The thought of starting your own beverage business in India is both exhilarating and intimidating. But with the right planning, best ideas, advice, and support, it can be an immensely rewarding experience both professionally and personally.
India is a land of opportunity for entrepreneurs across a wide range of sectors. The country’s population of over 1.39 billion people provides a vast domestic market, and its fast-growing economy presents plenty of scope for businesses to tap into new markets and expand internationally.
The Indian government is also supportive of entrepreneurship, with a range of initiatives and programs designed to promote and nurture start-ups. So, if you’re thinking of starting a beverage business, company in India, there has never been a better time to do it.
In this guide, we will outline how to start a beverage, soft drink business in India and the process of starting a beverage business in India, from choosing the right business structure and obtaining the necessary beverage licenses and permits, to understanding the legal requirements around setting up a shop. We will also provide some top tips on how to make your beverage start-up successful in 2023.
The market for beverages in India
The market for beverages in India is expected to grow at a CAGR of 7.4% during 2019–2024. The growth of the beverage market in India is being driven by the growing population, rapid urbanization, and the increasing disposable incomes of consumers. In addition, the changing lifestyles of consumers and the availability of a wide range of products are also fuelling the growth of the beverage market in India.
The sparkling drinks segment is expected to grow at the fastest rate during the forecast period. The growing health consciousness among consumers and their preference for healthy drinks are driving the demand for sparkling drinks in India. In addition, the easy availability and affordability of these drinks are also fuelling their growth in the country.
The segment includes a wide range of products such as juices, tea, coffee, energy drinks, soft drink, and sports drinks. The growing demand for these drinks owing to their health benefits is driving the growth of this segment in India.
The carbonated soft drinks segment is expected to account for a significant share of the beverage market during 2019–2024. Carbonated soft drinks are widely consumed by people of all age groups and are available at affordable prices, which is fuelling their demand in India.
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The regulatory environment for beverages in India
The sale, manufacture, distribution, and advertising of food products in India are regulated by the Food Safety and Standards Authority of India (FSSAI), which is an autonomous body established under the Ministry of Health and Family Welfare. The FSSAI is responsible for formulating and enforcing food safety standards and regulations in India.
In order to do business in the Indian food and beverage industry, enterprises must obtain a license from the FSSAI. Licensees are required to comply with the Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011. These regulations spell out the specific licensing requirements for different categories of food businesses, as well as the requirements for registration.
Basic registration and a license are the two types of licenses that can be obtained from the FSSAI. Basic registration is required for food businesses that have a turnover of less than INR 12 lakhs per year. A license is required for all other food businesses, and there are four different types of licenses that can be obtained, depending on the type and scale of business:
- A central license;
- A state license;
- A district license; or
- An artesian license.
In order to obtain a license, applicants must submit an application to the FSSAI along with certain supporting documents, such as proof of identity, proof of address and age, photographs of premises, a permit from local authorities (if applicable), details of premises (address & size), a list of products manufactured or traded, a list of food categories handled or traded, etc.
Once the application is submitted, an inspection will be conducted by an officer from the FSSAI in order to verify compliance with food safety standards. A license will be issued if the applicant is found to be in compliance with all relevant regulations. The fees for obtaining a license vary depending on the type and scale of the business. However, they are typically between INR 2000 and INR 5000 per year.
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Setting up a beverage business in India
Setting up a beverage business in India can be a very lucrative and rewarding endeavor. There are many different types of beverages that are popular in India, and there is a growing demand for new and innovative products. If you are looking to start a beverage company in India, there are a few things you will need to do in order to be successful.
- Choose your niche: The first step is to choose the type of beverage you would like to produce. There are many different options available, so it is important to select a niche that you are passionate about and that you feel has potential in the Indian market.
- Research the market: Once you have chosen your niche, it is important to research the Indian market in order to understand the needs and wants of your target consumers. This will help you create a product that meets the demands of the market and that has a good chance of being successful.
- Create a business plan: A detailed business plan is essential for any new business, and this is especially true for a beverage business in India. Your business plan should include an analysis of the Indian beverage market, your target consumers, your marketing strategy, your production process, your financial projections, and anything else that is relevant to your business.
- Find funding: Unless you have a substantial amount of personal savings or investment capital, you will likely need to find external funding for your new business. There are many different options available for funding a business in India, including bank loans, venture capitalists, angel investors, and government grants.
- Obtain licenses and permits: Before you can start operating your beverage business in India, you will need to obtain all of the necessary licenses and permits from the relevant authorities. This can be a complex process, so it is important to ensure that you are familiar with all of the requirements before starting your application process.
- Set up production: Once you have all of the necessary licenses and permits in place, you can start setting up your production facilities. It is important to choose a location for your factory or production facility that is accessible to raw material suppliers and that has good infrastructure so that finished products can be easily transported to distributors or retailers.
The manufacturing process for beverages in India
To set up a manufacturing unit for beverages in India, one must follow these steps:
Obtain a license from the FSSAI by filling up an application form available on their website. The documents required along with the application are as follows:
- A detailed project report
- A blueprint or layout plan of the manufacturing unit
- A No Objection Certificate from the local authorities
- A registration certificate from the FSSAI
- After the above formalities are completed, one must obtain a trade license from the municipality or local body in which the manufacturing unit is going to be set up.
- The next step is to get registration done for a firm/company under the MSMED Act 2006 if the investment in plant and machinery is more than Rs. 10 lakh or if it is a manufacturing company.
- In order to start production, one also needs to get environmental clearance from the state pollution board and food safety and standards clearance from FSSAI.
- After obtaining all the necessary approvals, permits, and registrations, one can start manufacturing processes for various types of beverages like soft drinks, sports drink, seasonal drink, indian cold drink, etc., by following the laid down procedures and guidelines.
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Marketing and selling beverages in India
In India, marketing and selling beverages can be a challenge due to the country’s diverse culture and population. However, there are some tips that can help you successfully market and sell your products in India:
- Establish strong brand identity and make sure your brand is unique and easily recognizable.
- Research the Indian market. Understand the preferences of the Indian consumer and tailor your products and marketing messages accordingly.
- Use traditional marketing channels Print, television, social media, and radio are still popular marketing channels in India.
- Use social media platforms like Facebook, Twitter, WhatsApp, and Instagram to reach a wider audience. Paid advertising on these platforms can be very effective in promoting your products.
The challenges of running a beverage business in India
The Indian beverage market is a challenging one, with a number of factors working against businesses in the space. These include the country’s hot climate, which decreases demand for some types of drinks, and the popularity of roadside vendor drinks, which are often cheaper than those sold in stores. In addition, many people in India do not have access to clean drinking water, which further reduces the demand for packaged drinks.
Despite these challenges, there are a number of promising opportunities for those looking to start a beverage company in India. The country’s large population and growing middle class provide a large potential market for businesses that can tap into emerging trends such as health consciousness and wanting to drink natural or organic beverages. In addition, the Indian government is supportive of the beverage industry and has provided tax breaks and other incentives to encourage investment.
If you’re thinking of starting a beverage business in India, it’s important to be aware of the challenges you’ll face and to have a solid plan for how you will overcome them. With careful planning and execution, your business can be successful in this high-potential market.
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FAQs on starting a beverage business in India
Are you planning to start a beverage business in India? Here are some frequently asked questions that can help you get started:
What are the most popular beverages in India?
What are the necessary licenses and permits required to start a beverage business in India?
What are the taxes applicable to beverage businesses in India?
What are the packaging and labeling requirements for beverages in India?
How do I decide on pricing?
How do I find investors?
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In India, the process of starting a beverage business can be daunting, but with the right strategy and partners, it can be an incredibly rewarding experience. When looking for potential business locations, keep in mind that the Indian market is ripe for growth in the beverage industry. With a large population and a rapidly growing middle class, India presents a unique opportunity for beverage companies looking to expand their operations.
To succeed in the Indian market, it is important to partner with experienced and reputable local players who can provide insights into the complexities of doing business in India. Additionally, establishing a presence in key cities across India will allow your company to tap into the country’s vast potential customer base. By following the above steps, and tips, you can position your company for success as you enter the Indian beverage market.