A study on beverage consumption trends in India, juxtaposition and

implementation through various statistical techniques

Submission by
Ananthu Ravi 20160123014
Amaresh Mohapatra 20160123012
Angad Singh Bhullar 20160123015
Rohan Desai - 20160123062

Introduction:
This study attempts at understanding the dynamic relationship between soft drink
consumption, national income and prices in the Indian context using techniques like
correlation, linear regression, multivariate analysis and two tailed T test. The category soft
drinks include: Carbonates, Fruit / Vegetable Juices, Bottled Water, Functional Drinks,
Concentrates, RTD Tea and Coffee and Sports Drinks. For soft drinks unseasonal rainfall
affects sales across the country. Generally, as winter ends and temperatures begin to rise,
beverages especially carbonates, record strong growth. In a growing economy like India and
with aggressive marketing campaigns, the soft drink consumption is only set to grow robustly
in the future.

Objectives:
1) To analyze the trend of soft drink consumption in India and evaluate it in light of
descriptive numerical techniques in order to have a more holistic understanding about the
same.
2) To study the relation between national income and soft drink consumption in terms of
correlation in order to understand the direction of movement of their relation.
3) To critically look at the relationship between prices, consumption and national income in
order to determine a multivariate linear relationship amongst them with the help of regression
in order to provide a basic framework for analyzing the same.
4) To test the hypothesis of their being a significance in difference of the mean consumption
of soft drinks pre 2010 and post 2010 with the help of T test, in order to understand the
structural difference in consumption (if any) and provide an explanation for the same.

Research Methodology:
In order to achieve the objectives highlighted above, secondary data was collected through
the approved data sources - including but not limited to EuroMonitor International. Reports
were collected from compiled sources from trade associations, trade press, company research,
trade interviews, trade sources. Efforts were made to collect data relevant to the timeline that
was being examined yet be comprehensive for the purposes of the objectives specified.
The data sets considered were as follows1.
2.
3.
4.

Soft Drink Consumption data (2001 to 2015)

GDP measured at PPP (2001 to 2015)
GDP measured at CP
Average Prices (2001 to 2015)

Microsoft Excel provided the statistical support for the purposes of analysis and inference. As
such a heavy literature review was not included in the interests of brevity and focus was fixed
on the statistical analysis as well as the inferences derived from them.

Statistical Analysis:
1. The first Objective of the analysis of soft drink consumption in India was carried out by
analysing the collected data set of soft drink consumption (2001 to 2015), Average Prices of
Soft Drinks (2001 to 2015), GDP of the country over the same period measured at current
price and subsequent GDP measured at purchasing power parity and measures of central
tendency and corresponding measures of dispersion was calculated.
Consumption of Beverage
Summary Statistics
Mean
Standard Error
Median
Mode
Standard
Deviation
Sample Variance
Range
Minimum
Maximum
Sum
Count

3526.606667
568.356807
2503.3
#N/A
2201.236448
4845441.901
6948.7
1383.4
8332.1
52899.1
15

GDP PPP Summary Statistics

Mean
Standard Error
Median
Mode
Standard Deviation

3813.541171
335.1304987
3637.756094
#N/A
1297.95484

Sample Variance
Range
Minimum
Maximum
Sum
Count

1684686.767
3982.808817
2105.841013
6088.64983
57203.11757
15

Price of Beverage Summary

Statistics
Mean
Standard Error
Median
Mode
Standard
Deviation
Sample Variance
Range
Minimum
Maximum
Sum
Count

23.58
0.331691193
23.8
23.1
1.284634467
1.650285714
4.6
20.9
25.5
353.7
15

GDP Current Summary Statistics

Mean
Standard Error
Median
Mode
Standard
Deviation
Sample Variance
Range
Minimum
Maximum
Sum
Count

1052.348236
106.9949879
1050.024801
#N/A
414.3898061
171718.9114
1120.762713
460.8261999
1581.588913
15785.22354
15

2. The second mentioned objective was to find if there is a relation between the countrys
GDP i.e. national income of the nation with the soft drink consumption across the country
which would enable us to track its flow and the factors affecting the flow.
Correlation Figures GDP Current vs
Consumption

Correlation Figures GDP PPP vs

Consumption

Yea GDP
r
Current
20
460.83
01
20
480.62
02
20
557.90
03
20
640.60
04
20
729.00
05
20
816.73
06
20
1050.02
07
20
1022.58
08
20
1124.52
09
20
1387.88
10
20
1455.67
11
20
1444.27
12
20
1456.20
13
20
1576.82
14
20
1581.59
15
Correlatio
n
Coefficien
t

Yea
r
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5

Consumption
(million litres)
1383.40
1557.80
1749.90
1957.70
1913.80
2008.20
2204.20
2503.30
3033.00
3567.40
4315.00
5178.10
6099.20
7096.00
8332.10

0.879237183

GDP
PPP
2105.84

Consumption (million
litres)

2182.24

1557.80

2361.33

1749.90

2576.54

1957.70

2860.89

1913.80

3172.71

2008.20

3484.76

2204.20

3637.76

2503.30

3920.16

3033.00

4315.44

3567.40

4634.95

4315.00

4921.84

5178.10

5267.83

6099.20

5672.19

7096.00

6088.65

8332.10

Correlat
ion
Coeffici
ent

0.956788837

1383.40

3. The third statistical technique implemented to achieve the objective of testing the
hypothesis of there being a significance in the difference of the mean consumption of soft
drinks pre 2010 and post 2010 with the help of T test, in order to understand the difference in
consumption (if any) after the regulatory changes were implemented in 2010.
For the said test, sample 1 was picked for consumption patterns before 2010 and sample 2
consisted of consumption patterns after 2010.
Sample 1
5764.633333
3149929.923
6
0

Mean
Variance
Observations
Hypothesized Mean
Difference
Df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail and
t Critical two-tail

Sample 2
1898.6
49476.74
6

5
5.294275011
0.001603546
2.015048373
0.003207092
2.570581836

Since Tstat was found to be greater than t critical one-tail and t critical two-tail,
P(T<=t) one-tail and P(T<=t) two-tail are both less than the assumed value of alpha i.e. 0.05
and hence, the confidence interval can be considered 95%.

4. The fourth and final objective was to look at the relationship between prices, consumption
and national income or GDP of the nation to determine a multivariate linear relationship with
the help of regression in order to provide a basic framework for analysing the data and its
fluctuations with respect to each other.
Regression Statistics
Multiple R
0.9569510
39
R Square
0.9157552
9
Adjusted R
0.9017145
Square
05
Standard Error
690.09901
84
Observations
15

Regression Equation:
Consumption = -3564.83224331875 + 43.277*consumer price + 1.592*GDP PPP

Interpretation of Results:

Representation:
Interpretation: Year by year comparison of GDP PPP, GDP Current were done with the
consumption of soft drink. This was represented graphically. Clearly we can witness a rising
trend in both parameters with the year. This explains the strong correlation between these
variables as mentioned before.

Insights gained: The minimum value obtained for both values of GDP and Consumption of
soft drink were for the first year of analysis (2001). The maximum value obtained for both
values of GDP and consumption were 2015. So all of these values form a positive slope over
the years. The consumption pattern of soft drinks and GDP shows a growth pertaining to
economic growth and consumption growth of the country.
Correlation:
Interpretation: The correlation coefficient can range in value from 1 to +1. The larger the
absolute value of the coefficient, the stronger the relationship between the variables.
For the Pearson correlation, an absolute value of 1 indicates a perfect linear relationship. A
correlation close to 0 indicates no linear relationship between the variables. The correlation
value obtained between GDP Current and Consumption, GDP PPP and Consumption are
0.879 and 0.957. This shows that these variables are highly correlated. This means they are in
a near perfect linear relationship. Also important point to note is that they are positively
correlated.
Insights gained: Purchasing pattern of soft drink consumption is highly correlated to GDP
measures in the country in the time period and increases with growing income of the
population making it a product of highly elastic demand.
T-Test:
We tried to analyse whether the consumption patterns changed significantly when considering
to two distinct time periods. We took a random sample of 5 years pre 2010. We took sample

of 5 years on or after 2010. Our research showed that one of the most used and effective
statistical test for comparing means of two samples was T-test.
We conducted T-test of two samples assuming unequal variance.
The null hypothesis was given as follows:
Ho : There is no difference between means of consumption of two samples of data chosen.
The alternative hypothesis was given as follows:
Ha: There is a statistically significant difference between means of two samples taken.
n=6
Degree of freedom was 5 (n-1)
Confidence Interval was 95%. Hence alpha value equal to 0.05.
Interpretation: P values for both one tailed and two tailed tests were lesser than assumed
value of alpha
T stat obtained were greater than T critical value in both one tail and two tail tests.
Hence null hypothesis was rejected.
So there exists a statistically significant difference between mean of two samples taken
Insights gained: The consumption pattern of beverages has changed significantly post year
2009.

Regression:
Consumption of Beverages are hugely dependent on GDP values and price. We tried to
quantify this relationship through a simple linear regression equation. This equation could
also be used to predict the value of Consumption of soft drinks through these variables
chosen.
Independent variable: GDP PPP, Price per litre
Dependent variable: Consumption
A simple linear regression model was created so as to predict the consumption of soft drinks.
Interpretation: R squared value obtained for the model was 0.92. R square value is an
estimate of how good the regression line can fit into the available data. Here the value
obtained is 0.92 which shows the model predicts the data with high accuracy.
R-squared = Explained variation / Total variation

Significance F is less than 0.05 (assumed alpha value pertaining to 95% Confidence Interval)
which says that there is hardly any probability that output (line of best fit) is obtained by
random chance.
92% of the variation in Quantity Sold is explained by the independent variables GDP PPP
and price. The closer to 1, the better the regression line fits the data.
The final regression equation obtained was:
Consumption = -3564.83224331875 + 43.277*consumer price + 1.592*GDP PPP
Insights gained: The regression model had R square value of 92%. This proves this model is a
good fit. Clearly quantity of beverages consumed can be predicted with great accuracy by
using price of beverage and GDP of the country.

Conclusion:
We picked seemingly random and completely unrelated datasets of consumption of beverages
across the country, its price and the GDP for the same period and were successfully able to
implement different statistical techniques to not only get a measure of its central tendency
and dispersion rates accurately, we were able to check how the data is correlated with each
other and were able to prove that change in one of the values could potentially affect the
other.
This realization led us to push for regression analysis and we were able to quantify the
relation between these parameters through the aforementioned equation. This equation can
help us predict the future of any of the parameters (consumption, price, income) given that
we know the other state of the other factors.

Data Sources and References:

1. http://data.worldbank.org/
2. http://www.indiastat.com/
3. http://articles.economictimes.indiatimes.com/2012-09-21/news/34002413_1_big-colacoke-beverage-brands
4. http://www.euromonitor.com/soft-drinks-in-india/report
5. http://www.beverageinstitute.org/
6. http://www.businesstoday.in/magazine/cover-story/small-brands-gujarat-softdrinksosyo/story/184711.html
7. http://blog.euromonitor.com/2015/01/unlocking-the-potential-of-indias-nascent-energydrinks-market.html
8. Euromonitor International which sourced data from trade associations, trade press,
company research, trade interviews, trade sources