Soft drink makers are expected to see a positive growth trajectory this fiscal marking a revenue rebound after witnessing a washed out summer season in the last fiscal, according to estimates by Crisil Ratings.

It noted that soft drink bottlers are poised to see revenue rebound to their long-term average growth of about 15 per cent this fiscal, driven by hotter summer, that account for about 40 per cent, of overall sales and deeper penetration into untapped domestic territories.

Though the impact of sustained elevated crude oil prices on their packaging costs and weather patterns will remains as key monitorables.

The ratings agency noted that there is heightened competition in the space due to entry of new players launching products at popular prices which will lead existing players to ramp up marketing and distribution spends

Also, a sharp rise in crude prices due to the West Asia conflict has driven up packaging costs, too. These will negatively impact the industry’s profitability by up to 250 basis points.

“However, the impact will be lower for bottlers with nationwide presence, due to their higher pricing power and better economies of scale. Cash flows of the players will remain healthy, ensuring stable credit profiles,” it added

The estimates are based on analysis of 13 bottlers in the non-alcoholic beverage industry, which includes carbonated soft drinks, juices and packaged water.

“Soft drink bottlers are poised for a strong volume rebound this fiscal driven by hotter summers and rising penetration. IMD predictions of above normal temperatures during summer along with possibility of El-Nino, which usually prolongs the summer months, is expected to boost consumption. Players have not only increased their bottling capacities by 30-35 per cent over the past two fiscals but also expanded their distribution network and cold chain infrastructure. The higher volume, coupled with 2-4 per cent price hike in a competitive environment will help players revert to their long-term revenue growth trajectory,” said Shounak Chakravarty, Director, Crisil Ratings,

Talking about the impact of new entrants in the soft drinks space, the ratings agency said the market share of new entrants rose to 6-7 per cent in the last fiscal from about 2 per cent in the FY24.

This is because In addition to launching novel indigenous flavours, the newer entrants are targeting impulse purchases through popular price points such as Rs 10 and Rs 20 bottles.

Rucha Narkar, Associate Director, Crisil Ratings, “Intensifying competition, leading to reduced pricing flexibility amid rising crude-linked packaging costs (20-22 per cent of overall cost), will cause a moderation in profitability this fiscal.

However, marginal price hikes and increasing focus on zero-sugar variants may limit the overall impact to 200-250 bps, keeping margins healthy at 15-16 per cent.

Further, bottlers with pan-India presence are expected to negotiate better pricing terms with suppliers and distributors through bulk raw material purchases and high-volume offtake respectively, thereby partially offsetting the impact on profitability.”

The ratings agency also indicated that the cash flows will remain healthy for the players, allowing them to continue spending on expanding bottling capacities and increasing visi-coolers2 at outlets, keeping capital expenditure (capex) intensity elevated.

Published on April 14, 2026