The malted food drink market, which is estimated at 120,000 tonnes and is valued at Rs 13 bn, can broadly be classified into white beverages (65%), brown beverages (35%) and soya-based beverages (negligible). Till a few years ago, these drinks were used as milk substitutes and taste modifiers. The market is now skewed towards nutritional and nourishment value.
The penetration rate is poor (around 15%), as it is an expensive product. However, with competitive pressures on children rising, an increasing number of households (mostly urban) are buying these products, based on health platform.
The white beverages have traditionally recorded higher growth at the expense of brown powders. SmithKline’s ‘Horlicks’ played a key role in expansion of this segment. The company was among the first to introduce malted beverages in India. Initially, it targeted south India as literacy levels there were comparatively higher and thus the living standards were better. In this market ‘Horlicks’ managed to create a niche for itself. As a result of its early mover advantage and its consistent focus on this segment, SmithKline commands over 65% of this market.
However, brown powders consumption is also on the rise but the trouble is that there are way too many competitors. Hienz (Complan), Cadbury (Bournvita), Nestle (Milo) and Amul (Nutramul) all have presence in the brown power segment. In 1996 when Nestle rolled out Milo, the largest chocolate energy drink in the world, it was expected to spur growth in the brown powder segment. However, the white malted beverage consumers still far outnumber the brown power consumers.
To keep its turf safe SmithKline has ‘Boost’ in the brown malted drinks segment. It even has chocolate variation of ‘Horlicks’. Infact, recently SmithKline bought over ‘Viva’ and ‘Maltova’ brands from Jagatjit Industries in an effort to boost its presence in the brown segment and keep competition at bay.
The mushrooming of different channels over the last few years has come as a blessing in disguise for the players in malted beverage segment. The TV culture has given the companies a platform to promote malted beverages as a nourishment product. As living standards continue to improve both in metros as well as in smaller towns, these products are likely to gain more acceptance, which means more business for players.
That India is the 2nd largest milk producer in the world also helps the malted beverage cause. Since it produces so much milk, India is also among the largest consumers of milk. While promoting malted drinks on the nourishment platform it helps when the larger audience is a milk drinker.
Increasing competition is a good sign for this market, as it will expand the consumer base. As it is, this market is still dominated by unorganised players. This market, according to estimations is valued at over Rs 30 bn. Given the low penetration and increasing demand from urban markets, 10-12% volume growth is expected to continue over the next few years.
Going forward, this market is likely to see an increasing number of players testing the Indian waters. However, in the near to medium term, the real fight is between the existing players and more importantly, between white beverages and brown beverages. Ain’t Indian consumers the lucky ones!