After a muted performance last fiscal, soft drink bottlers are expected to see revenue growth rebound to their long-term average of around 15% in FY27, supported by an intense summer season and deeper penetration into untapped markets, according to a report by Crisil Ratings. 

Summer months account for nearly 40% of annual sales, and forecasts of above-normal temperatures, along with the likelihood of El Niño conditions, are expected to boost consumption. 

Volume growth to drive recovery 

The analysis, based on 13 bottlers across the non-alcoholic beverage segment—including carbonated drinks (~70%), juices (~12%), and packaged water (~18%)—points to a strong rebound in volumes this fiscal. 

“Players have expanded bottling capacities by 30–35% over the past two fiscals while strengthening distribution and cold chain infrastructure. This will support healthy double-digit volume growth,” said Shounak Chakravarty. 

He added that a combination of higher volumes and modest price hikes of 2–4% will help companies return to their long-term growth trajectory. 

Competition intensifies 

The sector is also witnessing rising competition, with new entrants gaining traction through innovative local flavours and targeting impulse purchases with low-price offerings such as ₹10 and ₹20 packs. 

As a result, the market share of new players has increased to an estimated 6–7% last fiscal, up from around 2% in FY24. 

Margin pressure from costs 

Despite strong demand, profitability is expected to come under pressure due to rising competition and higher input costs. A surge in crude oil prices amid geopolitical tensions has pushed up packaging costs, which account for 20–22% of total expenses. 

“Reduced pricing flexibility and higher packaging costs will moderate profitability this fiscal,” said Rucha Narkar. 

However, marginal price increases and a growing focus on zero-sugar variants are expected to limit the impact to 200–250 basis points, with operating margins remaining relatively healthy at 15–16%. 

Bottlers with a pan-India presence are likely to fare better due to stronger pricing power and economies of scale, enabling them to partially offset cost pressures through better supplier and distributor negotiations. 

Capex to remain elevated 

Healthy cash flows are expected to support continued investments in capacity expansion, distribution networks and visi-coolers at retail outlets, although overall capex intensity may moderate compared to last fiscal. 

Financial metrics are also likely to improve, with aggregate debt-to-EBITDA ratios projected at 0.9–1.0 times and interest coverage ratios at 10–11 times in FY27, compared with 1.1 times and 9 times, respectively, last fiscal. 

While demand outlook remains strong, the report cautioned that sustained high crude prices and adverse weather patterns could pose risks going forward.