Thirsting For Growth

NOT long ago, few would have expected Pepsi to venture into the Rs 350-crore mineral water market. After all, market rumours suggested that the multinational was looking at peanut butter as its latest offering for the subcontinent's market. But this August, the cola giant made a quiet announcement in Mumbai about the launch of their bottled water under the Aquafina brand. "We will meet a long-standing consumer need for water they can trust at affordable prices," remarked PepsiCo Holdings chairman P.M. Sinha.

And it was not just Pepsi which is excited about the business. Soon after the cola titan test-marketed its product in Mumbai, food giant Britannia Industries followed suit, announcing it would test-launch its version in Bangalore in November. This was followed by Nestle's call that it would launch its Pure Life brand in December. The queue doesn't end there. Baba Zarda owner Dha-rampal Premchand Ltd has said it will hit the market early next year.

The euphoria is understandable. Observers claim the mineral and bottled water industry—estimated at 42.4 million litres a year—is growing at an impressive 45 per cent annually. No wonder that the Indian market—on a conservative estimate—has more than 350 brands, many of them purely regional and catering to scattered pockets. Current statistics show that the market has grown from 5,000 cases a month four years ago to 200,000 cases a season (April-June).

Nearly 65 per cent of the market is controlled by the Chauhan brothers of Parle, Ramesh and Prak-ash, with their Bisleri and Bailley brands, while the rest is split between brands like Ganga, Aquapura, Atco, Goodwater, Tripti, Hello, Schweppes, and Himalayan Wonder. The one-litre segment, with bottles priced at Rs 10-15, comprises more than 90 per cent of the market. Bisleri has also launched innovative half-litre bottles for Rs 5 and competitively-priced five-litre decanters for Rs 20. Right at the top is Evian—water from Alpine springs—at Rs 75 per litre, available in five-star hotels and heritage sites. There are other segments as well. For example, the Goodwater brand is being marketed by Thermax Culligan Water Technologies Ltd in 20-litre decanters, and is extremely popular with caterers.

Last fortnight, Parle officials announced plans for an annual investment of Rs 100 crore over the next five years to increase bottling capacity and marketshare. Besides bigger cities, the company was also focusing on small towns where awareness about safe drinking water is rising fast. Currently, Parle has 14 bottling plants and 2,000 trucks and retails through 400,000 outlets across the country. "It's no longer a rich man's product. It's a necessity now in India where it's very diffi-cult to get quality drinking water," says Parle chairman Ramesh Chauhan, adding: "We've been able to maintain this huge lead over others also because it's our core business." Chauhan says he is unperturbed by the entry of multinationals like Pepsi: "They are very, very new. Besides, some of them are extremely expensive. They have a long way to go."

Claims Ashish Sethi, director, Parle: "We do not see any immediate problem just because a few MNCs have entered the market. There are so many brands in the market but we still continue to grow fast. Second, sooner or later the market will understand the importance of staying with those who can provide quality. A unique thing about the bottled water market is that you can get in very fast and you can get out very fast as well. "

OTHER players in the sunrise segment remain equally optimistic. Not just the domestic market, a few of them have even ventured out and finalised tie-ups with departmental stores like Marsh in the US and Marks & Spen-cers in the UK. "The scope is immense and the volumes, naturally, huge. The market is primarily full of chemically tested and purified water. We started barely a year-and-a-half ago and already we are expecting stupendous growths to the tune of 300-400 per cent," said Nandita Pandey, marketing manager of Mount Everest Mineral Water Ltd, a subsidiary of the Dadi group, which markets mineral water under the Himalayan brand.

Agrees Raj Sujan, CEO of the Dhar-ampal Premchand group: "We are no newcomers to the food industry as our Catch brand of salt, pepper and rice are established brands in the Indian market. We are venturing into it because mineral water is a sunrise industry in India and has tremendous growth potential, especially for those who are willing to offer quality."

Analysts claim that the demand for quality drinking water will continue to drive growth in this segment for at least two more decades. According to recent surveys conducted by ORG-Marg, governmental and consumer awareness agencies, 74 per cent of liquid taken by the nation's population is water which people consume directly from source without purification. As a result of this, nearly 35 per cent of diseases in India are water-borne. Besides, these agencies found a direct link between the growth of the bottled or mineral water segment to the rise in a section of people's aspirational level.

But this phenomenal growth has been accompanied by disturbing news about a large number of companies in the business. Repeated studies by the Ahmedabad-based Consumer Education and Research Society has shown that few bottlers conform to the norms stipulated by the Central Committee on Food Standards, which necessitates that all mineral water be packed and marketed under the BIS (Bureau of Indian Standards) mark. There have been occasions when state-owned organisations like the Indian Railways, government-funded hospitals and diplomatic missions—in one case, even the American Embassy—banned a number of mineral water brands for not adhering to the norms stipulated by BIS.

"The irony is that many of these mineral water bottlers—especially the smaller players in the segment—get away scot-free because the certification is voluntary and not mandatory. And there lies the catch," rues a senior official of the BIS.

The official should know. But with a number of multinational companies with deep pockets entering the growing market, the domestic bottled water industry is likely to witness a major shakeout. And for those who have rarely bothered about stringent hygienic norms followed globally, it's time to rethink strategies.