Indian Soft Drink Industry Set to Bounce Back with 10% Growth in 2025 Despite Climate Challenges: Report

India’s soft drink industry, after grappling with weather-related demand disruptions in 2024, is projected to regain momentum and achieve a growth rate exceeding 10% in 2025, according to a recent analysis by Systematix Institutional Equities.

The report highlights that the carbonated soft drinks (CSD) segment, which historically clocked a robust 13–14% annual growth, remains the primary growth engine within India’s ₹300 billion liquid refreshment beverages (LRB) market. The LRB market includes carbonated drinks, packaged water, juices and nectars, energy drinks, and sports drinks.

In the last five years, the sector has witnessed mixed performance. After strong double-digit growth of around 12% annually between 2018 and 2019, the pandemic year of 2020 caused an unprecedented decline of nearly 20% due to lockdowns and mobility restrictions. Recovery began in 2021 and 2022 with growth rates returning to 9–11%, driven by pent-up demand and rapid urban reopening. However, 2024’s unseasonal rains and cooler summer days disrupted peak-season sales, temporarily pushing growth projections down.

Despite these setbacks, experts see clear signs of sustained medium-term growth. “Per capita consumption of soft drinks in India is still significantly lower than many Asian peers, including Bangladesh and Pakistan. This underpenetration offers room for growth as urbanisation and disposable incomes continue to rise,” the report said.

Shifting Market Dynamics: Regional vs National Players

India’s soft drink market remains almost evenly split between national brands and local regional players. Major brands like Bisleri, Kinley, Aquafina, and Bailey dominate packaged water, while carbonated segments see strong competition from local favourites like Bovonto in Tamil Nadu, Bindu-Jeera in the South, and Karachi Soda in North India.

However, the report points to changing tides. Post-GST implementation, competition from smaller regional brands has eased, leading to market share gains for larger players. In Tamil Nadu, for example, Bovonto remains the sole dominant local brand, with fewer challengers emerging in recent years.

Category-wise, soft drinks (CSD) account for roughly 40–45% of the LRB market, packaged water makes up a similar share, while energy drinks and juices together add around 13–15%, and sports drinks contribute 1–2%.

Consumer preferences are rapidly evolving, with growing demand for healthier, low- or no-sugar beverages, as well as regional and natural flavours. Leading beverage companies are responding by introducing zero-calorie variants, fruit-based sparkling drinks, and products tailored to local tastes.

Beyond product innovation, premiumisation and smaller pack sizes for on-the-go consumption are also helping drive volume growth, particularly among younger consumers in urban areas.

Despite short-term weather disruptions, the outlook for India’s soft drink sector remains bullish. Industry experts forecast the market to maintain strong double-digit growth over the next few years, supported by low per capita consumption, rising urban demand, and strategic portfolio shifts by major players.

As the competitive landscape changes and consumers seek healthier and more diverse beverage choices, both local and international brands are set to invest further in product development and distribution expansion, positioning the Indian soft drink industry for a dynamic phase of growth.