Consumer Goods Standards Tightened, Fizzy Drinks Losing Appeal – India Market Watch

October 30, 2017 Posted by India Briefing Reading Time: 4 minutes

India tightens regulatory standards for consumer, capital goods

The Bureau of Standards (BIS) is expected to double down on its enforcement of standards regulating consumer and capital goods. The BIS is tightening quality control norms across industries to end cheap imports and the dumping of inferior goods.

Some experts have suggested that the increased monitoring is an outcome of recent border tensions with China, and further speculate that stronger regulations could curb Chinese imports.

The government has issued new rules for India’s toys, electronic goods, machinery, food processing, construction, and chemicals sectors – all of which are dominated by Chinese goods, components, and imports. The rules will, however, be applied on all firms, domestic and foreign. Government departments and agencies will conduct laboratory tests and spot inspections to ensure goods satisfy regulatory standards.

Indian officials and retailers have variously mentioned substandard imports from China, complaining of goods even being semi-finished or damaged, such as in the toys sector, solar equipment, and in stainless steel products. At the same time, retailers are worried that ad hoc decisions by the government will choke their supplies, result in loss of advance payments to Chinese goods suppliers, and cause a loss of business, overall.

Soft drink makers diversifying to provide healthier products

India is an important market for beverage manufacturers, including makers of sugary and carbonated drinks. However, rising income levels, and exposure to global trends, have resulted in reduced consumption of fizzy beverages by Indians. This is particularly noticeable in India’s urban consumer preferences.

Additionally, beverage choices are proliferating in the Indian market: juices, dairy-based beverages, energy drinks, and flavored water, to name a few. The country’s soft drinks market is now worth US$9.25 billion (Rs 600 billion) annually, and carbonated drinks contribute to 46 percent of total sales.

In response, cola and other fizzy drinks makers have been diversifying their beverage offerings and making key changes. These include: creating healthier alternatives, reducing sugar content in fizzy drinks, and manufacturing smaller-sized bottles.

These trends signal both an expansion of India’s future beverage market and the heightened competition among international leading players like Coca Cola and PepsiCo.

Demand for branded honey grows

The organized honey trade is rapidly expanding in India, with demand for branded honey registering a 10 percent compound annual growth rate (CAGR).

The overall honey market is pegged at US$308.4 million (Rs 20 billion), of which branded honey accounts for a US$107.94 – 123.36 million (Rs 7 – 8 billion) share. Annually, India produces 7,000 million tons of honey – half of which is exported.

With the rising preference for healthier options in almost all fast-moving consumer segments – India’s honey market is also witnessing resurgent demand. Factors shaping this include the perceived medicinal value of honey, its use as a healthier option to sugar, and it being a natural product.

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