The regulator challenges the category’s definition
India's food safety regulator, the Food Safety and Standards Authority of India (FSSAI), has ordered makers of high-caffeine beverages sold as “energy drinks” to stop using the descriptor, saying there are no Indian standards for the category. The regulator has given companies 90 days to comply and has also raised concerns that certain on-pack claims amount to false advertising.1
Third Bridge has been covering the Indian beverage market for many years, interviewing experts including senior brand managers with experience in India’s energy drinks market, former senior executives at leading beverage companies, and senior commercial leaders with first-hand experience of India’s beverage sector. Here are some of the key observations from our experts on the latest developments in the industry after the regulatory crackdown.
Nobody saw it coming
Everybody was taken by surprise, according to a brand manager with close to a decade in Indian beverages, speaking to Third Bridge. Had there been any signal, leading brands would most likely have had preventive action or inventory controls in place.
One of the key reasons this notice was so surprising is that similar advertising messaging about the energising effects of energy drinks has passed regulatory approvals before. In 2024, Thums Up Charged, a sub-brand of India's leading soft drink, ran a national advertising campaign built on the line "Mind Charged, Body Charged", which was cleared by the advertising bodies, legal reviewers and the regulator at the time, according to a Third Bridge expert.
Prior to the national notice, regulatory attention on energy drinks had also emerged at the state level around the same time, although this gave little indication of the broader action to come. Several state governments have moved to restrict the sale of energy drinks within a certain distance of schools, with Maharashtra most recently imposing a 500-metre restriction around schools.2
While the exact reason for the crackdown is not yet known, the first probable driver according to our expert is health. Citing a possible increase in consumption of energy drinks, particularly among children under the age of 15, alongside concerns. Other countries have also recently taken action on healthcare grounds, with Britain and Spain among those announcing restrictions this year on energy drink sales to under-16s, according to public reporting.3,4 The second factor likely to be influencing this decision is that the market has simply become too large to ignore. The category at stake has grown more than tenfold in eight years, from roughly INR 600 crore in 2018 to close to INR 10,000 crore in 2026, or around 8 to 9% of the total beverage industry, according to Third Bridge experts' estimates.
A wait-and-watch approach
What remains unclear is a common understanding of the implications of what the regulator means by not recognising energy drinks as a category, according to our expert. The industry is left with no clear guidelines from the FSSAI on the future of energy drink classification.
Currently, experts are aligned in thinking that the notice will probably not hurt long-term sales, however, they are split on whether or not it will be rolled back.
"Based on the current information, the FSSAI notice seems to be more of a regulatory clarification than a structural challenge for the category. Industry representations are likely to address the concerns, and a pragmatic resolution or rollback seems probable within a short period, minimising any long-term business impact."—— a former senior executive at a leading Indian bottler, 2026/07/05 Indian Non-alcoholic Beverage Industry – Pepsi, Coca-Cola & Varun Beverages
“The FSSAI notice may require a change in marketing and labelling strategy, replacing the term 'energy drink' with 'caffeinated drink'. This may necessitate alterations to promotional messaging, though it will not have a material impact on sales.”—— a former CFO at a leading Indian bottler, 2026/07/05 Indian Non-alcoholic Beverage Industry – Pepsi, Coca-Cola & Varun Beverages
Whereas not recognising “energy drinks” as a category has caused much confusion, the claims issue appears to be more straightforward. The regulator's primary concern seems to be that energy drink packs attribute a functional benefit, such as improved focus, performance or vitality, directly to a caffeinated beverage, without proof to support it. As an example, Red Bull's own pack line, "vitalizes mind and body", may fall into this category, as does Adrenaline Rush's "ultimate focus" and "ultimate performance" positioning.
If claims are required to be removed or revised, it is likely that even more importance will be placed on brand names, with producers relying more heavily than ever on the marketing weight they carry. For example, Sting's messaging is "Energy Ka King Sting," means Sting is the king of energy, which does not associate itself with any functional claims. Monster is active in social media, but does not advertise much in other outlets. For brands with strong brand recall, consumers will be looking for specific brand names and not broad category search, thus manufacturers needing to strip non-compliant claims from the packaging only, rather than reworking the entire branding.
For now, brands have some breathing time, Third Bridge experts say. India’s peak beverage-selling season runs from April through mid-July, which an industry expert estimates accounts for nearly 55% of total beverage sales. With the summer season now largely over, brands have exited the peak selling season. The second peak comes during the festive season starting in October, leaving some time to take corrective action.
Not every brand is exposed the same way
Smaller brands may be able to take advantage of the regulatory disruption. Smaller and emerging players have the advantage of being more nimble-footed and agile as new entrants, making it easier for them to steer and find white space that Sting and Red Bull have left. A separate factor plays to smaller brands' advantage too. Another expert, speaking to Third Bridge, said no single player had locked up the Indian energy drinks category yet.
For the larger players, a broader portfolio offers some cover in the short term. Where energy drinks fall away, companies are looking to juices, water, and carbonated beverages to make up the shortfall, realigning the salience across their portfolio so that overall earnings hold up while the category works through the disruption.
That balancing act is not straightforward for every player, however. A beverages expert speaking to Third Bridge, described the opposite dynamic at Reliance, whose beverage portfolio includes Campa Energy and RasKik. The energy drink line was the stronger performer and was being used to push the slower-moving juice business, rather than the other way round. If the strong leg in a company's portfolio is the energy drink itself, leaning on other categories to offset an energy drink slowdown will be a harder trade to make.
"[The bundling of energy with juice] has happened because their energy is doing very well actually... If you want to buy 1,000 cases of energy [Campa Cola], you will have to take 200 cases of juices [Raskik], which is not the right strategy to push a product in the market,"—— a veteran of the Indian beverages industry, 2026/03/20 Indian Beverages – Juice Sector Performance & New Market Entrants
The cost is landing in the channel, not on demand
FSSAI officials have been picking up stock from the market for audit purposes, and distributors are not really sure what is happening to that stock or whether they will be compensated for the loss. Because of social media, visuals of these audits have been propagated far and wide, resulting in some fear among distributors.
Distributors are hoping brands will cover the value of any stock seized in these audits. That, however, looks unlikely to happen. "There is no way any beverage manufacturer can give an undertaking to a distributor or retailer saying we will make up for the losses you have, because there is no way to audit what is happening," one expert said.
As a result, distributors have cut energy drink replenishment by about 25 to 30%, keeping only bare minimum stock, Third Bridge was told. They cannot exit the category because market demand is still there, so they are holding just enough to stay afloat and avoid losing the consumer.
Instead of compensating for stock seized by the government, brands are paying discounts to keep the channel turning.
" On an average, under normal situations, a distributor earns about 5 to 7% in margin. A retailer earns anywhere between 18% to 22%. In special cases, this discount margin can go up about 3 to 5%. In times like these, even if the brand does not sell at a positive CM or is barely breaking even, it is a temporary situation and the brands are okay to do that. " —— A brand manager with close to a decade in Indian beverages, 2026/07/29 Indian Energy Drinks – FSSAI Crackdown, Brand Reactions & Impact on Trade
Not a demand problem
The more welcome news for suppliers is that demand itself has not moved.
While there is a reported dip in sales amongst the regulatory confusion, consumers are continuing to buy products, Third Bridge experts reiterate. Regulatory uncertainty and the need to change labelling and marketing could temporarily disrupt how products are manufactured, stocked and sold. However, experts don’t think that there will be major changes in repeat consumption or in acquiring new consumers, even if reported sales soften during the transition.
The affordable end of the category, where most of the Indian energy drink market sits, is largely unaffected, with core consumers there still willing to look past any adverse health messaging. At the premium end, Red Bull's own consumer base is also largely unmoved. There has been no reduction in energy drink inventory in modern trade stores, and no fall-off in consumption in bars, according to the same expert.
What remains unresolved, however, is not demand or even packaging. It is what the regulator means by refusing to recognise the category at all, a question the industry has yet to get an answer to.
Relevant transcripts
1. 2026/07/29 Indian Energy Drinks – FSSAI Crackdown, Brand Reactions & Impact on Trade
2. 2026/07/05 Indian Non-alcoholic Beverage Industry – Pepsi, Coca-Cola & Varun Beverages
3. 2026/03/20 Indian Beverages – Juice Sector Performance & New Market Entrants
References
All insights in this article are based on information provided by Third Bridge experts.
For media enquiries, please contact: comms@thirdbridge.com
