The drink industry in Iran
Introduction
Beverages are an inseparable part of food industries as they take up a significant portion of the production. Today’s beverage industry encompasses a wide range of drinks, including water, tea, coffee, carbonated and noncarbonated drinks, juice, dough, and herbal teas, among the popular beverages in Iran.
The financial turnover of the beverage industry is relatively high in Iran. However, the products produced in the industry are far from global standards in terms of quality. On the other hand, the cumbersome regulations –especially those set by the Ministry of Health- in the country prevent the production of healthy and tasty beverages in different regions of the world (Mehr News Agency).
Overall, beverages are categorized into two groups: hot and cold. Most of the drinks we know as industrial beverages in the country are in the cold beverage group. The cold beverage industry has a long history in Iran compared to other constituents of the country’s food industry. A large portion of the store shelves in the country is currently dominated by various beverages, as Iranians prefer cold and sweet drinks in most cases.
Cold beverages are, in turn, divided into two groups carbonated and noncarbonated. These beverages include coke, beer, juice, mineral water, syrup, and dough, among which carbonated cokes take up the largest share of production.
According to Snapp Express’s report on the sales of FMCG in Iran, Coca-Cola and Pepsi in the coke division and Hype and Big Bear in the energy drink division take up the largest portion of sales and competition. Per capita consumption of various beverages in Iran and the companies operating in this field are introduced as follows.
Per capita consumption of various beverages in Iran
1. Juice
Although natural juice has an attractive market across the world, this market is faced with several complications in Iran, the first being the low juice consumption per capita. Despite the variety of fruits harvested in different seasons across Iran, juice consumption per capita is, unfortunately, 11lit per year. At the same time, European countries have a per capita consumption of around 35-40lit annually as fresh fruit is less available in the European market (Tejarat Farda). Some attribute the low juice consumption in the country to the low purchasing power of households and the high juice prices, suggesting that purchasing priorities have changed as household income has slumped, rendering juice a luxurious item for some households.
2. Coke
America used to be known as one of the countries with the highest coke consumption, but recent research suggests that the consumption of this beverage has hit the bottom in the country over the past 30 years. America is among the largest coke consumers in the world, alongside other countries such as Argentina, Mexico, etc.. Still, this consumption has been attenuated since 2006 through various incentives such as placing taxes on coke. A report from Eghtesad Online argues that each Iranian individual consumes approximately 42 liters of coke annually, while many countries have an annual per capita consumption of around 10-11lit. This means that the average Iranian consumes this sugar-rich beverage four times the global average. This report indicates that 132 coke companies operate in 26 Iranian cities with 18,000 direct and 50,000 indirect employees. These enterprises have a nominal capacity of about 4.3 billion liters. Still, two billion liters of coke are produced annually in Iran, suggesting that these enterprises are capable of a larger supply. The low production and ingredients cost in Iran compared to the neighboring countries have made for stiff competition for foreign brands.
A survey conducted by Fidilio found that Coca-Cola’s red logo and the nostalgia associated with it attracted a wide range of consumers. Coca-Cola’s loyal customers reported its subtler sweetness and more fizz. Pepsi was the second most popular brand of coke among customers, according to Fidilio. Although many do not enjoy this coke due to its high sweetness and low fizz, it still has many diehard fans in Iran.
Miranda, a commercial brand producing some of the most popular nonalcoholic drinks with a large global audience, holds the third position on the list of most popular drinks in Iran. Miranda cokes are sold in various flavors, including orange, apples, grapefruit, strawberry, banana, grape, pineapple, lime, etc., among which orange Miranda is the most widely demanded flavor in Iran. Before This brand was introduced, Canada Dry – a brand that has recently expanded its activity in Iran as well- used to be the dominant brand in the market among orange-flavored cokes.
According to this survey, Sprite lemon-lime soda ranked fourth among the most popular cokes. Participants reported that the transparency of these cokes has advantages, such as reduced concern regarding impurities in the cokes. Some also mentioned that the fact that this brand of coke is not colored makes it easier to clean in the case of spills on tables, clothes, or carpets.
Just as the main competition among so-called “black” cokes is between Coca-Cola and Pepsi, the main competition between “orange” is between Miranda and Fanta. Of course, Fanta is also sold in flavors other than Orange in Iran. Fanta ranked fifth among the popular brands of coke, as few participants favored it over Miranda.
Despite being a diet coke, Coca-Cola Zero was not held widely popular among the participants of this survey and thus ranked sixth on this list. Many reported the reason for such unpopularity to be the excessive fizz and bitter taste of this coke.
3. Doogh (Drinkable yogurt)
Doogh is a traditional Iranian beverage that has long been present in our food culture. Doogh’s unique and distinct taste led to its industrial production with technological advancements. Ispa’s 2020 report revealed that 18.6% of people consumed Doogh daily in their households. 34.9% consumed Doogh “several days a week,” while 28.1% reported consuming this drink “several days a month.” Moreover, 10% of the respondents did not drink Doogh at all. However, a recent interview with a member of the Dairy Products Industry Association suggests that dairy consumption has undergone a 15-20% decline as consumers prefer to buy coke due to Doogh’s recent price increase.
This product is currently produced through various methods as a fermented milk beverage. Industrial production of carbonated and non-carbonated Doogh has a history of over 40 years in Iran.
Given that Doogh is a distinctly Iranian product, the international standard of this beverage is currently registered in Iran’s name as the beverage is considered a food cultural heritage.
Doogh is serverd with Gosh-e fil (elephant’s ear) is a fried pastry from Iranian cuisine and is also popular in Afghanistan. The dough is shaped like an elephant ear (goosh) and deep-fried in oil
4. Coffee
Coffee found its place among the daily-consumed beverages of Iranians since the Safavid era around the 16th century A.C. and has since remained among the most popular beverages among Iranians. As the coffee industry progresses in Iran and professional coffees enter the country’s market, Iranians have developed a taste for more prosperous and aromatic coffee over bitter coffee. Noush Online information databases have reported the annual coffee consumption in Iran to be approximately 94 thousand tons. This would mean an 80-100gr annual consumption per Iranian individual. However, this statistic has significantly slumped over recent years, given the increased coffee prices and a resulting shift to the consumption of instant coffee.
Solatte brand belonging to Kalleh Company, is among ready-to-drink coffee producers in Iran. Solatte is, in fact, a ready-made coffee that can be heated or consumed coldly. This beverage is prepared from Arabica beans through the Espresso brewing method. Solatte products include Espresso, Cappuccino, Mocha, Caramel Macchiato, and Vanilla coffee.
Another brand, Fabios, releases cold, ready-to-drink coffee with an Espresso flavor in 250ml cans. The product portfolio of Noushineh Agriculture and Industry Company –known as a producer of various types of juice under the commercial brand of Golshan- also includes Golshan cold coffee offered in 240ml cans. Many coffee shops also prepare and sell cold-brew coffee daily; however, Lamiz café packs and provides this product in 240ml cans and PET bottles. As of the time of writing the present article, none of these products are available in the surveyed online shops, except for Solatte products that are available in most stores.
5. Tea
Various types of tea are popular hot beverages in Iran. Among these, black tea is one of the country’s best-known and most popular teas. The most recent statistics reported by the head of the National Tea Organization indicate the tea consumption in the country to be 100 thousand tons, 25-30 thousand tons of which is produced domestically, and the rest is supplied through imports.
Tea is conventionally served hot in Iran, but the consumption of iced tea has recently become more popular, particularly on hot summer days. Golestan was the first company in the country to introduce a product named “Golestan Iced Tea” in lemon-lime and Earl Grey flavors, as well as iced green tea and peach and passionfruit flavored iced tea in 2010. Sunich is another producer of this product in Iran, offering iced tea in two flavors of lemon-lime and green iced tea in 200ml cans in its portfolio. This product is also available in 1-lit PET bottles as a carbonated beverage. As of the time of writing the present article, this product is unavailable in any surveyed online shops.
6. Energy drinks
No statistic has been published in Iran regarding the consumption of this beverage. Still, many factories producing energy drinks have been established in the country in response to its growing consumption, although some brands are less-than-favorable. Red Bull and Black Bear are among the most prominent energy drink producers worldwide but are not much more expensive than other brands. Big Bear, Monster, and Life are other well-known energy drink producers in Iran and across the world. Other energy drink brands in the Iranian market include Reborn, Hype, and Rock Star. The bans on importing unessential and luxurious products have led these groups of goods to be imported through the suitcase trade[1], which is why energy drinks are sold at considerably high prices in the market. However, brands such as Big Bear and Hype supply their products at a lower cost compared to imported drinks, as their production is domestic.
7. Malt Beer
Malt beer is among the most popular non-alcoholic beverages in Iran. Secretary of the Malt Producers Association declared in August 2022 that soft drink consumption surpassed milk due to the increased price of dairy products, resulting in an 8-10% growth in malt beer consumption (a considerable portion of malt beer raw materials such as Barley, hops, malt grains, flavors, and aluminum cans are imported.).
Behnoush Corporation is the first and largest malt beer producer in Iran, which started operating in 1966 under “Malta Iran” and kept working as “Behnoush” after the Islamic revolution. Behnoush currently possesses a total of 18 production lines in Iran. Alis is another one of the large corporations producing beverages in the country with various subsets. Nik Rose Chenaran Company is an Alis subset having 12 multiple flavors of malt beer.
Istak corporations –producing Istak in Arpanosh, Zarivar, and Rozhelat factories- have various malt beverages under the commercial brand of Istak. Istak’s first malt beer production line started operating with a production capacity of 36,000 bottles. Shams is another malt beer producer with a history of over 56 years. Shams malt beers began operation as a subset of Castlenoush Company in 2007. Tehran Govar Food Industries malt beer –under the brand name “Jojo”- is another big name in the Iranian market. This corporation has been among the largest non-alcoholic malt beer production units in the Middle East since 2010.
8. Syrup (Sherbet)
Syrup is an authentic Iranian beverage composed of water, sugar, and flavors. The flavors are available in various fruits, herbs, and flowers. Plant seeds such as flixweed and basil seeds are also added to syrups. Iranian traditional medicine has accentuated the consumption of these syrups due to their medicinal properties.
Authentic Iranian syrups such as musk willow syrup, mint sweat, rosewater, and saffron syrup are currently produced in factories. “Persis” company operating in Iranian saffron production and supply, has made various types of carbonated and non-carbonated Iranian syrups with lime-saffron and lime-musk willow containing basil seeds in 200ml glass bottles. “Lucky you,” a non-carbonated lemon-lime beverage available in rosewater and saffron flavors by Kalleh, is another product in the syrups group available in 500ml PET bottles. “Rough Afza” is another company operating in this field, producing various Iranian syrups with rosewater, bitter orange, musk willow, mint, and cumin.
The two influential factors in the Iranian beverage industry
The “beverage” industry is generally most influenced by the factors discussed in the following, rendering them as parameters that shareholders must consider when devising a vision for respective companies.
Reduced purchasing power: As the products of this industry are not among the items in households’ essential basket of goods, their demand is expected to slump during economic recessions compared to standard times. Moreover, the coronavirus disease has led to a temporary closure of restaurants and fast food restaurants, resulting in reduced demand from this target market (single-serving products such as canned and bottled beverages).
Currency rate fluctuations: Given the meager dependence of beverage companies on imports, such firms would face only a few challenges in the case of currency rate fluctuations. Reduced national currency value against foreign currencies leads to a steep increase in foreign materials and goods prices. Still, it is in favor of exporters as it multiplies export income.
Which beverage brand do Iranians have the most strong taste for?
A survey of Iranian consumers around three years ago revealed that over 53% of the respondents chose beverages based on their taste and were more inclined to sweeter flavors in most cases.
Following taste, the nutritional value of the beverage was a far second, with 19% of respondents holding it criterion in their choice of beverage.
Proper distribution of the products and availability were other factors involved in customers’ choice of beverage brands. Studies suggest that over half (53%) of consumers supply their daily beverages from local supermarkets. In this regard, 37% of consumers got their daily beverages from hypermarkets, 8% bought them from small supermarkets, and about 2% made wholesale purchases.
However, one must pay attention to components such as packaging appeal and quality of the products, as these factors have gained more attention from Iranian beverage-producing brands over the recent years. Attractive packages and, mainly, considering children’s tastes play a prominent part in how well the beverages on the market are received.
The future of the beverage industry in Iran
The accelerating increase in the worldwide demand for non-alcoholic and healthy drinks over the past few years has led beverage producers to respond to this change of needs in the market, which could be in favor of Iranian producers and their foreign markets so the Iranian beverage industry can further penetrate the global market. The technological advancement of beverage industries and the greater focus on the quality of raw materials and final products have led to considerable opportunities in the worldwide market. On the other hand, authentic Iranian beverages can conjure appealing export markets for Iranian products.
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