Winning Bizness Desk

Mumbai.India’s record-breaking summer this year is reshaping the country’s Rs 1.1 lakh crore soft drinks market, with traditional dairy beverages rapidly eating into the space long dominated by carbonated drinks. Refrigerators at neighborhood grocery stores and quick-commerce platforms are increasingly stocking lassi, buttermilk and probiotic beverages alongside colas as consumers, especially younger buyers and urban families, shift towards healthier, protein-rich options. The trend reflects a growing preference for nutrition over sugary fizzy drinks, prompting beverage makers to rethink their product strategies.

Growing demand fuels dairy beverage expansion

According to Mother Dairy Managing Director Jayen Mehta, sales of dairy beverages such as lassi and buttermilk have grown by more than 40% during the current summer season. The company has also witnessed double-digit growth on quick-commerce platforms, where demand for convenient ready-to-drink products continues to rise.

The changing consumption pattern is encouraging dairy companies to expand their portfolios with health-focused products while strengthening their presence across both offline and online retail channels.

Key highlights:

• Lassi and buttermilk sales have risen over 40% this season.
• Quick-commerce platforms are recording strong double-digit growth.
• Urban households and younger consumers are driving demand.
• Health-conscious buying behaviour is replacing traditional soft drink consumption.

Health-focused products become key business driver

Heritage Foods CEO Srideep Kesavan said dairy beverages now contribute twice as much to the company’s revenue as they did three years ago. Meanwhile, Parag Milk Foods Executive Director Akshali Shah said India’s packaged food and beverage industry, currently valued at Rs 9.51 lakh crore, is projected to reach Rs 14.27 lakh crore by 2030.

She added that the dairy drinks market alone is expected to touch Rs 4.23 lakh crore by 2031. Riding this opportunity, companies are investing heavily in protein, health and wellness beverages. Parag Milk Foods reported an annual growth of 109% in this business and recently introduced Avatar Protein Cold Coffee, offering 15 grams of protein per pack to combine convenience with nutrition.

Mother Dairy is also expanding its portfolio with probiotic buttermilk and mint-flavoured buttermilk, introducing entry-level packs priced around Rs 10 to attract mass-market consumers.

Beverages emerge as FMCG companies’ growth engine

India’s leading FMCG companies are increasingly relying on beverages rather than packaged food products to drive revenue growth. Ready-to-drink and health-focused drinks are outperforming categories such as ketchup and mayonnaise.

Recent business performance includes:

• Hindustan Unilever recorded strong double-digit growth in coffee, Horlicks and Boost.
• Tata Consumer Products reported 23% growth in its ready-to-drink portfolio.
• Dabur doubled its coconut water business while Real juices grew 26%.
• PepsiCo bottler Varun Beverages said nearly 63% of its March quarter volume sales came from low-sugar and no-sugar products.

Tax advantage and health awareness drive shift

Industry experts say multiple factors are accelerating the move towards dairy beverages. Carbonated drinks attract 40% GST, while dairy beverages are taxed at just 5%, allowing manufacturers to sell affordable Rs 10 packs. The tax gap has significantly improved price competitiveness.

Consumer attitudes have also changed after the Covid-19 pandemic, with buyers looking for beverages that combine taste with nutrition. Probiotic drinks, low-sugar formulations and protein-rich products are increasingly being viewed as healthier alternatives to conventional soft drinks. Traditional Indian beverages such as kokum drink, jaljeera, aam panna and buttermilk have also returned to the mainstream through hygienic packaging and modern retail distribution.

Traditional drinks post stronger long-term growth

Market estimates indicate that India’s soft drinks market is expected to expand from Rs 111.81 thousand crore to Rs 168.13 thousand crore, reflecting annual growth of 4.64%. In comparison, the lassi market is projected to jump from Rs 5.60 thousand crore to Rs 24.57 thousand crore with annual growth of 16.96%, while the buttermilk market is forecast to grow from Rs 19.33 thousand crore to Rs 101.18 thousand crore at an annual rate of 18.16%.

Market outlook at a glance:

• Soft drinks annual growth: 4.64%
• Lassi annual growth: 16.96%
• Buttermilk annual growth: 18.16%
• Source: IMARC market estimates

The numbers underline a significant transformation in India’s beverage industry. While carbonated drinks continue to dominate in size, the fastest growth is now coming from traditional dairy beverages, signalling a lasting shift towards healthier and value-driven consumer choices.