Introduction To Soft Drink Industry

Introduction to Soft Drink Industry The main production of soft drink was stored in 1830’s & since then from those experimental beginning there was an evolution until in 1781, when the worlds first cola flavored beverage was introduced. These drinks were called soft drinks, only to separate them from hard alcoholic drinks. This drinks do not contains alcohol & broadly specifying this beverages, includes a variety of regulated carbonated soft drinks, diet & caffeine free drinks, bottled water juices, juice drinks, sport drinks & even ready to drink tea/coffee packs. So we can say that soft drinks mean carbonated drinks. Today, soft drink is more favorite refreshment drink than tea, coffee, juice etc. It is said that where there is a consumer, there is a producer & this result into completion. Bigger the player, the harder it plays. In such situation broad identity is very strong. It takes long time to make broad famous. Coca – Cola has its beginning in 1981 & since then has been one of the three most dominate players in this soft drink industry.

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History of Soft Drinks 1798 The term "soda water" first coined. 1810 First U.S. patent issued for the manufacture of imitation mineral waters. 1819 The "soda fountain" patented by Samuel Fahnestock. 1835 The first bottled soda water in the U.S. 1850 A manual hand & foot operated filling & corking device, first used for bottling soda water. 1851 Ginger ale created in Ireland. 1861 The term "pop" first coined. 1874 The first ice-cream soda sold. 1876 Root beer mass produced for public sale. 1881 The first cola-flavored beverage introduced. 1885 Charles Aderton invented "Dr Pepper" in Waco, Texas. 1886 Dr. John S. Pemberton invented "Coca-Cola" in Atlanta, Georgia. 1892 William Painter invented the crown bottle cap. 1898 "Pepsi-Cola" is invented by Caleb Bradham. 1899 The first patent issued for a glass blowing machine, used to produce glass bottles. 2

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1913 Gas motored trucks replaced horse drawn carriages as delivery vehicles. 1919 The American Bottlers of Carbonated Beverages formed. 1920 The U.S. Census reported that more than 5,000 bottlers now exist. Early 1920's The first automatic vending machines dispensed sodas into cups. 1923 Six-pack soft drink cartons called "Hom-Paks" created. 1929 The Howdy Company debuted its new drink "Bib-Label Lithiated Lemon-Lime Sodas" later called "7 up". Invented by Charles Leiper Grigg. 1934 Applied color labels first used on soft drink bottles, the coloring was baked on the face of the bottle. 1952 The first diet soft drink sold called the "No-Cal Beverage" a gingerale sold by Kirsch. 1957 The first aluminum cans used. 1959 The first diet cola sold. 1962 The pull-ring tab first marketed by the Pittsburgh Brewing Company of Pittsburgh, PA. The pull-ring tab was invented by Alcoa. 1963 The Schlitz Brewing company introduced the "Pop Top" beer can to the nation in March, invented by Ermal Fraze of Kettering, Ohio. 3

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1965 Soft drinks in cans dispensed from vending machines.

1965 The reseal able top invented. 1966 The American Bottlers of Carbonated Beverages renamed The National Soft Drink Association. 1970 Plastic bottles are used for soft drinks. 1973 The PET (Polyethylene Terephthalate) bottle created. 1974 The stay-on tab invented. Introduced by the Falls City Brewing Company of Louisville, KY. 1979 Mello Yello soft drink is introduced by the Coca Cola Company as competition against Mountain Dew. 1981 The "talking" vending machine invented.

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Raw Materials used in Soft Drinks There are different types of raw materials used in different soft drinks. Most of the raw materials are as under: 1. Water: The simple sweetened soft drink contains about 90% of water, while in diet drinks; it contains 95% of water. 2. Flavour: Flavour is of great importance in soft drink. Even water from different places has different taste. The flavour for taste added can be natural or artificial, acidic, caffeine. 3. Artificial Flavour: These are the flavours manufactured from natural extracts; this is used to give greater choice, in taste to consumers. 4. Acids: Acids like citric acid & phosphoric acid are added to give refreshing tartness or bite & help in preserving the quality of a drink. 5. Natural Flavours: These are the flavours, which are extracted from fruits, vegetables, nuts, barks, leaves etc. in soft drink containing natural flavours & fruit juice.

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6. Caffeine: Caffeine has special kind of taste makes the taste of soft drink a royal one. Caffeine was added to soft drink from its introduction to a commercial market but now caffeine free soft drinks are also available. Its quality is ¼ than compared with same amount of coffee. 7. Carbon Dioxide: Carbon Dioxide is a colourless & smell less gas, which is added to cold drink to get bubble & it also help in keeping drink strong & fresh. 8. Colour: Along with taste of soft drink is also of very important, the company tries to maintain both taste & colour of the soft drink every where in the world. 9. Sugar: Sugar syrup is added to the drink at around 75 degree C0 to the pure drinking water, this is to make soft drink taste sweet. Even artificial sweetness is also used.

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Distributions of Soft Drinks The soft drinks can be distributed on the basis of two concepts. 1. Distribution according to taste. 2. Distribution according to consumption. 1. Distribution according to taste: The soft drinks can be distributed in Cola & non – cola taste. Non cola taste consist of drink of orange, lime, mango etc. & lime taste can further divided in to cloudy lime & clear lime. The pie diagram shows the market captured by different taste. Orange taste market is occupied by brands like Fanta, Mirinda Orange & Crush. Mango taste market occupied by brands like Slice, Maaza, Mangola. Cloudy lime taste is occupied by brands like Limca, Mirinda Lime etc. Clear lime taste is occupied by 7 UP, Sprite, Canada Dry etc. This is basically produced in green bottle as sunlight spoils the taste of the drinks; its colour is transparent like water. 2. Distribution according to the consumption: 80% of soft drinks are consumed on the spot, where it is sold at place like cinemas, railway stations etc. Other 20% of the market of soft drink is consumed at home or other places.

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Consumption of Soft Drink in India India is one of the lowest soft drink consuming countries in the world. According to per capita in India is 5 bottles per year, while highest consumption in USA of 800 bottles per year. Lower, Lower middle & upper middle class consume 91% of soft drink market. Brands

Rs. (Crore)

Thums Up Coke Limca Fanta Kinley Sprite Maaza 7 UP Mirinda Pepsi

1740 1350 1030 600 540 400 350 250 210 127

Brands

Male

Thums Up Coke Maaza Fanta Sprite Limca

Female 1238 994 468 391 282 462

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516 508 318 290 156 303

Growth & Size of Market The consumption diagram graph of soft drink has never, decrease. If once, it has increased. It is increasing at 24 – 25% per year. Even in India the market is constantly growing in 1993, the people of India consume only 0.7 lt/head, while in 1995 it increased from 0.7 to 0.93 lt/head, in 1997 it was 1.14 lt/head & in 2001 it was 1.62 lt/head. Year

No of Bottles produced (million) 1968 2070 2195 2490 2800 3000 3240 4000 4450 4920 5670 6480 7000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

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Market Share in India The two global majors Pepsi & Coca – Cola dominate the soft drink industry market. Coca – Cola, which had winded up its business from India during the introduction of IERA regime reentered in India after 16 years letter in 1993. Coca – Cola has acquired a major soft drink market by buying out local brands like Thums up, Limca & Gold Spot from Parle Beverages. Pepsi although started a couple of years before Coca – Cola in 1991, right now it has lower market share. It has brought over Mumbai based Dukes range of soft drinks. Both Cola manufactures Pepsi & Coca – Cola come up with their own market share & claim to have increased their share. Market Share (in %) Brand Name

Market Share (org figure)

Pepsi Coca – Cola Other Brands

Market Share (IMRB) 41 57 2

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49 48 3