Parle Agro Sees Profit Fall 89% in FY24 Due To Sin Tax On Sugary Drinks

Parle Agro Pvt., the maker of Frooti and Appy Fizz, has reported an 89% decline in the net profit to Rs 17.3 crore for the financial year 2024, primarily impacted by the 40% sin tax levied on sweetened fizzy drinks.

"Appy Fizz, a rapidly growing challenger brand within our portfolio, encountered a drastic GST increase of four folds, from 12% to 40%," said Nadia Chauhan, joint managing director, Parle Agro. "This tax hike impacted our pricing strategy considerably, leading us to adjust serving sizes for consumers."

The company's consolidated revenue also dipped 12.3% to Rs 3,126.06 crore during the fiscal, according to its regulatory filing shared by business intelligence platform Tofler.

The sin tax on sweetened carbonated beverages was brought into force on July 1, 2017. The carbonated or aerated beverages, ranging from low-sugar, fruit-based and flavoured drinks to zero-sugar aerated water, are placed in the highest slab of 28% GST, along with a compensation cess of 12%, taking the total levy to 40% tax. This is irrespective of their sugar or fruit content.

In 2021, Parle Agro re-entered the dairy space with Smoodh flavoured milk priced at Rs 10, targeting the mass end of the consumer basket.

Chauhan said the company made investments, exceeding Rs 600 crore, to strengthen its dairy business. "This category also mitigates the volatility of seasonal beverages, particularly given the significant impact of unseasonal rains during the last financial year,” she said.

Parle Agro's portfolio includes Frooti, Appy Fizz, Smoodh, Frio, Dhishoom, and Bailley. The Mumbai-based company, promoted by Prakash Chauhan and family, competes with brands such as Coca-Cola, PepsiCo and Dabur in the carbonated beverage and fruit-based drinks segments, and with those of Amul and Britannia in the dairy space. It also counts on Bollywood stars such as Alia Bhatt, Kriti Sanon and Varun Dhawan as brand ambassadors.

Furthermore, with a comprehensive portfolio restructure and an increase in the circulation of the Rs 20 coin, Chauhan is confident in driving expansion for Appy Fizz once again. "We are already witnessing impressive growth rates of over 30-40% for fiscal 2025 year-to-date compared to the previous year. Appy Fizz will regain its benchmark performance."