Marketing Articles

Bottled Water set to become billion-dollar industry
(Published in Economic Times, Ahm on 29th Sept.09)

One can not think about life without water. We are blessed with adequate natural resources of water but increasing population, alarming rate of global warming and rapid industrialization and lack of adequate and improved management of the water supply systems resulted in the increased rate of water consumption, wastage of water and deteriorating condition of the water supply networks and the result is, scarcity of water. The Water shortage around the world and particularly in the developing countries has opened new doors for bottled water Industry.

 
Bottled water is sold in a variety of packages right from 200 ml pouches and glasses, to 330 ml bottles, 500 ml bottles, to one-liter bottles and even 20- to 50-litre bulk water packs. In terms of cost the bottled water business in India can be divided broadly into three segments, premium natural mineral water, natural mineral water and packaged drinking water. It is obvious to found the bottled water manufacturer in metro cities though it might be running only in one room or shop, but its surprising to know that at present in many medium and small villages and even in some of the prosperous rural areas you will find the local manufactures of bottled water and local brand of bottled water laying with the well known brands on the same shelf.

Parle was the first major Indian company to enter the bottled water market in the country when it introduced Bisleri in India 25 years ago and created “Bisleri” as the synonym of mineral water but now that image is getting deteriorated with the entry of major international giants like Coca cola, Pepsi, Nestle and noticeable presence of national players like Mount Everest, Manikchand, Kingfisher. Their distribution network with professional marketing approach has resulted to capture the major chunk of the bottled water market though they are receiving good fight from the local players as well. One thing have to be noted in this business is that the required infrastructure and the distribution network requirements are same for major players and small or local players but in as per my belief where they can make difference is the only marketing and branding part.

Almost all the major international and national brands water bottles penetrated in the Indian market and are available at right from the malls to railway stations to bus stations to multiplexes to grocery stores and even at panwala's shop. It has penetrated so deeply in to market and now it’s become very common to consume bottled water where as before few years it was considered as the rich people's choice and fashion to consume bottle water. Thanks to low pricing and aggressive marketing strategies adopted by the multinationals. Some surveys show that truck drivers on highways form a major chunk of bottled water drinkers. Penetration in rural areas is another significant factor that is likely to play a key role in the development of the bottled water trade.

If we compare the growth and status of Indian Bottled Industry with that of Western or Asian market, we are far behind in terms of quantum, infrastructure, professionalism & standards’ implementation. The per capita consumption of mineral water in India is a mere 0.5-liter compared to 111 liter in Europe and 45-liter in USA. Also As per UN study conducted in 122 countries, in connection with water quality, India’s number was dismal 120. In comparison to global standards India's bottled water segment is largely unregulated. Safe water is rated with a different yardstick in different countries. In India, the aspect has been overlooked since long. Indian consumers tend to believe that any bottled water is safe water while this may not be true.

However there is no need to be disappointed looking at the global bottled water industry because our industry data shows that the Indian bottled water industry is one of the most booming sectors in India.

The Indian market is estimated at about Rs 1,000 Crore and is growing at whopping rate of 40 per cent. By 2010, it will reach Rs 4,000 - 5,000 Crore with 33 per cent market for natural mineral water. According to a national-level study, there are more than 200 bottled water brands in India and among them nearly 80 per cent are local brands. In fact, making bottled water is today a cottage industry in the country. However though having the large number of small and local producers, this industry is dominated by the big players like - Parle Bisleri, Coca-Cola, PepsiCo, Parle Agro, Nestle, Mount Everest, Kingfisher and Manikchand and so on. These players can be called as the trend setters in the marketing of packaged drinking water.

The recent industry figures indicates that the sales of bottled water grew from $189 million (USD) in 2003 to $599 million in 2008 -- a growth rate of 216 percent and it is expected that this figures will be doubled in the next five years. This growth rate makes Indian Bottled water market as one the fastest growing in the world. The factors contributing to such a rapid growth are sound economy, disposable income of the people, poor public water distribution system and infrastructure and the Indian government hardly cares for what happens to the nation's water resources. However like each industry is facing the challenges the Indian bottled water industry is also having bottlenecks like poor transportation infrastructure, low entry barriers, difficulties in brand recognition and sometimes threats from the environment protectors and social activist against the use of bottled water. Though ignoring all these hurdles and only looking at the above mentioned growth rate figure many bottled water companies think about their future business plans. For e.g. PepsiCo announced that it will double the investments in its Indian beverage business in 2009. The company's Indian beverage investments will be now total $220 million. Mount Everest Mineral Water, a subsidiary company of Tata will also very soon launch a bottled water brand for the mass market. Mount Everest presently sells only premium drinking water under the Himalayan brand.

The western part of India which accounts for around 40 per cent of the market and in particular Gujarat state more than 300 local and private companies are there packaging water pouches and bottles in the state.

If we look at the future of water in India, is very gloomy unless the water management practices are changed and if not taken any drastic steps towards this direction then we will face sever water crisis within next two decades and by that time will not left with enough money supply to build new infrastructure and also will not be able to satisfy increasing demand of water due to the population explosion in India.

Also World Bank draft report, `India's Water Economy: Bracing for a Turbulent Future,' says by 2020, India's demand for water will exceed all sources of supply unless the country's management practices are changed, and soon.

India can still store only relatively small quantities of its fickle rainfall. Whereas arid rich countries (such as the United States and Australia) have built over 5,000 cubic meters of water storage per capita, and China can store about 1,000 cubic meters per capita, India's dams can store only 200 cubic meters per person. Moreover, India can store only about 30 days of rainfall, compared to 900 days in major river basins in arid areas of developed countries.

In my view, thanks to all these factors the Indian bottled water industry will be booming in coming years and Do not be surprise if today’s bottles water industry becomes next Oil industry by 2025. The present Indian entrepreneurs and those who are planning to take the plunge in the bottled water business are thinking that the industry has reached to its peak point, and having stiff competition, need to change their perception because with the ever increasing demand of water the elephant is already grown and looking at the future of water in India, is continuously growing and one day it will turn into mammoth.
 

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About Author

Azaz Motiwala is a Marketing Consultant and CMD of IKON Marketing Consultants India a leading marketing consultancy company assisting corporate companies and SMEs with expert advices and solutions on various areas of marketing. http://www.ikonmarket.com

Co-Author - Taruna Sondarva  (Sr. Consultant at IKON Marketing Consultants)