.3% increase in volume and a 12.8% rise in value in CY23. Demand was substantially
boosted by the growing popularity of professional sports, gyms, and marathons and rise in corporate
sponsorships. It is anticipated that the category would continue to increase as customers become more health
conscious.
3. Juices - In 2023, this segment recorded the highest growth in the soft drinks sector, with volume increasing
by 70.8% and value by 69.7%, driven by the health and wellness trend and rising out-of-home consumption.
Consumers are increasingly shifting toward natural, preservative-free options, and modern retail and quick-
commerce expansion improving accessibility sets the juice market for sustained growth.
4. ICED/ RTD Tea drinks: In CY23, this segment experienced strong growth, with volume increasing by 11.8%
and value rising by 17.7%, driven by warmer temperatures, expanding flavor options, rising health-
consciousness and the rapid growth of QSR outlets. Additionally, premiumization trends are leading to the
emergence of organic and cold-brew iced teas.
Sports drinks Juices
Source:Varun Beverages Initiating Coverage (Asit C. Mehta)
B. Carbonates -
Volumes in the category increased by 15.1%, while its value increased by 23.8% in CY23. Increased on-the-go
consumption and tourism, particularly during the scorching summertime, helped its performance. The demand for
low-calorie and sugar-free varieties increased by 18.3% due to growing health consciousness. Regular-calorie
carbonates showed a 15% decrease in growth. Volumes in the category were greatly expanded by robust
distribution networks and increased uptake by rural consumers.
Source:Varun Beverages Initiating Coverage (Asit C. Mehta)
C. Packaged water -
It registered 15.9% volume growth in CY23, driven by rising temperatures, rapid urbanization, and concerns
over tap water quality. Increasing levels of office-based work also fueled demand for packaged water. In addition,
an uptick in travel and tourism led to high on-the-go consumption. India’s per capita consumption of packaged
water remains at almost half the levels of regional average, indicating strong growth potential. With consumer
preferences shifting toward sustainability, brands will need to invest in eco friendly packaging, biodegradable
bottles, and water conservation initiatives to maintain long-term appeal. The expansion of quick-commerce
platforms and rising penetration in tier 2 and 3 cities will further drive demand, making packaged water a key pillar
of India’s evolving beverage landscape.
Source:Varun Beverages Initiating Coverage (Asit C. Mehta)
Risks and Challenges
Risk Description
A cyclical downturn can result in a slowdown in the sector’s target markets,
Demand Risk
affecting its sales velocity
Regulations regarding consumer health and the risk of the products being
Regulatory Risk signed out for discriminatory tax and packaging waste recovery may
adversely impact business.
Failure to adapt to changing consumer health trends and address
Consumer
misconceptions about the health effects of soft drink consumption may
Preference Risk adversely affect demand.
An interruption in the supply or significant increase in the price of raw
Raw Material Risk materials or packaging materials may adversely affect the business
prospects, results of operations and financial condition.
References
1. Varun Beverages Annual Report CY24
2. Foodlink F&B Holdingss (India) Limited DRHP
3. Asit C. Mehta Initiating Coverage on Varun Beverages
4. https://www.mordorintelligence.com/industry-reports/non-alcoholic-beverage-market
