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_ K. K. Mustafah

Packaged water is a Rs 1,500-crore market, not counting over 1,800 smaller brands.

Debdatta Das

Water has always been a big bone of contention between continents, countries and regions. However, this very source of sustenance is also proving to be an interesting battlefield for the corporate world, both Indian and multinational. In fact, it wo uld not be wrong to say that when someone predicted water will be the reason for some major wars in the future, they could not have been more right. So, be it the homegrown Tatas, Parle or DS Foods or multinationals PepsiCo and Coca-Cola, they all seem to be in a race with the ultimate objective being leadership in the rapidly growing packaged water market in India. The bottled water or the packaged water category, estimated to be over Rs 1,500 crore (not including the other smaller regional brands, which according to the Bureau of Indian Standards are more than 1,800 in number), has been witnessing an unprecedented amount of action. While on one hand Coca-Cola’s global acquisition of vitamin water brand Glaceau made news, it was Tata Tea that got the cash registers ringing with its much talked about acquisition of the premium mineral water brand, Himalayan. Says Ramesh Chauhan, Chairman of Parle Bisleri, and the creator of the packaged water market in India, “It was meant to happen. A lot has to do with the declining popularity of soft drinks or carbonated drinks and the increase in focus thereby on all beverages that are non-carbonated. Therefore one can easily see the reason behind the surge in the market of juice brands as well as water brands.” He continues, “When Bisleri (now the market leader with 60 per cent share) was started in 1967, it was the first-of-its-kind packaged water brand in the country. In fact, I decided to foray into packaged water only after I had sold off my carbonated beverages brands ThumsUp and Gold Spot to Coca-Cola. At that point, I had aimed Bisleri only at the foreigners and the diplomats who were not used to the quality of drinking water available in our country. However, I realised sometime later that Bisleri was not only being consumed by the foreigners but also by the common Indian person because he too was getting conscious about the quality of drinking water in India. That is when we decided to also lower the prices so as to be able to cater to the common Indian citizen.” Having tasted phenomenal success with the product to the extent that Bisleri became synonymous with bottled water, and now exporting the brand, Chauhan forayed into the packaged natural spring water category, a category that has been witnessing exponential growth, in double digit figures, over the past couple of years. Then there is the Tata Tea acquisition in June this year of the Mount Everest Mineral Water Company that manufactures the Himalayan brand of spring water. Tata Tea had then agreed to buying 24 per cent stake in that company for Rs 110 crore as well as making an open offer for an additional 20 per cent at Rs 140 per share, for an estimated Rs 100 crore, thereby making it the largest acquisition of a packaged water firm in the domestic market. However, Tata Tea’s acquisition was preceded by Coca-Cola’s global takeover of 30 per cent equity in Glaceau, a US-based vitamin water brand, which was held by the Indian beverage company, for an estimated $1.2 billion.

In fact, a Coca-Cola India spokesperson had earlier said that the US-based beverage giant, which already captures a fairly large share of the packaged mineral water category with its brand Kinley, is all set to foray into the flavoured and sparkling water category that till recently was the preserve of the indigenous Catch brand owned by DS Foods Ltd.

With the opening up of the non-carbonated beverages market, it is the flavoured water market that is going to see the largest influx of capital, say experts, with most of the large national and multinational players vying for a slot in the category. While Coca-Cola India has very clearly said that it would soon introduce its flavoured and sparkling water brands such as Bonaqua into the Indian market, domestic giants such as Bisleri and Tata Tea are also gearing up for the foray. According to Chauhan of Bisleri, the company would be introducing its range of flavoured waters by the end of December 2007.

PepsiCo, a significant player in the packaged water market with its brand Aquafina, is believed to have been toying with the idea of introducing flavoured water in the Indian market given the discomfort about carbonated drinks.

According to Homi Battiwalla, Vice-President (Emerging Categories), PepsiCo India, “India was the first market outside of the US to have Aquafina launched in 1999, when the market was beginning to grow. Today, the size of the bottled water category has become extremely large and highly competitive. However, the category is still largely commoditised and price-sensitive. But having said that, competition is healthy for the segment as it grows the category at large. Aquafina today is among the top three retail water brands in the country and has a significant share of the bottled water market.” However, on plans to foray in to the flavoured water segment, Battiwala said, “It’s still early days and we are evaluating the enhanced waters space. PepsiCo has a strong presence in the enhanced waters space globally.”

So, as these giants fight it out in an ever competitive market, experts predict that after fruit juices, water and its variants will be the single largest beverage category, growing and becoming at least 20 times of the current market size within the next 10-12 years.

More Stories on : Water | Brands | Insight

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