Beverage consumption on rise in India!

Ankita Chakrabarty/ ZRG

Beverage consumption in Indian households has steadily increased over the last decade as more families are spending on non-food items indicating a clear shift in food preferences. Not only that, the trend transcends the urban-rural divide.

According to the latest National Sample Survey Office (NSSO) 2011-12, Indian households on average spend about 6.5 percent of their food expenditure on beverages. The share of urban households stands at 7.1 percent while rural households spend 5.8 percent of their expenditure on it.

Beverage share has steadily increased over the years. While beverage accounted for 3.9 percent in 1987-88, it rose to 4.2 percent in 1993-94. And from 4.5 percent in 1999-2000, it rose to 5.6 per cent in 2009-10.

Urban households too show an increased preference for beverages. The share of the urban households’ expenditure on beverages in 1987-88 was 6.8 percent. It swelled to 7.2 percent in 1993-94. But, thereafter it declined to 6.4 percent in 1999-2000 and further dropped to 6.2 percent in 2004-05. Beverage share recovered a bit at 6.3 per cent in 2009-10. In 2011 -12, it stands at 7.1 percent respectively.

Food and beverage companies, both Indian and multinational, view the trend optimistically. Speaking with Zee Research Group in 2011, Deepak Jolly, vice president, public affairs and communications at Coca-Cola India had said, “The growth has been across markets and across the country. There is so much potential in the market for beverages in India that growth will continue to come from all segments.”

The NSSO data is revealing on changing food preferences of Indians. The share of food in total consumption has steadily declined in the past 15 years. The average spending of rural households on food products is down from 64.0 percent in 1987-88 to 48.6 percent in 2011-12. The figures continuously declined from 63.2 percent in 1993-94 to 59.4 percent in 1999-2000; it further dropped to 55.0 percent in 2004-05. It now stands at 48.6 percent in 2011-12.

The trend is not very different in urban households. While the average spending of urban households on food products went down from 56.4 percent in 1987-88 to 54.7 percent in 1993-94, it further dropped to 48.1 percent in 1999-2000. From 40.7 percent in 2009-10, expenditure on food items now stands at 38.5 percent in 2011-12.

While the overall food category declined, NSSO study said that there was a rise in the consumer expenditure on non–food items. The average spending of rural households on non–food items jumped from 45.0 percent in 2004-05 to 51.4 percent in 2011-12. Similarly, the urban households spending on non–food items increased from 57.5 percent in 2004-05 to 61.5 percent in 2011-12 respectively.