PepsiCo bottler says that increasing on-the-go consumption, driven by changing lifestyles in urban and semi-urban markets, has strengthened demand for convenient beverages
After a challenging consumption environment in 2025, the soft drinks market in India is poised for substantial growth. PepsiCo bottler Varun Beverages said in its annual report that rapid urbanisation, a growing middle class and rising disposable incomes continue to support higher consumption of packaged beverages.
Increasing on-the-go consumption, driven by changing lifestyles in urban and semi-urban markets, has strengthened demand for convenient beverage formats across categories. The growing participation of women in the workforce is also contributing to higher household incomes, enabling broader consumption across food and beverage segments, the company said.
“Younger consumers are more inclined to experiment with new flavours, formats, and brands, encouraging innovation and the introduction of differentiated offerings. This demographic continues to influence consumption trends, supporting growth across carbonated, non-carbonated and emerging beverage segments,” the annual report added.
The company highlighted that energy, hydration and sports drinks are gaining momentum, driven by active lifestyles. Innovation in low-and zero-sugar formulations, natural ingredients, flavours and convenient formats is supporting sustained growth across segments.
“Rationalisation of GST rates in the juice and packaged water categories is expected to improve affordability and accessibility, particularly for price-sensitive consumers. Lower tax incidence has led to lower retail prices, encouraging higher trial and repeat consumption, and supporting deeper penetration across urban, semi-urban, and rural markets,” the company pointed out.
VBL emphasised that rural and semi-urban markets represent a significant untapped opportunity for the soft drinks industry. Strengthening last-mile distribution, improving affordability through smaller stock-keeping units (SKUs) and expanding localised marketing initiatives are enabling deeper penetration.
Brands are expanding their portfolios with low- and no-sugar options, juice-based functional beverages, and differentiated offerings, enabling them to cater to evolving consumer preferences. The growing focus on health is further driving innovation in organic and natural ingredient-based drinks, supporting sustained category relevance and growth.
India’s diverse climatic conditions, with a significant portion of the population living in regions characterised by hot, dry, or moderate weather, create a natural demand for refreshing beverages. However, short-term consumption can be impacted by weather variability, including unseasonal or extended rainfall, as witnessed last year.
