What are Non-alcoholic Beverages? 

The beverages are generally categorized into Alcoholic Beverages and Non-Alcoholic Beverages. Non-Alcoholic Beverages constitute drinks that are either completely alcohol-free or those containing less than 0.5% alcohol by volume (Abv). Non-Alcoholic Beverages are further classified into Carbonated Beverages and Non-Carbonated Beverages. Out of these two, the Non-Carbonated Beverages market is growing at a faster pace and is more popular among consumers as a result of changing consumption patterns and a shift towards a healthy lifestyle. Non-Alcoholic Beverages constitute various types of drinks like:

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Why start a non-alcoholic beverages manufacturing company?

There is a shift in the consumption pattern of the Indian consumer base from home-prepared food and beverages towards packaged food and beverages. The rising tourism industry is also playing a major role in pushing the beverages industry towards huge profits. The Non-Alcoholic Beverage market’s profit margins are very much higher than any other beverage area.

Industry and Market

There is a rise in the consumption of non-alcoholic beverages in the country due to consumers' changing preferences, coupled with innovations in product packaging and sizing to improve affordability. The non-alcoholic beverages market in India was valued at INR 336.50 billion in FY 2020, in terms of revenue. It is expected to reach INR 1,131.52 billion by FY 2027, widening at a compound annual growth rate (CAGR) of ~18.69% during the forecast period. 

In FY 2020 the carbonated beverages market segment was valued at INR 134.60 billion and is expected to reach a value of INR 349.64 billion by FY 2027, widening at a CAGR of ~15.12% during the FY 2022-FY 2027 period. The non-carbonated beverages section of the non-alcoholic beverages in India was valued at INR 153.33 billion in FY 2020. It is expected to reach INR 781.88 billion by FY 2027, widening at a CAGR of ~20.52% during the FY 2022-FY 2027 period.

The second wave of COVID-19, was responsible for a steep rise in the sale of non-carbonated beverages, especially in segments such as packaged drinking water, primarily because of improved health awareness. The disruptions in supply chains of popular brands during the nationwide lockdown paved the way for regional players to increase their shares in local markets through having small supply channels, and direct-to-trade incentives marketing.

Benefits of Starting

The Non-Alcoholic Beverage comes under processed food. The government through MoFPI is encouraging investments in the industry. It has approved proposals for joint ventures (JV), foreign collaborations, industrial licenses, and 100% export-oriented units. As per the data given by the Department of Industrial Policies and Promotion (DIPP), the food processing sector has received approximately USD 393.41 million worth of FDI in 2020-21. From April 2000 till November 2021, FDI WORTH USD 10.88 billion was received by the food processing sector. The CII has estimated that the food processing sectors have the potential to attract more than US$ 33 billion of investment over the next 10 years. 

Under the automatic route, 100% FDI is permitted in the food processing industries in India. As per 2020-21, data India is exporting Ready to Eat (RTE), Ready to Cook (RTC), and Ready to Serve (RTS) food products to U.S.A, U.A.E, Nepal, Canada, and Sri Lanka, which were more than $ 2 Billion in 2020-21.

The government has approved the Central Sector Scheme – Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) to support food manufacturing and Indian food product brands in the international market with an outlay of Rs. 10900 crore. 

Government Incentive Schemes

Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)

The implementation period of this scheme will be from 2021-22 to 2026-27.

This scheme has two components. 

The first component is associated with incentivizing manufacturing of four major food product segments viz. Ready to Eat/ Ready to Cook (RTE/ RTC) foods including Millets-based products, Processed Fruits & Vegetables, Marine Products, Mozzarella Cheese.

The second component is associated with supporting branding and marketing abroad to incentivize the emergence of strong Indian brands.   

PMKSY:

Several schemes will be implemented under PMKSY. These are as follows: 

• Mega Food Parks
• Integrated cold chain and value addition infrastructure
• Creation/Expansion of Food Processing/ Preservation capacities 
• Infrastructure for Agro-processing Clusters
• Creation of Backward and Forward linkages
• Food safety and quality assurance infrastructure
• Human resources and institutions
• Operations Green

How to Start The Non-Alcoholic Beverages Manufacturing Business?

Land

It is the choice of the project proponent to decide the size and scale of his industry. As per the resources available the industry could be small, medium, or large-sized.  The land area required for the industry would depend upon the market size and share of the industry. The land area may range from 0.5 acres to 50 acres. The land area and location should be finalized considering the availability of raw materials, manpower, transportation facilities, ease of doing business, etc. In some states, the government provides tax exemption and subsidies on establishing businesses in specific locations. 

Building and Construction

The building should be designed considering the requirements of the business. The Architect should prepare the building plan taking into consideration the machinery required and the processes that are to be carried out in the plant. The safety measures as mandated by different rules and regulations should be in place. The average construction cost comes around Rs. 2000-4000 per square feet.

Financial

Finances and financial compliances are some of the most important requirements for running a business smoothly. There are a few mandatory tax registrations. 

• Income Tax:- Every business is mandated to have a PAN (Permanent Account Number) and TAN (Tax Account Number), under the name of the business or the owner, in case of a sole-proprietorship, for filing income tax.
• GST Registration:- GST registration is mandatory for businesses having a financial turnover of more than Rs. 20 Lakhs (Rs. 10 Lakhs for special category states). In some cases GST Registration is mandatory irrespective of the turnover:

1. The business involving inter-state supply of goods and services
2. The situation where the tax is paid by the person receiving the goods/services instead of the supplier.
3. A business operating on an e-commerce platform.

• Professional Tax:- This is levied by the local municipality on the salary paid to every individual. The tax rate is different in different States.

Legal and Statutory

Registration of the business entity: You are free to decide on whatever business structure you want to choose for your company. The business structure that you choose should be suitable for your conditions. The different structures to choose from are as follows-

• Private Limited Company

It’s the renowned legal structure for the business with multiple benefits such as limited liability, separate legal entity, ease in share transfer, etc. A private limited company can be registered with a minimum of 2 directors and 2 shareholders, where shareholders and directors can be the same person. At maximum, the directors can be 15 and the members can be 200. 

• One Person Company

The biggest advantage of OPC is – that there can be only one member as the sole owner who will be responsible for all the economic and organizational decisions. It is mostly preferred for micro-businesses.

• Limited Liabilities Partnership

It is an upgraded version of the general partnership and the partners are known as Designated Partners. The partners in LLP have limited liability, meaning that the personal assets of the partners can’t be used for paying the debts of the company. All partners are shielded from joint liability. For professional firms, micro and small businesses that are family-owned or closely-held LLPs are the most recommended.

• Proprietorship

A sole proprietorship is a kind of business entity that is solely owned, controlled, and managed by a single person. It is the easiest way of running a business, with the ease of registration process and with lease compliance responsibilities. The proprietor possesses the complete rights of the business to himself in terms of legal formalities, decision making, finance, etc.

• Partnership

A partnership comes into the picture when two or more people agree to go into business together and both might be from the same family or same association, whether or not they have a written contract. Validating the details in a partnership agreement that specifies each partner’s rights, responsibilities, and share of the profits is mandatory.

Licenses and Registration

1. Food License

Any FBO (Food Business Owner) who is planning to start a business that involves activities related to beverages or food (processing, manufacturing, re-labelers, repackers, retailers, distributors, suppliers, caterers, etc.) need to register itself or get a license from FSSAI depending upon the annual turnover. 

• FSSAI

FSSAI stands for Food Safety and Standards Authority of India which was established under the Food Safety and Standards Act, 2006. It comes under the Ministry of Health & Family Welfare. FSSAI regulates and checks for safe food manufacture, storage, and handling practices of FBOs. FSSAI is responsible to check for compliance and see if FBOs are following the regulations and standards mentioned under the Food Safety and Standards Act, 2006. 

• What is FSSAI License?

Any FBO requires an FSSAI Registration or an FSSAI License depending upon annual turnover, installed capacity, area of operations, branches, etc. FSSAI License is a 14 digit license number issued to FBOs compliant with the rules and regulations laid down under Food Safety and Standards Act, 2006. The FSSAI License number should be printed on the products with the FSSAI Logo. 

Three types of FSSAI License

• FSSAI Basic Registration

Small start-ups and businesses having an annual turnover under Rs. 12 Lakhs should seek FSSAI basic registration. Registration can be obtained from the state government by submitting the needed documents. Registration application should be applied through Form A.

• FSSAI State License

Mid-sized companies having an annual turnover of more than 12 Lakhs but less than 20 crores need to obtain FSSAI State License from the State Government. State License is to be applied through Form B.

• FSSAI Central License

Large businesses having an annual turnover of more than 20 Crores need to obtain FSSAI Central License from the Central Government. The Central License is to be applied through Form B.

Documents for FSSAI Basic Registration (Also required for State and Central)

• Duly-Filled Form A signed by all directors/partners/proprietor/ Executive members of the society [Form B for State and Central License]
• On the letterhead of the company, Food Safety Management System (FSMS) declaration should be done
• Annual Turnover of the Food Business Operator (FBO) determined by Proof of Income
• The person appointed by the firm/company nominated in Form IX
• Self-Declaration by Director
• Affidavit on Non-Judicial Stamp Paper

Additional Documents for State License

• Location’s Blueprint or layout 
• A list specifying the Equipment and Machinery installed or to be installed at the location
• Copy of the license and NOC from manufacturers
• Authority letter specifying the name and address of the responsible person

Documents for Central License

• An Analysis report of water from a certified and/or a government health laboratory
• IEC issued by the Directorate General of Foreign Trade
• For units involved in the manufacturing of mineral or carbonated water, a pesticide residue report of water
• Source of Milk
• Proof of Annual turnover, if required
• Meat provider/ Meat processing units
• Certificates issued by the Ministry of Tourism, if applicable
• Vehicles turnover proof, if applicable
• Articles of Association (AoA) and Memorandum of Association (MOA)

2. Pollution Clearance

Since the non-alcoholic beverages manufacturing industry is considered a polluting industry as per CPCB as well as SPCBs, Pollution clearance (Consent to Establish/Consent to Operate) is required from the respective SPCB. Depending on the type and scale of the business operation a category-specific license is required. The Non-Alcoholic Beverages Industry falls in the orange category.

CTE should be obtained before establishing the business and CTO is required before the beginning of the operations. CTE is a one-time NOC whereas CTO requires renewal from time to time.

3. Shops and Establishment Registration

As per the Shops and Establishment act, 1953, an FBO is mandated to get a trade license by registering the business with the local authority. The FBO should send an application along with the required fee and details of the business to the concerned local municipality or health department. An inspector will visit the premises for inspection. After the complete inspection and verification of the documents, the license is issued to the FBO.

4. Fire Department NOC

A NOC from the concerned fire department is required as well before starting the business. The FBO should apply through an application accompanying necessary documents like- building plans, building model, and certificate from the architect. A questionnaire related to compliance with fire safety rules and regulations shall also be filled out by the FBO. An inspection of the premises will be carried out by the fire department officials after the verification of the documents. 

5. Trademark Registration

Trademark registration is not mandatory but it is an added advantage for any business for faster growth and building a brand image in the market. The FBO can get a trademark registration by registering over the Intellectual Property India Portal with necessary documents and fees.

6. Water testing and an Organic testing Certificate

Water is the most necessary ingredient for preparing any beverage. The water being used by the FBO for manufacturing beverages should be of the best quality. A water testing certificate should be obtained from a certified agency to comply with the underlying permissible limits.

7. Import and Export Code (IE Code)

Any business that is importing goods is required to obtain IE Code. IE Code application should be submitted to the Directorate General of Foreign Trade (DGFT) along with necessary documents and fees. The IE Code registration is a one-time requirement and it has no additional compliances or annual filings. 

8. Drug and Pharmaceutical License

It is mandatory for the FBO to obtain a license from the Food and Drug Department in case the drinks include caffeine. The limit of caffeine should be mentioned.

Machinery

The process of beverage processing involves different pieces of machinery. 

• Production line: This line includes equipment for:-

1. Receiving, storing, and distributing crystal sugar
2. Reception, storage, and distribution of liquid sugar
3. Continuous and discontinuous sugar dissolving equipment
4. Dissolving and dosing concentrates, components, and simple syrup 
5. Making final syrups and ready-made drinks

• Beverage Filling and packaging lines: This line of equipment includes:-

1. Belt conveyors
2. Air transporters
3. Articulated conveyors

• Pasteurization stations
• Beverage mixers: These mixers are for deaeration and carbonization of water and dosing of syrups and carbonated beverages.
• Energy equipment inside beverage bottling plants: This line of equipment includes:

1. Piping
2. Hot water and steam system
3. High and low-pressure air systems
4. Cooling systems

• Cooling, Heating, and ventilation systems: This includes production and storage facilities. 

Raw Material

The raw material is procured from the producers to make finished goods. The raw material required depends upon the type of beverage being manufactured in the industry. The raw materials being used in the manufacturing process should be of the best quality. 

The government developed the “Nivesh Bandhu” Investor Portal. The trade section of this portal allows the food processors to procure raw materials. 

The food producers can procure raw materials from FPOs (Farmer Producer Organization) as well.

Staff

To handle the operations and functioning of the business, manpower is required. The staff of the industry constitutes of people having different job roles according to their experiences and capabilities. The basic teams required are- Management, Human Resources, Operations, Quality, Sales, and Labor. 

The people employed in any business are subjected to different labor law regulations and registrations:

• Employee State Insurance registration

The businesses having more than 10 employees earning less than Rs. 21,000 per month must do ESI registration. 

• Employees Provident Fund registration

The businesses having more than 20 employees must obtain EPF registration. The employees earning less than Rs. 15,000 per month are mandated to be covered under EPF.

Manufacturing /Service Flow

A general manufacturing flow for non-alcoholic beverage

Manufacturing flow for soft drink

Conclusion

The non-alcoholic beverage industry offers great opportunities to the new manufacturers as the consumer preference is shifting from alcoholic beverages to non-alcoholic beverages. Because of the prevailing pandemic and increasing lifestyle diseases people are choosing healthy drinks over alcoholic and carbonated drinks. This is an amazing opportunity for new entrepreneurs to know this industry and start investing in it. The big names in the market have suffered after the pandemic which has opened the gates for the domestic manufacturers to make a place for themselves in the market. India due to its gigantic population of 1.3 billion, a large percentage of young population, and increasing demand extend a great opportunity to this industry. 

Why Corpseed?

Corpseed is the one-stop solution for setting up a new industry in India. We facilitate end-to-end solutions starting from company registration to quality management certificates. Our team of Industry veterans catering the in-depth knowledge of this industrial sector provides the best in class consultation to overcome all the compliance burdens and provide hassle-free delivery.

We at Corpseed have a team having extensive knowledge relating to various horizons of Environmental Laws and Regulations. We perform desk-based research, documentation, and coordination to help the clients in establishing their businesses. 

Our specialists have the technical knowledge and industry-specific experience to understand the challenges that this sector confronts, as well as extensive experience working with important government agencies. Our expertise in liaisoning with government officials helps us to represent our clients whenever required.