Twist In The Creek

If you ask anyone in Parle Industries about the possible sale of its immensely popular Bisleri brand, the answer would be a definite no. But that’s official. The unofficial-and perhaps the real-answer is that chairman and managing director Ramesh Chauhan is abroad, holding negotiations with a host of MNCs. There is Coca Cola, Chauhan’s favourite which had earlier bought his brands (Thums Up, Maaza and Limca) lock, stock and barrel, Groupe Danone (which recently launched Evian, India’s most expensive mineral water), Nestle (which will soon launch its Pure Life brand) and FMCG giant Unilever plc. Chauhan’s demand: a whopping Rs 500 crore. The market’s estimate: Rs 150-200 crore. And if the sale materialises and a global giant picks up a controlling stake in India’s largest bottled water company (which has 14 bottling plants, 2,000 trucks, 400,000 outlets and a staggering 65 per cent marketshare), it will be a veritable cakewalk for the bidder in the Rs 350-crore market.

Highly-placed industry sources admit Ramesh Chauhan-whose $40-million deal with Coca Cola was reportedly brokered by Purnendu Chatterjee of George Soros Fund-is scouting for either an outright buyer or a strategic partner. But why the sale, especially when Bisleri-along with brother Prakash Chauhan’s Bailey-controls almost 80 per cent of the market?

"Chauhan is having problems with his Rs 5 miniature bottles on the royalty issue with franchisees," sources reveal. Chauhan admitted recently during an interview with CNBC Asia that high production costs for the Rs 5 bottle (500 ml) were posing problems for Bisleri.

Other players in the market watch Chauhan’s move with interest, admitting anyone with such a share would definitely be calling the shots. After all, the domestic mineral and bottled water industry-estimated at 42.4 million litres-is registering a whopping 45 per cent growth per annum. No wonder 350 brands crowd the market, most being local players catering to scattered townships. Sales have grown from 5,000 cases a month five years ago to 2,00,000 cases a season (April-June).

Besides Bisleri and Bailey, the market has brands like Ganga, Acquapura, Atco, Goodwater, Tripti, Hello, Schweppes, Himalayan Wonder, Acquafina and Evian-the last being a direct import from France selling for Rs 80 a bottle. Nearly 90 per cent of the market comprises the one-litre segment where bottles are priced between Rs 10 and 15. There are five-litre packs (from Parle) and 20-litre Goodwater packs from Thermax Culligan which are popular with tent-house owners and caterers.

There’s more. Sources say Coca Cola India has already got into the market, having test-launched its brand, Schweppes, in Gujarat at Rs 14 for a one-litre bottle. Quips Coke marketing chief Sanjiv Gupta: "We want a share of the consumer’s parched throat... bottled water is a huge market in India."

The Coke launch follows that of its arch rival Pepsi’s Acquafina brand-the largest in the US-which was test-marketed in Mumbai recently and is now available in Mumbai, Bangalore, Chennai, Ahmedabad and Vadodara. "Pure and safe drinking water is in short supply. Which explains the explosive growth of the bottled water market," remarks Pepsi vice-president Deepak Jolly. Besides, the market awaits the launch of brands from Britannia, Nestle (which has already launched in neighbouring Pakistan) and Dharampal Premchand Limited (DPL), which is known for Baba Zarda and the Catch brand of pepper.

Observers feel with increased penetration by both domestic and multinational players, the bottled water market would register heavy growth in the next few years. "The potential for growth is huge...and why not? Most cities and rural belts lack access to quality drinking water," says water purification expert A.C. Chatterjee. He quotes from recent surveys which show 74 per cent of liquids consumed by Indians is water and most of that isn’t purified and, virtually, unsafe for consumption. This, in turn, causes nearly 35 per cent of water-borne diseases in the country.

Chatterjee feels with increased growth will come increased standardisation of bottled water: "The Indian market will eventually see the exit of small players because the giants have already started penetrating small towns. And unlike local players, the big-time players will follow stringent hygienic norms (with expensive treatment plants) as is the norm abroad." And that would definitely be good news for the parched throats at home.