Negative publicity has contributed to a second successive year of declining CSD sales in India, according to recent research.

A report by beverage industry analysts Canadean, released yesterday (8 August) has shown that CSD sales in the country declined again in 2006. The uptake of iced and RTD teas, sports drinks and soy drinks, meanwhile, has been slower than in other countries due to a cautious approach to new products and flavours.

Stepping into this breach has been the cheaper still drinks sector, the report noted, with substantial economic growth in India being offset by the continually low level of spending power of the nation's consumers. Taking the loose sales sector into account, still drinks replaced CSDs as the leading category last year, Canadean said.

"In recent years, CSDs have borne the brunt of widespread negative publicity stemming from fears about alleged pesticide contamination," the analyst said. "In some provinces, CSDs have been boycotted or banned altogether. In the face of such pressure, CSDs have actually been remarkably resilient, indicating that the decline has been allegation- rather than product-led."

Demand for still drinks has been further buoyed by the introduction of new larger 1.2 litre PET formats. Frooti, a brand that previously enjoyed strong sales with 20cl cartons, has broadened its appeal with a new 6.5cl carton and a range of PET packs up to 200cl. So far, these have proven popular with volumes more than two and a half times those for 2002.

Turning to specific categories, Canadean has forecast that nectars are expected to grow by more than 12% in 2007, while the growth of bottled and bulk/HOD water has been driven by the big increase in new office blocks where bulk water dispensers are often provided as part of the package.

Loose sales- often hawked by street vendors - account for high annual volumes of unbranded, unpackaged drinks and provides consumers with a convenient and cost-effective point of purchase. This channel offers alternatives to the branded products which have a much more 'global' character. In the Still category alone, sales of loose fresh lime juice, coconut water, sugar cane juice and other flavours equate to around 2,000m litres.

In summary, Canadean said, India's tropical weather, well-established distribution and retail channels and growing consumer affluence provide the perfect platform for soft drinks companies. India also represents a huge but complex market with a common currency and free inter-state movement. Overall consumption, therefore, is expected to rise by a little under 5% this year.