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Hansa Research white paper focuses on need to increase investments in beverage industry

Hansa Research white paper will focus on beverages targets potential of this industry to enhance investment in food processing technology.

As part of the  R K SWAMY group, the company stated that some of the targets it aimed to pursue through this white paper titled ‘Doubling retailers’ incomes through focus on beverages sector’, are to augment  farmer income and undertake job creation.

India to become the beverage capital of  the world. There is need to bring in innovation to a stagnant beverages sector.  The report stated that the  focus was  on non-alcoholic ready-to-drink segment. This broadly includes bottled water, stills like fruit juices, and sparkling.

Currently this segment is about Rs 58,000 crore in value terms in 2022 and saw a growth of roughly 30% over 2021. The highest reach of any segment within beverages category is only 40%: out of the total number of grocery stores, bottled water is only available at 40% of the stores and sparkling beverages at 39%. Still beverages including fruit juices, are only available at 32% of outlets in India.

There is no debate that clean water should be available across the country besides availability reach of any segment within beverages category is only 40% out of the total number of grocery stores, bottled water is only available at 40% of the stores and sparkling beverages at 39%. This sector has much room for growth given that there is reach of other FMCG products. The worrisome part is that sale of organized sector is only 20% in overall beverages segment and balance is counterfeit or unorganized sector where there is no guarantee of cleanliness or hygiene.

According to the report, apart from playing with the health of common man, this is a big loss to Government in terms of revenues. Our estimates suggest that Government earns less than 1% of its revenue from this sector. Even a 20% movement from unorganised to formal economy can boost Government revenue substantially.

Currently, this segment contributes to about 11% revenue of a retailer and less than 1% revenue of Government basis our estimates. Government revenue being dismal in India compared to peer group has several reasons. One of the key reasons for low revenue from this segment is the presence of informal retailers and counterfeit products. According to estimates, around 80% of the beverages which is the non-alcoholic sector is the  non-corporate or  informal industry.

This poses several challenges. These include revenue loss to the government. Serious health hazard with no regulation on ingredients or process of manufacture / packaging / transportation. Low hygiene standards of unorganized production with possibilities of becoming a core for infections.  Unorganised sales points eating away share of organised retailer income, according to the report.

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