Home ／ Insights on entering the Indian market
2026.03.26
The Suntory Group's approach to the Indian market is a highly instructive case for Japanese food and beverage companies. It entered India with its soft drink business in 2012, only to suffer the bitter failure of withdrawing after just 10 months. However, it used that lesson to steadily build success with a second attempt in the whisky business, and in 2024 it established the new Suntory India to announce its re-entry into the beverage and health food sectors.
This article analyzes the chronological evolution of Suntory's India strategy and looks at how Japanese food companies can find hints for sustainable growth in India Market the Indian market.
In May 2012, Suntory established a joint venture with a local Indian company and entered the Indian market with its soft drink business. At the time, the Indian soft drink market was dominated by the two giants Coca-Cola and PepsiCo, but the overall market continued to grow at a high annual rate of 15-20%, and it was judged that there was sufficient room for a new entrant.
However, Suntory's Indian soft drink business was forced to withdraw after just 10 months. The causes of failure were complex, but the most fundamental problem lay in the relationship with the joint-venture partner. The partner neglected to develop new sales channels, and Suntory itself was slow to introduce products suited to the market, both sides falling into a "trap of mutual dependency" in which responsibility became blurred.
A shallow understanding of the market was also fatal. Competition in the Indian soft drink market centered on an ultra-low price segment measured in single rupees, so the product development capability and quality control advantages Suntory had cultivated in Japan did not translate directly into competitiveness. In addition, building a distribution network to cover India's vast geography was something that could never be achieved in a short period.
It was in the whisky market that Suntory once again turned its attention to India. India is the world's largest whisky-consuming country, accounting for roughly half of global annual consumption. Moreover, a pronounced trend toward premiumization accompanying economic growth was accelerating demand among middle-class and higher-income consumers for higher-quality whisky.
In December 2019, Suntory Global Spirits (formerly Beam Suntory) launched "Oaksmith," a whisky brand created exclusively for the Indian market. The brand is a special blend crafted by Suntory's chief blender Shinji Fukuyo, combining Scotch malt whisky with American bourbon to create a flavor tailored to Indian palates.
Oaksmith is offered in two variants, "Oaksmith" and "Oaksmith Gold," priced competitively within the premium segment of the Indian market. This reflects the lesson learned from the soft drink failure a decade earlier: a clear strategic choice to "focus on the premium segment with growth potential, rather than targeting the entire market."
For its spirits business in India, Suntory has set a target of $1 billion (about 150 billion yen) in sales by 2030 and has announced plans to raise the share of its premium portfolio to 50-60%. As a core part of this strategy, Oaksmith is steadily expanding its market share.
The development process for Oaksmith is a good example of localization this approach. Suntory's development team thoroughly researched the flavors Indian consumers look for in whisky. In India, it is common to drink whisky mixed with soda or water, so a blend was needed whose flavor would stand out even when consumed this way. Indian preferences also tend to favor fruitiness and smoothness over smokiness, and these insights were reflected in the product design.
In June 2024, Suntory Holdings established a new company, Suntory India, to strengthen its business foundation in spirits, beverages, and health foods in the Indian market, and began operations that July. In addition to its already-established spirits business, this new company aims to enter the Indian market in the soft drink and health food sectors as well.
Notably, Suntory has decided on a "third entry" into the soft drink business that failed 12 years ago. Behind this decision lies a structural change in the Indian beverage market. As of 2025, the size of India's beverage market has reached approximately $80.1 billion and continues to grow at an annual rate of 6.8%. In particular, demand for functional beverages and RTD (ready-to-drink) drinks, driven by rising health consciousness, is expanding rapidly, and the market environment has changed significantly since 12 years ago.
What stands out in Suntory's latest strategy for re-entering India is its ability to leverage the foundation it has already built through its spirits business. The distribution network, understanding of local business practices, relationships with government agencies, and brand recognition built through the spirits business all provide a major advantage in launching the beverage and health food business.
The biggest difference from the failure 12 years ago is that this is not "entry from scratch" but "entry built on an existing foundation." This strategic advantage should prove effective both in reducing risk and in securing speed.
India's beverage market is growing rapidly, driven by the three tailwinds of demographics, urbanization, and rising incomes. In particular, the soft drink market was worth approximately $20.7 billion as of 2024 and is projected to reach approximately $32.1 billion by 2033. With an estimated average annual growth rate of 4.6-7.0%, India is one of the markets with the greatest room for growth in the world, at a time when beverage markets in developed countries are reaching maturity.
Growth is being driven by the spread of RTD beverages, a shift in demand toward low-sugar and sugar-free products, and middle-class growing interest in premium beverages accompanying this expansion. In addition to global companies such as Coca-Cola and PepsiCo, Indian-origin brands such as Paper Boat, Raw Pressery, and Lahori Zeera are also growing rapidly, and the market is becoming increasingly diversified.
Suntory's plan to expand into the health food sector in India aligns with market trends. Health consciousness rooted in the Ayurvedic tradition remains strong in India, and in recent years this has merged with modern wellness concepts, giving rise to a unique market where tradition and innovation intersect, including probiotic drinks, turmeric lattes, and ashwagandha-infused beverages.
Suntory's decision to withdraw from the soft drink business after 10 months was a failure in the short term, but in the long term this experience became the foundation for its success in the whisky business and its 2024 re-entry. The speed of cutting losses, combined with a willingness to accurately analyze the causes of failure and apply them to the next strategy, serves as a model for every Japanese company considering entering the Indian market.
Oaksmith is not an existing product developed for Japan or global markets that was brought into India, but a product developed exclusively for the Indian market. Japanese food companies, too, rather than bringing in products popular in Japan as-is, should consider Indian consumers' preferences, food culture, companies should consider developing dedicated products tailored to local price sensitivities.
Competition in India's ultra-low-price segment should be left to local companies and global giants that have overwhelming advantages in distribution networks and cost structures; Japanese companies should instead focus on the premium segment, where they can differentiate through quality and added value. As Suntory's Oaksmith has shown, the purchasing power of India's middle class is rising year by year, and the segment of consumers willing to "pay a fair price for a good product" is steadily expanding.
Suntory has expanded its India business through a phased approach, starting with alcoholic beverages and moving into beverages and health foods. Rather than attempting to expand on all fronts at once, the strategy of establishing a foundation in one business and then using that infrastructure and know-how to move into adjacent fields is an effective model for achieving growth while keeping risk in check.
The 2012 failure stemmed from its relationship with its joint venture partner. Local partners When selecting a partner, companies should weigh not only financial strength but also how well the business vision is shared, management transparency, and execution capability. In addition, joint venture agreements must clearly define each partner's roles and responsibilities, performance evaluation criteria, and dispute resolution mechanisms.
Suntory's India strategy traces a textbook-like evolutionary path: failure, withdrawal, learning, re-entry, success, and business expansion. The most important message this trajectory sends is that failing once in the India market is not the end.
For Japanese food companies, Suntory's case serves as a guidebook for taking on challenges. The biggest risk is standing still out of fear of failure. Instead, companies should challenge the market with thorough preparation and resolve, and if they fail, withdraw quickly and make their next move. This agility is the most important quality for surviving in the vast and complex India market.
It entered the soft drinks business through a joint venture with a local company but withdrew after a short period. The reasons cited include a poorly functioning division of roles with its joint venture partner, and the fact that its product development capability and quality control cultivated in Japan did not translate directly into competitiveness in a market where ultra-low-price competition was the where the business is won.
India is one of the world's largest whisky-consuming countries. Suntory launched a brand for the India market and took a clear strategy of focusing on the premium segment, where growth is expected, rather than the market as a whole. It has set growth in its alcoholic beverage business as a medium- to long-term goal.
Since drinking whisky mixed with soda or water is common in India, the blend was designed so its flavor stands out even when consumed that way. The tendency to prefer fruitiness and smoothness over smokiness is also reflected in the product design.
It marks a re-entry into the soft drinks category it withdrew from after a short period years ago, against a backdrop of a changing market environment, including rising health consciousness and growing demand for functional and RTD beverages. A major difference from its original entry from scratch is that it can now leverage the distribution network, understanding of business customs, and relationships already built through its alcoholic beverage business.
The ultra-low-price segment is the where the business is won for local companies and global giants that have advantages in distribution networks and cost structures, making it a segment where Japanese companies find it hard to differentiate on quality and added value. The purchasing power of India's middle class is rising, and the segment of consumers willing to pay a fair price for good products is expanding.
These include cutting losses quickly and analyzing causes after failure, developing products dedicated to the India market, focusing on the premium segment, expanding step by step into adjacent fields, and designing partnerships with clear roles, responsibilities, and dispute resolution. Standing still out of fear of failure is the biggest risk; the important thing is to challenge the market with preparation and resolve, and to have the agility to recover quickly even after a setback.
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