Plastic straw ban will have disruptive, albeit short-term impact on India soft drinks industry, says GlobalData.
India is all set to ban the production, import, stocking, distribution, sales, and use of an array of single-use plastic products including straws from 1 July 2022, says Global Data.
Against this backdrop, the ban on plastic straws will temporarily disrupt the sales of small packs of soft drinks, which are popular among the Indian masses.
An analysis of GlobalData’s Market Analyzers reveals that the margins on small packs in India are low as they typically retail at INR 10–INR 30 (US$0.13 – US$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.
“Plastic straws are a part and parcel of the consumption experience of small cartons and pouches packs,” says consumer analyst Bobby Verghese.
“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.”
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.
“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,” adds Verghese.
“The onus is therefore on the industry to adopt sustainable packaging and take accountability for the packaging waste.”