After nearly three decades, veteran businessman Ramesh Chauhan is in the market again. This time his packaged drinking water business, Bisleri International, is on the block. Bisleri and Tata Consumer Products (TCPL) have both confirmed being in talks for a potential deal. Experts say if the deal goes through it could end up being the largest in the FMCG sector so far.

Chauhan has had a front row seat, witnessing the ebbs and flows of the beverage business in the country. He is known for successfully launching brands such as Thums Up and Limca, which he eventually sold to Coca-Cola India in 1993. Thums Up’s annual sales in 2021 crossed the billion-dollar mark in India. The entrepreneur next ensured that Bisleri became a household name so much so that it is often used as a generic name for bottled water in the country.

Tata’s play

TCPL has been looking to become a “formidable player” in the FMCG space. It has been angling for a stronger foothold especially in the packaged food and beverage space and has stated that it is open to inorganic growth opportunities.

Angel investor and business strategist Lloyd Mathias pointed out that the Tatas have been trying to make a play in the beverage segment for some time now. From acquiring Himalayan Natural Mineral Water to forming a joint venture with PepsiCo called NourishCo for beverages, the company has made several attempts at becoming a key player in this space. But it realised that the only way it could have a sizable beverage portfolio is to make a mainstream entry into the fast-growing bottled water segment, which is dominated by 3-4 brands, he added. Cut to 2020, Tata Consumer Products decided to acquire PepsiCo’s stake in NourishCo to strengthen and widen its presence in the beverage segment. In FY22, brand Himalayan broke even for the first time in its long history backed by a strong direct distribution.

“If the deal goes through, this acquisition will give TCPL an unparalleled reach and distribution because Bisleri is very deeply penetrated in every nook and corner of the country. Bisleri also has a very good sourcing strategy with a large number of company-owned and franchised plants. Most importantly, the deal will give them a powerful brand, that is synonymous with bottled water in the country,” says Mathias.

Analysts point out that the potential deal can help TCPL become the leading player in the packaged water market. The water market is expected to grow at a CAGR of 13.25 per cent on account of increasing disposable income, rising health and hygiene awareness, and increasing product innovation.

Abneesh Roy, ED- Institutional Equities, Nuvama Group, in a report states, “If TCPL acquires Bisleri, it can further scale up the brand due to its expertise and capabilities as well as distribution heft. It will become the dominant player in the branded segment. Overall, we believe Bisleri can potentially boost TCPL’s hydration portfolio. TCPL continues to be one of the most agile companies in driving inorganic growth.

“Bisleri will be a good bolt-on acquisition as TCPL already has a presence at the premium packaged mineral water with brand Himalayan as well as Tata Copper Plus Water, and Tata Gluco+ in the hydration segment,” he added. But, much water has to flow under the bridge before it’s a settled deal!