INTRODUCTION

THE PACKAGED DRINKING WATER INDUSTRY-AN OVERVIEW

India is the tenth largest bottled water consumer in the world. In 2002, the industry had an
estimated turnover of Rs.10 billion (Rs.1,000 crores).Today it is one of India's fastest growing
industrial sectors. Between 1999 and 2004, the Indian bottled water market grew at a compound
annual growth rate (CAGR) of 25 per cent - the highest in the world. With over a thousand bottled
water producers, the Indian bottled water industry is big by even international standards. There are
more than 200 brands, nearly 80 per cent of which are local. Most of the small-scale producers sell
non-branded products and serve small markets. In fact, making bottled water is today a cottage
industry in the country. Leave alone the metros, where a bottled-water manufacturer can be found
even in a one-room shop, in every medium and small city and even some prosperous rural areas
there are bottled water manufacturers. 

Despite the large number of small producers, this industry is dominated by the big players – Parle
Bisleri, Coca-Cola, PepsiCo, Parle Agro, Mohan Meakins, SKN Breweries and so on. 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. 

OVERVIEW OF THE MARKET SHARE

Currently, Bisleri continues to lead in the Rs 700-1,000 crore organized, packaged water market with
an estimated 40 per cent market share, followed by Kinley at 28 per cent and Aquafina with an 11
per cent share. In terms of volumes, the North and West remain Bisleri’s biggest performing
markets, despite the brand’s sustained national-level presence. The market has been growing for the
last three years at an unimaginable rate of 80%. The market size of bottled water is expected to
surpass the size of soft drinks market very soon in the near future.

BISLERI-60% AQUAFINA-13% KINGFISHER-6% KINLEY-10% XALTA- 5% OTHERS-6%

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Due to the demand for water, a large number of “mineral water manufacturers” have been spawned
selling little more than tap water to the unsuspecting consumer, the majority of whom are still very
native about mineral water. Pepsi Co’s Aquafina brand, which debuted the bottled water business in
September 1999, targets the youth sector and concentrates on just one pack size, 750ml priced ten
rupees.

Coca-Cola is the most recent entrant (May 2000) with its Kinley, brand and in a controversial and
unsuccessful marketing campaign, it obtained an endorsement from the Federation of Family
Physicians’ Association of India (FFPAI), a lesser known body of doctors for its brand.

Estimates show that there are around 100 small regional players in the bottle water market and the
number have been growing at an unbelievable 70%-100% per year, year on year, for the past four
years. This has enticed a number of international brands in the market besides Coca-Cola and
PepsiCo-Nestle (Pure Life), Britannia, Lever, United Breweries and Shaw Wallace. Danone Pairs
launched Evian some time back and even imported hundreds of cases for VIP guests celebrating the
Hindu festival, KumbhMela.

Until recently the government of had set standards only for mineral water and even the PFA
(Prevention of Food Adulteration Act) and BIS (Bureau of Indian Standards) were deficient when
compared to international markets. Under the new regulations 48 specifications are to be met for
water to become mineral water and for packaged drinking water there are 43 specifications.

The bottled water market is growing at 21% CAGR (compound annual growth rate) and will grow
over four-folds to Rs 36,000 crore by 2020.

"The increasing scarcity of safe drinking water, changing life styles and aggressive expansion by
market players may lead this industry to be the next oil industry in coming decade," Motiwala,
expressing optimism about the future of Indian bottled water market, said.

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MARKET SEGMENTATION

1) According to the type of Consumers:

 Foreign Tourists
Foreign tourists have been the main consumers of the mineral water as they face a lot of
digestion problems due to different food habits.
 Domestic Tourists
Domestic tourists have switched to mineral water mainly because of safety and hygiene
factors.
 Health/Fashion Conscious
Like soft drinks, drinking mineral water is also considered fashionable by some people.

The mineral water consumer is mainly in the age group of 20-35 years and is an educated middle-
class person. This is also the segment of fruit drinks, which have usually been positioned as fun
and health drink for young adults.

2) According to the Pack Sizes:

 One litre bottle

This is meant to spell safety and security for consumers. It is positioned on a prestige
platform for the achiever segment - who like to make a fashion statement by drinking
mineral water. This segment gets the maximum sales.
 500ml bottle
This size has been introduced in the market to target the individual and local travellers.
 PET bottles
The size of the PET bottles varies from 10 to 20 litres. These are mainly for institutional sales
(Wedding parties, Hotels, Corporate, etc.)

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CONSUMER HABITS AND PRACTICES

 Consumers are growing more health conscious and are more careful of their drinking habits.
 Brand loyalty is very low as all the products taste the same so they can buy just any product
which is on the shelf, same as that of soft drinks and fruit beverages.
 Availability in the chilled form and brand awareness plays a crucial role in purchase
decisions.
 While there is no aversion to consumption of mineral water by any age group, this product is
mainly consumed by the people in the age group of 20-35 years who have less attraction of
soft drinks or other synthetic drinks whereas youngsters look in for soft drinks and fruit
beverages to quench their thirst.
 Visibility is another factor that should be taken care of by the companies as consumers are
not very brand loyal and consume whatever is in front of them.

Consumers often drink bottled water as an alternative to tap water. They think it tastes better
(no chlorine taste) and perceive it to be safer and of better quality. They also look for security:
food scandals in industrialized countries and water-borne diseases in developing countries
greatly influence consumers’ attitudes. Consumers buy bottled water to feel well and to lose
weight. Bottled water is perceived as a healthy alternative to other beverages. Thus, for the
aerated beverages bottled water offers a potential threat.

Moreover, increasing urbanization, causing declines in tap-water quality, can also explain the
popularity. Because it is untreated, natural mineral water is perceived as “natural” by city
dwellers looking for genuine products. Higher living standards and auto usage enable people to
easily bring home more and heavier bottles of water. At the office, a bottle of water is now a
common sight on the desk, next to the computer and the telephone. Drinking bottled water is a
sign of a rise in the social scale. Above all, bottled water has become a huge marketing success.

Fig: The factors that potentially impact the consumer behaviour of drinking water choices

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SWOT ANALYSIS OF THE PACKAGED DRINKING WATER INDUSTRY

PORTER’S FIVE FORCE ANALYSIS:

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MAJOR PLAYERS IN THE PACKAGED DRINKING WATER INDUSTRY

With over 200 players jostling to be the thirst-quenching favourite of the Indian consumer, the
business is growing at a rate of over 50 per cent annually. The country’s bottled water business is
estimated to be around Rs. 1,100/- crore, of which the branded market accounts for Rs. 700 crore
and about 700 million litres in volume.

After the Cola wars the time has come for water wars. Here we discuss the major players and
warriors in the bottled water market.

TOP 2 PLAYERS:

1. BISLERI-A CONCERN OF PARLEY

The brand is a product of Parle International and presently is the market leader with more than 45%
market share. The company pioneered the concept of bottled water in the Indian market as early as
1967. The company is also credited with SKUs of 500ml, 1.2 ltr, 1.5 ltr and 2 ltr in the Indian market.

The re-launch of Bisleri in 1993, however was a success due to growing awareness and high
consciousness of health and hygiene among people. In 1993, when Ramesh Chauhan, Chairman,
Parle Bisleri sold his right to market Bisleri brand to Coca-Cola, Bisleri, which underwent the new
management for a period of 5 years, remained largely neglected. On getting the rights back, he
started building Bisleri as a mineral water brand. Bisleri had a brand name, a product, the brand
building of Bisleri started in a small way in 1998, which bore fruit in 1999- 2000 when it grew by
140%.

Positioning : Playing Safe

Target Audience : Health and hygiene conscious people

Personality : Guardian, Authoritative, Reliable

Punch Line : “Play Safe”

USP : Pioneer advantage in bottled water industry

Old player with lot of Experience

In the case of 500ml and 1 litre it directly supplies to the retailer.

In the case of 20 litre jar they have appointed distributor over the area to reach through the
corporate. But then also they lack in providing better service to the customer.

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2. KINLEY-A CONCERN OF COCA COLA

This brand was first introduced in the country in March 1998, when Coca Cola launched Kinley Soda.
The company entered in the business in May’00 through its brand, Kinley. The company tied up with
Kothari Beverages, of Yes brand of mineral water, for manufacturing coke’s brand at Yes’ facilities.
Starting with Bangalore, Kinley mineral water was rolled out nationally in a phased manner.

Positioning : Safety and health oriented

Target audience : Health and hygiene conscious people

Personality : Trustworthy, Strong, Confident

Punch Line : “Boond Boond mein Vishwas”

USP : Belongs to the Coca Cola lineage

Gains advantage from the distribution and retail network

In the case of 1 litre and 500ml it directly supplies to the retailer without any distributor.
In the case of 20 litre jar they have their own distributor.

OTHER PLAYERS:

6. BAILEY-A CONCERN OF PARLE

Though a pioneer in this field; Mr. Ramesh Chauhan Chairman- of Parle Bisleri had to contend with
several new entrants in this segment. For starters, his own brother, Mr. Prakash Chauhan through
Brand Bailey has been trying to emulate the Bisleri success through the franchising route, but Bailey
has never been successful in it. The brand is a product of Parle Agro, the company of Frooti fame.
The company presently is the second largest player in the market with share of 20%. The company
has recently extended its Bailey brand name for its soda water. It is also credited with forming a new
segment of 330ml SKU in the market.

Target Audience : Health and hygiene conscious people

Personality : Guardian, Authoritative, Reliable

Punch Line : “I want my bailey”

USP : Pioneer advantage in bottled water industry

Old player with lot of Experience

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3. AQUAFINA-A CONCERN OF PEPSI CO

Entered the bottled water business in September 1999 by test launching its first in Mumbai and then
in Bangalore. PEPSI with its AQUAFINA brand has backing of a good distribution channel of 60000
outlets, its refrigerators at retail outlets which stock its cold drinks along with Aquafina as well.
Initially Aquafina was available in just one pack-750 ml and was priced at Rs. 10. Now they also have
competing packages of 500ml and 1 ltr ml pack priced at Rs.6 and Rs. 10 respectively. The main
target audience for Aquafina is the youth segment. By end 2002 PEPSI added 7 more to its existing
base of 5 plants. Unlike most players, Pepsi is not looking at bulk buys or in-house consumption at
the moment. The focus was thus only on one SKU, that too 750ml.

4. PURE LIFE-A CONCERN OF NESTLE

With its mass-market product branded PURE LIFE has banked on its distribution network for
chocolate, which are marketed through a large chain of retail outlets. Pure Life is aimed to have a
National presence; the second brand which is being tried for by the company is aimed at targeting
the regional markets. Pure Life is for Mass Market like hotels, restaurants and cafe segment. The
company has priced the ‘Pure Life’ brand very competitively in the market.

7. HIMALAYAN- A JOINT VENTURE

As the brand tag goes ‘Live Pure’, the company totally believes in the fact. A joint venture between
Tata Global Beverages and PepsiCo India, this packaged water boasts of using totally natural water
without any chemical processing. This is the only packaged water Indian brand that has
accreditations from renowned institutes across the world including Institute De Fresenius, US FDA
and the Health Ministries of Japan & France.

8. EVIAN- A CONCERN OF BRITANNIA

Evian by DANONE INTERNATIONAL is marketed by BRITANNIA INDUSTRIES in India. The high-priced

mineral water from French Alps is clearly targeted at the premium segment of consumer. Currently
Evian has more of an Institutional presence (5 star hotels) than on retail shelves. With 1 litre bottle
being priced a hefty Rs.80

9. RAILNEER- A CONCERN OF INDIAN RAILWAY

This is owned by Indian Railway and is now a brand that quenches thirsts of millions travelling by
train. Indian Railways installed 4 Neer bottling plants that produce 6.14 lakhs of packaged bottles per
day. The Indian Railways plans to produce 16 crore water bottles with a turnover of Rs 120 crore.

UPCOMING INDUSTRIES:

 Britannia also plans to launch its own branded water very soon.
 NATIONAL DIARY DEVELOPMENT BOARD also plans to launch DHARA through its distribution
channel.
 Even HLL is said to be firming up plans to enter the market.

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3) According to the price:

The market can also be divided on the basis of the price at which this bottled water is available into
three categories:

 Super Premium mineral water

Presently, Evian of Danone group; Perrier and San-Pellegrino of Nestle belong to super
premium category.
 Premium Local natural mineral water
Catch, Himalayan, Brilliant etc. belong to premium local natural mineral water category.
 Popular or Plain bottled water
All other brands like Bisleri, Bailley, Kinley, Aquafina etc. belong to popular or plain bottled
water category.

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