Soft Drink Bottlers: 15% Revenue Growth Forecast

New Delhi, Apr 14 (PTI) Soft drink bottlers are likely to witness a revenue rebound to their long-term average growth of 15 per cent this fiscal, on the back of a hotter summer this season and deeper penetration into the market, according to a report from rating agency Crisil.

The summer months account for almost 40 per cent of the overall sales of beverage makers. However, due to unseasonal rains, the last fiscal year was not good for the industry.

"Soft drink bottlers are poised for a strong volume rebound this fiscal year, driven by hotter summers and rising penetration. IMD predictions of above normal temperatures during summer, along with the possibility of El-Nino, which usually prolongs the summer months, are expected to boost consumption," it said.

However, with rising sales, competition is also on the rise with newer entrants launching products at popular price points. The incumbent players are expected to ramp up their marketing and distribution spends, besides expanding capacity and distribution reach to protect their turf.


Moreover, a sharp rise in crude prices due to the West Asia conflict has driven packaging costs higher.

"These will negatively impact the industry's profitability by up to 250 basis points (bps)," it added.

However, the impact will be lower for large bottlers having a nationwide presence due to their "higher pricing power and better economies of scale". Cash flows of the players will remain healthy, ensuring stable credit profiles, it added.

IMD has predicted above normal temperatures during summer, along with the possibility of El-Nino, which usually prolongs the summer months, is expected to boost consumption.