Monday, 29 August 2022 08:27

Plastic straw ban will have disruptive, albeit short-term impact on India soft drinks industry, says GlobalData

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India is all set to ban the production, import, stocking, distribution, sales, and use of an array of single-use plastic products including straws. Against this backdrop, the ban on plastic straws will temporarily disrupt the sales of small packs of soft drinks, which are very popular among the Indian masses, opines GlobalData, a leading data and analytics company.

An analysis of GlobalData’s Market Analyzers* reveals that the margins on small packs in India are low as they typically retail at INR10–INR30 ($0.13– 0.38). Nonetheless, owing to their mass-market appeal, pack sizes of 100ml to 330ml contributed 35.1% of overall soft drinks volumes in 2021. However, as the ban extends to plastic straws, which are quintessential accessories for small packs, soft drinks companies will be badly hit.

Bobby Verghese, the Consumer Analyst at GlobalData, comments: “Plastic straws are a part and parcel of the consumption experience of small cartons and pouches packs. Switching to bottles, cups, or pack formats with drinking spouts is a cost- and time-intensive proposition for soft drinks companies. In addition, the domestic manufacturing capacity for recyclable, biodegradable, and edible straws may prove insufficient in time for the ban. Moreover, the high import cost of such sustainable straws will drive up prices of the small packs at the cost of its mass-market appeal.”

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Leading companies such as Parle Agro, Amul, and Dabur are developing in-house capacity for paper straws, and others are expected to toe the line sooner or later. On a positive note, the Indian Paper Manufacturers Association has affirmed that domestic paper mills are capable of producing sufficient paper straws for the soft drinks industry.

Verghese concludes: “While single-use plastic pollution is a growing concern for Indian authorities and consumers, the price-sensitive masses are unable to foot the bill for eco-friendly alternatives. The onus is therefore on the industry to adopt sustainable packaging and take accountability for the packaging waste.

“While the change is painful, in the long-term companies can gain consumer goodwill given that sustainable/environmentally friendly feature is an essential factor for 56% of Indian consumers while purchasing products, according to GlobalData’s 2022 consumer survey**.”

  • Quotes provided by Bobby Verghese, the Consumer Analyst at GlobalData
  • Data is taken from GlobalData Consumer Intelligence Center—Market Analyzers, accessed in June 2022 and GlobalData 2022 Q2 Consumer Survey—India, with 598 respondents, published in June 2022

About GlobalData

4,000 of the world’s largest companies, including over 70% of FTSE 100 and 60% of Fortune 100 companies, make more timely and better business decisions thanks to GlobalData’s unique data, expert analysis, and innovative solutions, all in one platform. GlobalData’s mission is to help our clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology, and professional services sectors.

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