'Juice business in India is complicated'

By C. R. L. Narasimhan

The fruit juice business, as Mr. Abhay Manglik, country director of Tropicana Beverages Company, calls it, is tough. ``The market is tough and mostly because of the weather India is a tough country for that kind of product.'' Making this point recently in Chennai, Mr. Manglik, who has completed four years with Tropicana (part of PepsiCo), said not many companies were capable of entering this business and sustaining it.

How big is the Indian market? In terms of turnover, it is between Rs. 80 crores and Rs. 100 crores, modest perhaps but growing by a healthy 25 to 30 per cent annually. Tropicana has a 40 per cent share and is easily the number one, according to Mr. Manglik. The only other brand of consequence is Dabur's Real launched in mid- 1996. It is distributed at more centres than Tropicana. One other brand Onjus showed promise but disappointed in the end. It has had both finance and organisation related problems.

Interesting times aere ahead for the fruit juice makers and suppliers. The budget has given concessions to the food- processing sector. Besides, imports have been freed. The market is bound to grow. Already the Australians have come in and had a visible presence. Other brands from Singapore, Malaysia and the Philippines are also seen on supermarket shelves in the metros. But all these do not add to a large volume. It was tough to be in the fruit juice or any other food business by depending solely on imports, said Mr. Manglik. You have to reckon with environmental conditions, expiry dates and so on. Which brings into focus Tropicana's practices and experience so far in India.

Selling juice is tough. It deteriorates the moment you take it out. It had to be aseptically packed. Tetrapacking for all its costs was the only viable method. If you pack it in sachet or cups you must ensure that it is consumed - not just sold - in less than 24 hours. Otherwise it would grow rancid, said Mr. Manglik.

Besides, in India fruit-juice drinking is becoming popular but is not yet a habit like drinking coffee or tea in the morning. ``If a particular type of consumption is occasional, doing a format for the distribution of that product is tough. How will you ensure that people drink it immediately?'' In the U.S. and other developed countries, it is different: most people drink juice regularly. So one can set up a distribution system that can ensure fresh delivery each day and consumers use it up immediately. In India on the other hand, shelf life is important. According to Mr. Manglik, shelf-life of less than three months will not work in a logistic sense.

The Indian market at the current juncture is both fascinating and challenging. It should grow to an economic size and that by itself is a great challenge. However, once it grows into an economic proposition it will attract all kinds of brands. There will be global brands but some local players will also master the art of doing it. Brand-proliferation over the next three to five years is a good thing because it will ensure the evolution of categories, said Mr. Manglik. The flip side, however, is that there could be substandard brands, whose consumption will drive away the new converts to packaged juice. Even the better brands will then suffer because there will be no way of differentiating. However, generally speaking, the proliferation of brands will dramatically increase the size of the market.

What will competition do to the market?

Mr. Manglik felt there would not be an appreciable reduction in the price. Tropicana now retails at Rs. 62 a litre (after the Government brought down the excise). But there are import duties and sales taxes whose levels are still high. Moreover, India though the second largest fruits and vegetable growing nation in the world, is not cost effective. ``It is like the milk story. Cost efficiencies, the per cattle yield are among the lowest. It is the same with fruits. The per hectare productivity whether of bananas, pineapple or even mangoes is not among the highest. The only fruit we can come reasonably close is the grape. That has been a recent phenomenon in India. Also, the quality of fruits available does not lend itself to juice making. Take citrus. The varieties grown here may be good for the table but not for mechanised juice making. Loose skinned, lots of seeds-whether it is Coorgi or Nagpur orange or even the Kino which was the big experiment over the past three decades.

Tropicana sources its juices from a factory at Baramati, near Pune. Its products are now available in about 18 towns. The secret of its success is that it has a tightly controlled distribution system on top of an equally controlled production. If you do an uncontrolled distribution of a natural product like orange juice, the customer will get a product that is variable in its taste. So contrary to popular perception fruit juice is a complicated business like milk. For now it imports all its raw material, the fruit concentrates. But it hopes to create a big enough juice market for Indian fruit-growers to meet the demand.

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