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 Executive summary

India is a tropical country and has accorded a favorable reception to thirst quenchers
such as fruit juices and aerated drinks. Ready to serve kiwi juice is a beverage prepared
from clarified kiwi juice. When chilled the RTS beverage makes for a nutritious and
refreshing drink. The nutritive value of real fruit beverages is far greater than that of
synthetic products, which are being bottled and sold in large quantities throughout the
country. If real fruit juices could be substituted for these synthetic preparations, it would
be a boon to the consumer as well as the fruit grower.
India is a market of diversity – diverse with regards to incomes, price points of products,
culture and preferences and a marketer has to get use to these diverse characteristics
of the market.
Drinking juice is not a part of our culture. We drink water with our meals but in the West
one starts the day with breakfast and a glass of juice. Juice is to a great extent
considered as a luxury not a necessity in our society, surely but slowly things are
changing mainly in the urban and semi urban areas, where the population is getting
more and more health conscious and are realizing the important nutrient values of fruit
and are making them a part of their daily diet.
The companies in this Rs. 100 crore industry will have to organize various promotional
activities from time to time mainly to increase sampling and to educate the consumers
about packaged fruit juice that it is as pure and nutritious as fresh juice which is
perceived as fresh as it is extracted in their presence i.e. actual or assumed.
There are two main brands in this segment of non- carbonated drink markets; they are
‘Real’ from Dabur and ‘Tropicana’ from PepsiCo. These two players command around
80% market share in the organised sector.
We can observe this industry growing and new players entering the market. In recent
times we have seen the entries of some international brands, like Berri [Australia],
Ballantyne [Australia], and Tipco [Thailand], with the intention to strengthen their hold in
India and to grow with the market.
 Company

Shreeji Enterprises Pvt. Ltd will be entering the food processing industry with its first
launch i.e. a Kiwi fruit juice.
Three of the four investors have full operational responsibilities. SD and SY are the co-
founders and have both entrepreneurial and industrial experience. PB brings
operational management and financial skills to the operation.

Shreeji Enterprises Pvt. Ltd has a Strategic Alliance with the New Zealand based
company Zespri International Limited to supply the kiwi fruits to India. Pursuant to our
company policy stating "Quality First, Credit Prominent", we process our KiwiJoos with
strict production standard, quality control and sophisticated processing technology, we
at all time provide our consumers the natural and healthy Kiwifruit juice.
Our Start up costs, listed below, has been financed to date by the investment from its
owners. Following are the parameters:

Particulars Amount
Land & site development;[x[ acres @ Rs. [y] lakh per acres xxx
Building and civil works xxx

Plant and machineries xxx

Miscellaneous Fixed Assets xxx
Preoperative expenses xxx

Preliminary expenses xxx

Technical know-how and engineering fees xxx
Contingencies @ 10% xxx
Capital Expenditure xxx

Margin money for working capital xxx

Project cost xxxx
 Market Analysis

Market Analysis Summary:

One can sense an evolution that the industry has seen with development in the tetra-
pack market, there also has been a natural progression from drinks to nectars to juices
and while traditionally fruit drinks were aimed at children, the new brands like ‘Onjus,
Real, and Life’ have focused on young adults and professionals.

Although fruit drinks focus strongly on out of home consumption, the juices and nectars
have been concentrating on takeaways or in-home consumption with more choice
coming in, the tetra- pack market is likely to witness further segmentation.

Packaged fruit juices are getting recognized as social drinks now, with dominant
consumption being observed in the company of family and friends. People have started
to perceive fruit juices as anytime beverages, with consumption being spread more or
less evenly between the mid mornings, afternoons and evenings. And generation now is
as much inclined to sipping fruit juices as colas, with teenagers driving the maximum
trials.

If the findings of a usage and attitude study conducted by market research agency
Indica Research across 1200 adults in Sec A and Sec B households in Delhi and
Mumbai are anything to go by, then its not just champagnes and colas that qualify as
social beverages.
The results of the research can be briefly put as follows:

• Among packaged fruit beverages, the ‘awareness to trial, ratio of PepsiCo’s

Tropicana juice brand has been rated the highest. Up to 17% of the respondents
were aware of Tropicana, while the brand’s trial stood at 11%, also, 8% of the
respondents stocked the brand at their homes. Other parameters where Tropicana
edged out competitors included taste, health, purity and nutrition, according to the
study, Tropicana was also perceiver as ‘reasonably priced’.

• The average Indian may have a legendary weakness for mango, but when it comes
to preference of fruit-based juices; his choices are in tune with international trends.
Therefore it is orange juice that is the most preferred fruit juice flavour in India,
followed by apple, sweet orange and mixed fruit.

• The findings indicate that most packaged juice drinking consumers travel abroad on
holidays.

• Other attributes of branded juice consumers include employment of domestic help,

ownership of assets and credit cards, and health consciousness with 80%
respondents going to aerobic classes or working out at gymnasiums.

• Understandably therefore, awareness and trial levels of packaged juices are higher
within the Sec A category, than among Sec B consumers, the majority of whom rated
these as aspirational.

• Awareness levels are similar in both Mumbai and Delhi; more trials are generated by
Delhities than their counterparts in Mumbai.

• The consumers are starting to perceive fruit juices at home. While 55% of the
respondents consumed 1- litre packs at home, 45% consumed 200ml packs.

The fruit beverage market has more acceptances in Northern and Western India, which
is due to the climatic conditions prevailing there with relations to the rest of the country.
Market Segmentation:

There has been no general acceptance of the product forms in the fruit beverage
market. The consumer is basically concerned if it is a fruit juice or synthetically
constituted product. Product segmentation, therefore, should be clearly delimited.

• Under the fruit drinks the first segmentation is between real fruit drinks and
synthetic drinks.
 The real fruit drinks are based on natural fruit pulp or juice.
 The synthetic drinks are synthetic products with fruit or other flavors.

• Broad taste preferences could be another way to define the market. The market is at
present also segmented on the basis of fruit pulp content. For the purpose of
segmentation, on the basis of fruit pulp content. For the purpose of segmentation,
on the basis of fruit pulp content, market can be segmented as:

 Fruit juicewith pulp content more than 80%. Brands falling in this category
are Onjus, Real, Tropicana, etc.
 Fruit Nectar with pulp content between 40% to *0%. Life and X’s come in this
category.
 Fruit Drinks with pulp content less than 40%. Frooti and Jumpin are the
popular brands in this category.

• Segmentation could also be on the basis of the benefits provided to the consumer:

 One benefit could be the nutrition content it gives to the consumer so one
market could be the health-conscious segment.
 Second benefit is thirst quenching, so the other segment could be those
buying the drink or nectar for satisfying the thirst.
• Another very broad segmentation can be on the type of situation in which the drink
or nectar is used:

 People who are on the move i.e. Outdoor use e.g. those traveling.
 People who are using it on the breakfast table as a part of their menu i.e. in-
house use.

Players very often choose one or more of such segmentations to differentiate their
product and target market and accordingly plan their distribution and promotion
patterns.

Market Needs:

Consumers usually, are not going to accept something that doesn’t taste good even if it
is good for them or has certain benefits. Companies working to bring a new food
product to the market have two questions—does it taste good and will consumers buy
it?
Market Trends:

Tropical fruits and flavours dominate the market, yet some consumers are still hesitant
to try unknown exotic flavours like cherimoya, guanabana and carambola. Companies
have found the best way to introduce exotics is in combination with familiar flavours. A
flavour combination that began in the new age, 5% to 10% juice category, and has
spread to other beverage categories as well as to other products like kiwi, strawberry,
etc. stating that it was a small company that took the risk and won.

Smaller companies lead the way, as they are more willing to try exotic flavours even
though the larger companies have a larger staff and budget, and can afford to search
out the trends. The large companies tend to introduce prototypes that are pretty well-
tested. They are always interested in the next flavour trend, but usually are not the first
to debut it.

Fortified drinks are also gaining market i.e. the juice is processed and an additional
nutritious trait is added to enhance its wholesome value e.g. with additional calcium,
vitamin C etc.

One can notice the population in the country mainly in the cities becoming more and
more aware with regard to the nutritional aspect of life. This knowledge, coupled with
the consumer’s desire for a healthier lifestyle, has greatly impacted the evolution of juice
and juice-based drinks over the last few years.
 Industry analysis:

The Rs 100 crore packaged fruit juice market is estimated to be growing at 20% to 25%
annually, with Tropicana and Real holding 40% market share each.

The market can be categorized in terms of product content and there are three major
product contents available.

• Drinks: Juice with pulp content less than 40%,

• Nectars: Juice with pulp content between 40 - 80%,

• Juices: Juice with pulp content more than 80%,

The canned juice market initially covered brands like NAFED, Noga, Midland, Gold Coin
and Druk. These were fruit juices and nectars and not drinks. But they did not make a
mark in the market due to reasons such as high price, unattractive packaging and lack
of right promotion programme.

Parle Agro’s Frooti, a mango drink, was introduced in the tetra pack in 1985 and since
then has been a leader in its segment. The market has suddenly picked up since 1994-
95 and a few players have emerged as market leaders.
 Leading Manufacturers of Fruit Beverages in India:

Company Brand flavours

1. Parle Agro Frooti Mango, Guava, Pineapple, Strawberry
& Orange

Appy Apple

2. PepsiCo Ltd. Tropicana Orange, Nature Sweet, Apple,

Grape, Pineapple, Tomato, Mixed
Fruit.
Slice Mango, Litchi, Orange & Guava.

3. Dabur Real Grape, Guava, Orange, Pineapple,

Tomato, Mixed Fruit, Litchi, Mango.

Real Active Orange, Apple

4, Godrej Foods Jumpin Orange, Apple

Re Orange, Apple

Xs Orange, Apple
5. Coca Cola Maaza Mango

6. BBI. II Tree Top Mango

7. Voltas Volfruit Mango

8. Hindustan Grapy Red Grapes, Litchi, etc.

9. HP Agri HPMC Apple Marketing

10. North East Agro NERAMAC Pineapple

Mkt. Ltd.
 11. Kerala Milk Mkt. Milma Mango, Pineapple

12. Salstar Foods Regold Mango, Apple Mixed

13. Mohan Meakins Gold Coin Apple Juice

14. Modern Foods Rasika Mango, Guava

15. Eastern Fruit Efil Mango, Litchi

16. NAFEED Nafed Apple, Mango, Processed Guava,

Pineapple, Orange

17. Vadilal Industries Vadilal Mango, Pineapple, Orange

Ltd.
18. Himgiri Foods Himgiri Mango, Pineapple, Orange

19. Lakhanpal Foods VAFA Mango, Pineapple, Orange

20. WIMCO Ltd. Sunsip Tropical Fruits Kioces

21. Tims Products TIMS Mango, Pineapple, Orange, Guava

22. BEC foods ROLZ Mango, Mixed Fruit Juices

23. The Maharashtra NOGA Pineapple Agro.

Inds. Development
Corp. Ltd.

[The above mentioned list consists of the brands noticeable in metros and as such there
are a large number of small canning units scattered all over the country catering to
niche markets.]
Imports:

With a whole range of product lines opened up for imports over the past 14 months,
these exporters have now full freedom to exploit the huge Indian market. The fruit juice
market in India is not yet large enough to justify investing.

Today the consumer has got a wide variety to choose from as many foreign food and
personal products can come in unrestricted now. The Indian market place has seen a
dramatic increase in the range and quality. There is expected to be some level of
competition in these areas. Quality will have to improve and manufacturers will have to
be more cost effective.

Proliferation of product range is also proving to be a problem for retailers with limited
space on their shelves. With Indian producers also improving and enhancing their
variety, products are jostling for space.

Consumer’s belief in India products too is going up; earlier issues were of durability and
poor shelf life. Now, Indian products have moved up to the next level. This could make it
tough for imported products to make a dent in established categories, especially where
there is a substantial price difference.

The complex sales tax structure In the various states confounds the exporter of fruit
juices for instance, it is myriad varying from state to state i.e. Central sales tax in Delhi
at 85 and in Kerala it is 20%, while Maharashtra has VAT plus octroi hence fixing prices
is quite an exercise and when you add on these, the product becomes expensive. Right
now, sale of imported goods from stores is at the top end and is small percent of store
turnovers. But this is expected to go up in the years to come. Imports may not really
make an impact in the market, but could allow legitimacy to some of the products that
come through the grey market channel.
The removal of QRs [Quantitative Restrictions] is not expected to have a major impact
on the Rs 100 – crore organised domestic juice market. This could be on account of the
continuance of customs duties at around 30-35% & juices have been coming into India
under the open license policy for over 2 years now. As such, there has been no change
ion the Exim policy for the juice market.

Through industry players are confident that there will not be a deluge of juice brands but
they expect some more additions in this category mainly because this market is growing
and not necessarily as a fallout of Exim policy. They also believe the stage is not set for
any major price restructuring, or price war in the Indian juice market as yet, as this
market is very small still, and normally severe price wars happen only when the market
becomes big.

Both Berri and Ballantyne are among the recent entries in the industry. Berri fresh juice
producer which has 60% of the Australian domestic market and sells to over 30
countries. The company’s products such as Apple, Orange, dark Grape and Apricot
juices are now available at supermarkets in the major cities in India. Yet, in the year that
Berri has been in the market, it has found the response to be good. It has gained about
5-6 % of the fruit juice market. For Berri, whose biggest market happens to be Asia,
India is still small. But the company is serious about growing it. Ballantyne also as
Australian company is also not looking at investment in India at this stage.
Problems with imports:

• The imported products on offer in most stores stocking foreign foods reveal that they
are close to their expiry dates.

• Most such products available now come through the grey market. Most of these
products, especially those that come from South-East Asian countries, are imported
by agents who supply to stores. As the imported process itself is a long drawn out
affair, often food products land up on shelves quite close to their expiry dates and
there is also a danger then of agents tampering with expiry dates and consumers
buying stale food.

• The other problem that retailers face is that since they are dealing with agents there
is a problem of returns of products when they are past expiry dates. Its not an issue
when a retailer is dealing with a company as there is a mechanism for accepting
returns. At times companies are seen to import through their own channels and
supply it to the retailers.

• India is a difficult market mainly because of delays at the docks, tariffs and duties on
various products, bribery and corruption and the lack of a cold chain (for horticulture
produce). Things when they arrive do not get straightway into cold storage i.e. the
inadequate infrastructure to handle the distribution of fresh produce, which causes a
rapid deterioration in the quality.

Therefore, while there could be more brands in the organised juice market, the bigger
chunk of the market will, in all likelihood, continue to be with the already existing
players. Fruits and their derivatives are expected to enter India in huge quantities and
once the market becomes bigger and volumes come in, prices of imported goods are
expected to come down.
Substitute:
Fruit juice companies have to face a two level competition i.e. on the first level with the
substitutes and the then the players within the industry. The ‘sip war’ is comprised of the
following players with respect to India.

• Soft Drinks (both carbonated and Non- carbonated soft drinks)

Soft Drinks are divided into carbonated and Non- carbonated drinks. While Cola, lemon
and oranges are carbonated drinks mango drinks come Non- carbonated category.

• Flavoured Milk (energy, N-Joy etc.)

Just like fruit drinks Flavoured milk is also positioned on the health platform. Companies
are trying to project it as a fun drink with added flavours and innovative packaging.

• Mineral Water

Fruit drink sellers consider even mineral water as substitute to their offerings. The main
assumption is that packs ensure quality delivery.

• Other products

Milk by- products like buttermilk and lassi also serve as major substitutes. They
compete in terms of low price as well as easy availability. These drinks are also
considered important from the health perspective.
Distribution patterns:

Distribution network and reach are vital factors for success of the brands in the fruit
beverage market. It is mainly the distribution strategy that the companies are focusing
upon.

The distribution is mainly done through stockist. The companies also have franchises
that work as a separate entity. Some companies also have their C & F agents to give
the product to the distributors, who further distribute to the retailers. To co-ordinate the
things properly with the distributors, companies keep their own field force.

Below the figure shows the many ways the companies in this industry are seen to be
operating:

The urban Indian retail sector has traditionally been structured around three small retail
entities—the grocer, the general store and the chemist.

• The grocer stocks non packaged, unbranded commodities such as rice, flour, and
pulses, as well as branded fast moving consumer goods (FMCGs)

• The general store stocks only branded, packaged FMCGs.

• The chemist, a part from dispensing pharmaceuticals products, sells branded

FMCGs such as personal care products and health foods.

• Departmental stores and

supermarkets.

• Others:
  Bakeries and confectioners
 Fruit juice/ tea stall/ vending machines
 Ice-cream parlours,
 Electrical and hardware stores and
 Non-food boutiques, etc.

These retail outfits stock branded FMCGs that gel with their businesses.

Supply chain integration does not quite matter in the case of the small retailer because
of the small scale of his operations. He normally deals directly with wholesalers with
whom he is able to negotiate rates.
Retail consolidation (consolidation of buying power) among supermarket operators is
unlikely to hurt small retailers simply because it will affect manufacturers directly, who
will not want to compromise on the distribution reach to offer large volumes to a few big
retailers.

The small retailers form an integral part of the wide distribution network set up by the
large FMCG companies. Marketers have also found that private/ store brands from
supermarkets can prove to be a threat to their own brands and hence, desist from
encouraging retail consolidation.

Consumption and buying Patterns:

The Indian lifestyle has a traditional predilection for fresh fruits and vegetables or those
processed at home. People go in for fresh fruits vending from kiosk fountains, which
produce instant juices from fresh fruits in the presence of the consumer.

One reason is the unavailability of hygienically produced and well- preserved products
with the use of preservatives. The fact that it is packed denies its freshness. This was
also a reason why some of the real but branded fruit juices launched in the late 1980’s
and early 1990’s did not succeed.

Taste is often the secondary consideration in the Indian market for beverages. Fruit
juices also lose on roughage, which is an important part of fruit nutrition. Few people
know the difference between a juice and nectar.

In general, the Indian consumers have become health conscious now and are looking
for healthy and natural appetizing juices. They are moving away from synthetic drinks to
natural and wholesome fruit juices. At present;

• Per capita consumption of juices in India is estimated at a fraction of a litre i.e.

200ml.

• The consumption of fruit juices in take home packs is estimated at 17250 mnlt.

• Consumers go for convenient and economy products.

 So small packs are well suited for travelers and children and large take home
packs for families and price conscious people.

• Availability in chilled form and brand awareness plays a crucial role in purchase
decision.
 This has implications for the need for availability of the product and in the
right form.

• While there is no aversion to consumption of fruit beverages by any group, the main
consumers of this market are people in the age group of 30 and below.
 Young adult and teenagers predominantly consume tetra pack drinks.

• Brand loyalty is very low, as all the products taste the same.

 But brand loyalty is high in case of kids.

▫ Though there is a lot of difference between brand awareness and brand
loyalty.
• Consumers are money conscious where the purchase of fruit beverages is concern.

• Consumers are not ready to explore the market.

 They do not want to change their taste and are stuck to their old brands.
 Orange and other drinks are slowly picking up and breaking the loyalty
towards old brands.
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