STOCK MARKET BSE NSE

Softdrink industry revenues unlikely to regain pre-pandemic levels in FY 2021-22

Crisil Ratings said that the non-alcoholic beverages industry is led by American cola giants Pepsi and Coca-Cola, who control over 80 per cent of the market.

Published: 21st May 2021 02:12 PM  |   Last Updated: 21st May 2021 02:12 PM   |  A+A-

PepsiCo India

Representational Image

By PTI

MUMBAI: Revenues of softdrink majors like Pepsi and Coca Cola are unlikely to regain the levels seen before the pandemic struck as the second wave will impact consumption for the second consecutive summer, a report said on Friday.

The revenues, which were impacted by a fifth in FY21 because of the national lockdown in the peak summer season, will still be 10 per cent lower than the pre-pandemic levels in FY22, Crisil Ratings said in the report.

It said that the non-alcoholic beverages industry is led by American cola giants Pepsi and Coca-Cola, who control over 80 per cent of the market. "Last fiscal, a strict nationwide lockdown and subsequent restrictions over April-September severely affected peak season demand as summer months alone account for two-thirds of annual cola sales. A redux looms now," the agency said.

Its director Nitesh Jain said sales volumes will be adversely impacted in the peak season once again due to localised lockdowns and other restrictions to contain the second wave of the pandemic.

Consumption of the beverages at places outside the home, like hotels, restaurants and cafés, which constitutes up to a fourth of overall sales will be impacted in the first quarter, he said. "Though these restrictions are staggered across regions and are less stringent this time around, full-year revenue may still be 10 per cent below pre-pandemic levels," Jain added.

However, operating profits may be more resilient, driven by continuation of cost-control measures and improving product mix, the agency said, adding this will also ensure that the credit profiles of the players are resilient.

Demand for high-margin carbonated soft drinks (CSD), which forms two-thirds of the beverage portfolio of players, was impacted less during lockdowns compared with juices and bottled water. It said that this is due to higher in-home consumption of CSD, driven by increasing access to refrigeration.

Its associate director Rohan Kulshrestha pegged the operating profits at 7 per cent lower than the pre-pandemic levels, as against the 10 per cent lower revenues. The analysis assumes decline in demand by a fifth in the first quarter of this fiscal.

Recovery is expected from the second quarter with the surge in number of cases and consequent lockdowns peaking in June, and the pace of vaccination also picking up, the agency said.



Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp