INTRODUCTION

Bottled Water Industry in India

Genie is out of the bottle. Indeed, the bottled water industry is one of the most thriving
sectors in India. The market is growing at a whopping rate of about 55 per cent annually and
is expected to cross Rs. 1000-crore mark within the next couple of years.

India is the tenth largest bottled water consumer in the world. Between 1999 and 2004, the
Indian bottled water market grew at a compound annual growth rate (CAGR) of 25 per cent -
the highest in the world.

With over a thousand bottled water producers, the Indian bottled water industry is big by
even international standards. There are more than 200 brands, nearly 80 per cent of which are
local. Most of the small-scale producers sell non-branded products and serve small markets.
In fact, making bottled water is today a cottage industry in the country. Leave alone the
metros, where a bottled-water manufacturer can be found even in a one-room shop, in every
medium and small city and even some prosperous rural areas there are bottled water
manufacturers.

Despite the large number of small producers, this industry is dominated by the big players -
Parle Bisleri, Coca-Cola, PepsiCo, Parle Agro, Mohan Meakins, SKN Breweries and so on.
Parle was the first major Indian company to enter the bottled water market in the country
when it introduced Bisleri in India more than 25 years ago.

Government failure to address basic services

Millions of people, both in rural and urban India, suffer from inadequate or no tap water
supply. Even some parts of Mumbai, the country's financial capital, get a mere two hours of
daily water supply. So bottled water is much in demand by residents, even though the
businesses profiting from the sales are thriving from access to public water sources.

Bottled water fills a void created by government failure to address basic services, Peter
Gleick of the Pacific Institute writes in its World Water report. "In many parts of the world,
tap water is not available or safe to drink. In these regions, the failure of governments to
provide basic water services has opened the door to private companies and vendors filling a
critical need, albeit at a very high cost to consumers." The institute reasons that governments
should tap into spending on commercial water by consumers to secure funds to provide safe
water at fraction of the cost.

Gigi Kellett, US national director of the Think Outside the Bottle campaign, argues that
demand for bottled water is due to industry creating "a market by casting doubt on the quality
of tap water, when in fact bottled water is subject to far less scrutiny and often comes from
the same source".

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Water resources over-exploited

The majority of the bottling plants are dependent on groundwater. They create huge
water stress in the areas where they operate because groundwater is also the main source - in
most places the only source - of drinking water in India. This has created huge conflict
between the community and the bottling plants.

Private companies in India can siphon out, exhaust and export groundwater free because the
groundwater law in the country is archaic and not in tune with the realities of modern
capitalist societies. The existing law says that "the person who owns the land owns the
groundwater beneath". This means that, theoretically, a person can buy one square metre of
land and take all the groundwater of the surrounding areas and the law of land cannot object
to it. This law is the core of the conflict between the community and the companies and the
major reason for making the business of bottled water in the country highly lucrative.

Take for instance the case of Coca-Cola's bottling plant in drought-prone Kala Dera near
Jaipur. Coca-Cola gets its water free except for a tiny cess (for discharging the wastewater) it
pays to the State Pollution Control Board - a little over Rs.5,000 a year during 2000-02 and
Rs.24,246 in 2003. It extracts half a million litres of water every day - at a cost of 14 paise
per 1,000 litres. So, a Rs.10 per litre Kinley water has a raw material cost of just 0.02-0.03
paise. (It takes about two to three litres of groundwater to make one litre of bottled water.)

Bottled water companies earn extraordinary profits

Up to 40% of bottled water comes from the same source as tap water, but is sold back to
consumers at hundreds of times the cost, says the website of the North American "Think
Outside the Bottle" campaign. Not only Coca-Cola but there is thousands of brands in
India's $445 million packaged water industry. "Whatever figures you come across in the
bottled water business would be underestimated," says Chandra Bhushan, associate director
of the New Delhi-based Center for Science and Environment that campaigns to protect
ground water resources. He said companies earn extraordinary profits by selling water at
10 rupees (24 US cents) or more per liter after a production cost of 25 paise, or 0.25 rupee
per liter. The water is drawn mostly from public sources.

Recent industry figures from India indicate that sales of bottled water grew from $189
million (USD) in 2003 to $599 million in 2008 -- a growth rate of 216 percent. With this
figure projected to double in the next five years India is being touted as one of the fastest
growing bottled water markets in the world. The growth of the Indian market is being
attributed to people having more disposable income coupled with poor public water
infrastructure. These are the kind of market forecasts on which bottled water companies base
future business plans. True to form, PepsiCo announced earlier this month that it will double
investments in its Indian beverage business in 2009. The company's Indian beverage
investments will now total $220 million.

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VARIETY OF PACKAGES
Bottled water is sold in a variety of packages: pouches and glasses, 330 ml bottles, 500 ml
bottles, 1-litre bottles, 2-litre bottles and even 20- to 50-litre bulk water packs. The formal
bottled water business in India can be divided broadly into three segments in terms of
cost: premium natural mineral water, natural mineral water and packaged drinking water.

Premium natural mineral water includes brands such as Evian, San Pelligrino and Perrier,
which are imported and priced between Rs.80 and Rs.110 a litre. Natural mineral water, with
brands such as Himalayan and Catch, is priced around Rs.20 a litre. Packaged drinking
water, which is nothing but treated water, is the biggest segment and includes brands
such as PARLE BISLERI, Coca-Cola's KINLEY and PepsiCo's AQUAFINA. They are
priced in the range of Rs.10-12 a litre.

Bottled water top players

Top multinational players such as Coca-Cola and PepsiCo have been trying for the past
decade to capture the Indian bottled water market. Today they have captured a significant
portion of it. However, Parle Bisleri continues to hold 45 per cent of the market share. Kinley
and Aquafina are fast catching up, with Kinley holding 38 per cent of the market and
Aquafina approximately 10 per cent. The rest, including the smaller players, have the
remaining of the market share.

Market share
7%
10%
45%

38%

Bisleri Kinley
Aquafina Others

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MAJOR PLAYERS IN BOTTLED WATER SEGMENT WITH
THEIR BRANDS:

1. PARLE’S BISLERI

The brand name Bisleri is so popular in India that it is used as generic name for bottled
water.

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Mineral Water under the name 'Bisleri' was first introduced in Mumbai in glass bottles in two
varieties - bubbly & still in 1965 by Bisleri Ltd., a company of Italian origin. This company
was started by Signor Felice Bisleri who first brought the idea of selling bottled water in
India.
Parle bought over Bisleri (India) Ltd. in 1969 and started bottling mineral water in glass
bottles under the brand name 'Bisleri'. Later Parle switched over to PVC non-returnable
bottles and finally advanced to PET containers.

Since 1995 Mr. Ramesh J. Chauhan has started expanding Bisleri operations substantially
and the turn over has multiplied more than 20 times over a period of 10 years and the average
growth rate has been around 40% over this period. Presently they have 8 plants & 11
franchisees all over India. They have their presence covering the entire span of India. They
command a 60% market share of the organized market. Overwhelming popularity of 'Bisleri'
and the fact that they pioneered bottled water in India, it has made them synonymous to
Mineral water and a household name. When we think of bottled water, we think Bisleri.

They at Bisleri value their customers & therefore have developed 8 unique pack sizes to suit
the need of every individual. These are present in 250ml cups, 250ml bottles, 500ml, 1L,
1.5L, 2L which are the non-returnable packs & 5L, 20L which are the returnable packs.

Till date the Indian consumer has been offered Bisleri water, however in their effort to bring
to us something refreshingly new, they have introduced Bisleri Natural Mountain Water -
water brought to us from the foothills of the mountains situated in Himachal Pradesh. Hence
the product range now comprises of two variants: Bisleri with added minerals and Bisleri
Mountain Water.

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It is their commitment to offer every Indian pure & clean drinking water. Bisleri water is put
through multiple stages of purification, ozonised & finally packed for consumption. Rigorous
R&D & stringent quality controls has made us a market leader in the bottled water segment.
Strict hygiene conditions are maintained in all plants.

In their endeavor to maintain strict quality controls each unit purchases performs & caps only
from approved vendors. They produce their own bottles in-house. They have recently
procured the latest world class state of the art machineries that put them at par with
International standards. This has not only helped them improve packaging quality but has
also reduced raw material wastage & doubled production capacity. We can be rest assured
that we are drinking safe & pure water when we consume Bisleri. Bisleri is free of impurities
& 100% safe. Enjoy the Sweet taste of Purity!

The price of a 1 litre Bisleri bottle is Rs12, while 500ml and 250ml bottles are sold for Rs8 and Rs5,
respectively.

Bisleri has planned to introduce vending machines for its packaged drinking water, a first
initiative of its kind by any branded water company in India. Bisleri has tied up with vending
machine company Grabbit to set up automated machines in offices, shopping malls, airports
and other high traffic points. Bisleri is testing the concept in Mumbai and will take it
nationally in the next three to four months. The idea is to make packaged water available to
people at places where it is either not available or available at price higher than the maximum
retail price (MRP).

The price of bottled water at places such as airports and cinema halls is usually higher than
the marked MRP. A higher price point discourages sales. There are also places where bottled
water is not available. Bisleri’s move to introduce vending machine will address both
problems. Bisleri aims to triple its sales from around Rs300 crore in 2007 to Rs1,000 crore
by 2009. The company is investing Rs200 crore in strengthening its distribution network
apart from setting up 12 new bottling facilities with an investment of Rs150 crore.

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Parle Bisleri is also planning to set up 25 new bottling plants across the country in FY10 as a
part of its growth strategy. The company is also drawing up a dual-marketing penetration
strategy to reach out to wider target consumers. To meet the growing consumer demands,
Bisleri is setting up new bottling plants in Maharashtra, Kerala, Jammu & Kashmir,
Himachal Pradesh, Tamil Nadu, Karnataka, UP, Orissa, Jharkhand and north Bengal.

In the Rs 1200-crore organised bottled water market in India, Bisleri today directly competes
with Coke's Kinley, Himalaya and PepsiCo’s Aquafina. Currently, there are over 400 local
brands vying for market space in the unorganised sector for bottled water in India. To sustain
its leadership, Bisleri has made a conscious effort to revamp its existing products as well as
new variant of Bisleri. They have designed and patented the ‘Break Away Seal’ as a unique
selling proposition to counter duplicates. The brand colour has been changed from blue to
aqua-green.

As part of its marketing strategy, the company’s distribution network is being expanded to
meet the changing needs of the consumers. On a national level, there are 2,000 trucks on call
for Bisleri, while the number of trucks averages 300 and 250 in the Mumbai and Delhi
markets, respectively. Everyday, nearly 5,000 delivery vans drive out of the 52 strategically
located Bisleri bottling plants, carrying over 1 million units of pure, sweet drinking water to
replenish...

2. COCA COLA’S KINLEY

Coca-Cola India has made significant investments to build and continually improve its
business in India, including new production facilities, wastewater treatment plants,
distribution systems and marketing equipment. During the past decade, The Coca-Cola
System has invested more than US $1 billion in India, making Coca-Cola one of the
country’s top international investors and in 2003, Coca-Cola India pledged to invest a further
$100 million in its operations.

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The Coca-Cola System in India includes 24 Company-owned bottling operations and another
25 franchisee-owned bottling operations that directly employ 5,500 local people and create
jobs for another 150,000.

Virtually all the goods and services required to produce and market Coca-Cola products
locally – including our Kinley water brand launched in 2000, Shock, an energy drink
launched in 2001, and Sunfill, our first powdered concentrate, also launched in 2001 – are
made in India, ensuring that the benefits of such enterprises remain in the local communities
in which they operate.

Kinley, currrently, has a 10.3 per cent market share in the packaged water industry worth Rs
2200 crore. The company also plans to expand its portfolio with products like flavored
packaged water but these plans are still in the pipeline.

Other marketing activities in the Kinley campaign would include out-of-home media and a
range of on-ground activities.

Soft drink major Coca-Cola has launched a new marketing initiative for its packaged
drinking water brand; Kinley. The previous marketing campaign for Kinley sported the tag
line “Boond-Boond Mein Vishwas” (trust in every drop). This time around the tag line, an
extension of Kinley’s previous campaign, reads “Vishwas Karo.”

The latest communication ‘Vishwas Karo’ brings forward Kinley’s belief that a little bit of
trust can restore faith between people, within oneself and in the basic goodness of life at
large.”

The new Coca-Cola Kinley ad campaign does not feature any brand ambassadors.

The commercial is a collection of vignettes. It opens on a woman being offered a bottle of

Kinley at a hunger strike to quench her thirst, followed by a man who steps into the office
canteen alone and lands up with a couple of mates - accompanied by a bottle of Kinley. Next,
a soldier is startled when the window of the house that he's hiding behind opens suddenly –

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only to have a hand stretch out to offer water from a bottle of Kinley. The fourth sequence
has a man suddenly meeting his old crush, with the insecure wife gradually relaxing with a
sip from a bottle of Kinley.

The fifth sequence has an old man making an attempt to make it to the finish line even after
the stipulated time of the race – he celebrates his victory with a sip of Kinley.

The TV commercial will focus on situations where individuals have to choose between trust
and mistrust. The marketing campaign is being handled by Ogilvy & Mather. Carolisa
Monterio has lent her voice to the new jingle and the lyrics have been written by Amitabh
Bhattacharya. The TV commercial has been directed by Vinyl Mathew.

Kinley has undergone a significant revamp. The bottle now comes in a new 'easy to hold'
shape; and the label has changed from the previous blue to a transparent one. Kinley was
launched by Coca-Cola India in the end of 2000. In the eight years of existence, this is the
first time that the brand has reconsidered its packaging. It's not only about a new look, it’s
more about the functionality. The transparent label conveys what the brand stands for.

3. PEPSICO’S AQUAFINA

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PepsiCo launched Aquafina, the largest selling bottled-water brand in the US, in Kolkata in
one-litre pack size in may 2001.

In 2002, Pepsico expanded range of its bottled water brand Aquafina. The cola major
introduced 2 litre size for Aquafina, along with existing 0.5 and one litre bottles. The 2 litre
Aquafina was priced at Rs 18.

In 2003, Pepsi entered a new business segment with the launch of Aquafina Bulk Water.
Venturing into the new business, Pepsi unveiled its premium quality international bottled
water brand Aquafina in 25-litre packs in Hyderabad. Aquafina, the largest-selling bottled
water brand in the US, is being launched in large packs for the discerning direct-to-home
consumer for the first time anywhere in the world.

Thanks to Pepsi’s venture into the new business of bulk water, the consumer will benefit
from great tasting top quality water, aseptically packaged with a 100% tamper proof seal
with a guarantee of hygienic dispensing. Packaged in premium quality transparent food
grade, clear Polycarbonate jars, the Aquafina 25-litre pack is competitively priced at Rs 65/-.
The unique "Tamper & Adulteration Proof Seal" assures the consumer of consistently
genuine product and highest quality water which need not be re-boiled.

They are among the top three players in the packaged retail water business. This year, they
have aggressive plans for Aquafina and will be focusing on consumer engagement. At the
start of the year, PepsiCo revamped Aquafina’s 500 ml carry pack for the Indian market,
giving it an enhanced translucent blue label to entice consumers. Starting April end, the soft
drink company will also replace all existing packs of Aquafina, with new labels. “Packaged
bottled water is a low margin game and is more or less an impulse purchase even today, so
marketing plays a crucial role.

The labels will announce that by next year, PepsiCo India will be a positive water balance
company. In other words, the company says it will save and replenish more water in its plants
and communities than the total water it uses in the country. India is the first country in the
PepsiCo universe where a corporate sustainability initiative is being communicated to
consumers through a product pack. The Aquafina pack labelling is a public declaration of
PepsiCo’s commitment to positive water balance.

The pack labels will carry details of the company’s ‘replenish and restore our water’
message. With the objective of involving the consumer, the pack urges the consumer to
partner with the company to ‘use water wisely so it could be enjoyed by future generations’.
It is a way of telling the consumers that not only do they care about our environment and
communities, but they are also committed to water sustainability to make our tomorrow
better than today.

4. MANIKCHAND’S OXYRICH

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Launched in 2003, Manikchand’s Oxyrich brand has created its USP as a 300 per cent
oxygenated mineral water and commands a premium pricing (Rs 15 for 1 litre) in the market.
The company has applied for patents in almost 20 countries and is now waiting to take its
brand to other countries beginning with West Asia.

Part of the food and beverage division of Dhariwal Industries, Manikchand’s Oxyrich is now
poised for brand extensions into new areas such as natural fruit juices. At the same time, its
mineral water brand could also get stretched into flavoured and sparkling water. Besides, its
new brands in the area of health foods are also being contemplated.

Marking an investment between Rs 12 crore and Rs 15 crore, the company has adopted a
franchisee model for its water business as it expands its operations into new territories.

With a 9 per cent volume share for its Oxyrich rich brand, the company is hoping to take it to
15 per cent share in the next two years. According to the company, the total size of packaged
bottle drinking water business is estimated at Rs 1,800 crore and is poised to grow to Rs
2,200 crore by 2010 at a rate of 40 per cent every year.

5. OTHER PLAYERS
Other players in the packaged drinking water market are Parle Agro’s BAILEY, Nestle’s
PURE LIFE WATER, GANGA mineral water etc. The market shares of these are very less
as compared to the three giants of the industry.

6. HIMALAYAN
Himalayan, a product of Tata, which operates in the premium segment should be preparing to
up its stakes in the bottled water mart. Nearly 70% of the market share in this niche segment
is held by Himalayan. The brand is also a clear leader in the institutional sales segment,
where its USP of being ‘packed at source’ has helped Himalayan considerably. Himalayan is
packed at the source and its composition is entirely different as compared to other brands in
the industry”. With both Bisleri & Coca-Cola giving a shot at this premium segment,

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institutional sales of premium bottled water can well emerge as a high potential market for
the industry in coming times.

CONCLUSION
Coming back to the mass packaged water segment, in a business where distribution plays a
vital role, Bisleri’s slow and steady market expansion since 1969 has given it an upper hand
vis-à-vis competition. Sources in the industry agree that distribution can help this impulse
purchase product like no other marketing activity can, including advertising. Bisleri boasts
over 50 manufacturing plants across the country (ahead of competition), the latest addition
being at Andaman & Nicobar islands. The more plants you have, the more is your
distribution reach. For this low margin biz to be viable, plants need to be within a 150-200
km radius of the distribution circle.

On the other hand, thanks to their soft drink business, Aquafina & Kinley have managed to
capture an altogether different distribution channel, that of modern retail formats. Kinley &
Aquafina have a total dissolved solids level (TDS) of less than five (where zero TDS stands
for distilled water) and Bombay Municipal water has 40 TDS. So, Municipal water is much
better in terms of minerals. Easy to say, but tough to digest without scientific laboratory tests.
Given that for the average consumer there is hardly any differentiation between various
bottled water brands, Bisleri constantly needs to be on its toes to protect its market
leadership.

For sure, as the summer will approach, the battle between the bottled water majors for market
share is going to get hotter. Bottom line is – how quickly can these players grab consumer
attention and bottle up his impulse spending for thirst quenching.

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REFERENCES:
http://www.gits4u.com/water/water16.htm

http://www.finewaters.com/Bottled_Water/India/index.asp

http://www.bottledwaterindia.org/regulation.htm#

http://www.bisleri.com/

http://www.livemint.com/2008/02/04225623/Bisleri-to-introduce-vending-m.html

http://www.financialexpress.com/news/bisleri-plans-25-plants-in-2010-to-retain-market-
leadership/483698/

http://economictimes.indiatimes.com/News/News-By-Industry/Cons-Products/Food/Pepsi-to-
replace-packs-of-Aquafina-with-new-labels/articleshow/2872378.cms

http://www.andhranews.net/india/2003/sep/pepsiwater.asp

http://timesofindia.indiatimes.com/news/business/india-business/Pepsi-to-expand-Aquafina-
range/articleshow/20694574.cms

http://www.4psbusinessandmarketing.com/10042008/storyd.asp?sid=1893&pageno=1

http://www.thehindubusinessline.com/2007/11/28/stories/2007112851170500.htm

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