The Hindu Business Line : Testing the waters

With little growth in the bottled water segment, Bisleri is going to the US to try its luck there. In India, it will focus on the bulk water business.

Ramesh Chauhan, Chairman, Parle Bisleri

WATER king Ramesh Chauhan wants to hang up his boots. But he cannot retire, at least not till his only child completes her education and is ready to take on the business some years from now. So Chauhan is working harder these days, harder than he was working probably five years ago to retain his numero uno slot in the bottled water market and grow the business before his daughter takes over the mantle.

This means Bisleri, which is the undisputed market leader in the bottled water business today, must take longer strides to widen the gap between itself and other brands and perhaps become twice its present size as far as sales are concerned. But growth in the bottled water market has been slow over the last few years due to several factors. These include increasingly stiff competition from MNC brands such as Aquafina and Kinley, besides undercutting by the smaller players.

But the glint in Chauhan's eyes betrays his enthusiasm. "The market is tough but then I have to grow the business and double it within three years. I have decided to take Bisleri to the US to begin with. This may not be good for the company but will grow the brand."

On wonders why has Chauhan chosen the highly competitive US market. But he explains patiently that the bottled water business in India is hardly growing. In fact, all the growth in this segment is coming from the bulk water business. So, he has decided to generate growth through sales in the overseas markets, beginning with the US.

But the industry is sceptical of Chauhan's reasons for taking his brand to the US. Says an analyst, "The US market is highly competitive and brand-conscious. Unless there is heavy investment in brand building, Bisleri stands little chance. At best, the brand can be sold in stores which stock primarily Indian stuff but even there it might have to jostle for space."

Chauhan counters this criticism by saying he is looking only at niche markets in the US. He is the same man who sold off all his well-entrenched beverage brands to Coca-Cola in India though he still retains the rights for the hugely successful Maaza in every other country so the water foray into the US will ride piggyback on the Maaza bottling and distribution network.

"We will use the contract manufacturing route to bottle Bisleri in Quebec, Canada and then sell it in the US market. US is a $10-million market already for Maaza," he said.

What about earlier plans to sell bottled and sparkling water in Europe? Chauhan says negotiations fell through so the European foray has been put on the backburner. An industry observer points out that the US market has several variants of bottled water including sparkling and carbonated ones. "Bisleri is only going in plain bottled water form. There isn't a huge market for this type of product. Besides, premium pricing is followed in the US in most water brands so brand positioning should become a crucial issue for Bisleri."

On the company's growth strategy, Chauhan declines to divulge numbers of Bisleri sales while adding that the focus is on the 20-litre bulk water jars instead of the PET bottles.

"Bulk water constitutes 60 per cent of my business today but its share will go up to 80 per cent soon. Bulk water is extremely economical for consumers and means large sales volumes for my company. The only problem is that its delivery is tougher than the PET bottle with issues like someone needed at home or office to receive it at any given time."

When one examines the growth rates of the two segments — up to 50 per cent annually in bulk water business against only about 1-2 per cent at present in the bottles — Chauhan's stress on the former makes eminent economic sense.

Besides, competition in the domestic market is making things rather tough here. Pepsi has entered the bulk water segment, initially in two cities, but will expand this. Although it has priced the Aquafina jars at a premium, this is one more brand Chauhan will have to contend with in the high-growth bulk water segment besides local players.

Chauhan is not only taking his water overseas, he also repackaged Bisleri recently, keeping in mind the US foray. He says that initially Bisleri will be sold in half-litre bottles at about $1 but that later, the one-and-a-half litre pack size will also be added.

On his oft-voiced plans to tie up with a strategic partner by offering majority stake in the company, again Chauhan says negotiations have remained unsuccessful. "I have dropped plans to invite a strategic partner as of now. I want to grow the business first." Parle Bisleri was reported to be negotiating with Nestle as well as Group Danone of France some time ago to offload equity.

Thus, Chauhan has charted a clear course for his business: concentrate on the bulk water business in the domestic market while taking the brand overseas. And like his earlier endeavours, this strategy may yet reap rich dividends for desi brand Bisleri!

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