The Hindu Business Line : Packaged water industry — ‘What we see is tip of the iceberg’

From being confined to the uppermost echelons of society, packaged water has now become a commonplace commodity and almost a necessity in metros. After witnessing historic growth in recent years, it has become a Rs 3,000-crore industry, one that is slated to only post healthy growth rates to become a Rs 10,000-crore business in just three years, says Mr Sushil Kumar, Marketing Director of Shivsu Canadian Clear Waters Technology Pvt Ltd, a company that has executed more tha n 3,000 packaged water projects worldwide and over 2,000 in India.

Speaking to Business Line on the water industry and the road ahead, he said that the industry’s phenomenal growth in recent years can be attributed to rising incidence of water-borne diseases, improper municipal supplies, evol ved health consciousness of people as well as globalisation, which has brought in tremendous tourist inflow.

“The bulk water industry, or water in 12-, 20- and 25-litre packages, has also witnessed a parallel growth of Rs 700-1,000 crore,” he informed.

“Basically, the market can be divided into two segments — the retail consumer market where the pack sizes are 500 ml, one litre, 1.2/1.5/2-litre and five-litre, and the household and institutional market, where the pack size is usually are 20- or 25-litre.”

He added: “The total Indian market for small segments, such as 0.5-2 litre stands at 12-15 million cases a year. Bulk water sale of 25-litre bubbletops stands at 16.8 million bottles a month.”

According to him, stringent Government regulations have ensured constant monitoring and quality control of the packaged drinking water sector.

“The Bureau of Indian Standards (BIS) is the governing authority on all quality and production regulations related to natural mineral water as well as packaged drinking water.”

He added that it is mandatory that every packaged drinking water plant meets BIS standards and obtains its certification before commencing production.

“The BIS has also specified detailed testing and listing of laboratory equipment to be installed within the factory.”

Stating that mandatory implementation of BIS certification has “gone a long way” in eliminating spurious manufacturers, he said that it has also ensured standardisation and homogenous pricing of plant and machinery.

Now that the industry has matured, only big companies with branded products will be in the fray to capture large market share, he said.

Though the industry growth rate is 40-50 per cent a year, India is still behind countries such as Indonesia, Malaysia and Singapore, where the industry is already worth Rs 15,000-20,000 crore, Mr Kumar pointed out. “These countries have much smaller population but similar climatic conditions.”

Mr Kumar also attributed the growth to the entry of large liquor companies such as the UB Group, which has set up more than 29 plants all over the country for rolling out the Kingfisher brand of packaged water, and around 20 plants for McDowell No 1 brand.

Similarly, SAB Miller has come out with Royal Challenge and Haywards 5,000 brands of packaged water, for which purpose it has set up more than 40 plants all over India. The company has also introduced a new concept of sparkling water, “which is low-carbonated water for a niche market, basically foreigners.”

Mr Kumar said that though the Indian market currently has more than 2,000 players, the main brands controlling the market are Pepsi’s Aquafina, Coke’s Kinley, Kingfisher, SAB Miller’s Royal Challenge, Parle Agro’s Bisleri, besides local players such as Sabol.

He also informed that with better knowledge of packaged drinking water, brands such as Evian of France, Himalayan of North India and Blu Mont from the South are trying to create a niche in the premium water segment of “mountain spring water,” which comes under the natural mineral water specifications of BIS.

“These products are mainly sold in ‘A’ class outlets such as five-star hotels, resorts, lifestyle stores, high-end beauty parlours and elite clubs. The industry has also paved the way for new product segments such as flavoured, vitaminised and herbal waters.”

With the entry of big players such as the Tatas (who recently bought stake in Mount Everest brand of packaged drinking water), the water industry is poised for a phenomenal surge, said Mr Kumar. “What we see is just the tip of the iceberg.”

D. MURALI

C. RAMESH