Plastic straw ban may disrupt soft drink industry in short-term

This will particularly hit sales of small packs of soft drinks.

The ban on plastic straws in India could have a short-term impact on the soft drink industry, particularly the sales of small packs of soft drinks, GlobalData reported.

Margins on small packs in India are low as it sells for $0.13-0.38. Despite this, small packs with sizes ranging from 100ml to 330ml contributed 35.1% of the overall soft drinks volume in 2021. 

“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,” Bobby Verghese, Consumer Analyst at GlobalData, said. 

“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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This has led companies, such as Parle Agro, Amul, and Dabur, to develop in-house capacity for paper straws. The Indian Paper Manufacturers Association has also affirmed they can produce paper straws for the 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,” Verghese said. 

“The onus is therefore on the industry to adopt sustainable packaging and take accountability for the packaging waste.”

Verghese noted that in the long run, this could help companies gain consumer goodwill, which is an important factor amongst 56% of Indian shoppers.