MANAGEMENT EDUCATION AND RESEARCH INSTITUTE

CONTENTS

1. INTRODUCTION …………………………………………………………………1

2. AN INSIGHT INTO BOTTLED WATER INDUSTRY IN INDIA………………2

3. BISLERI ……………………………………………………………………………..7

4. AQUAFINA …………………………………………………………………………9

5. KINLEY …………………………………………………………………………….11

6. RECOMMENDATIONS……………………………………………………………14

7. CONCLUSION ……………………………………………………………………..15

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INTRODUCTION

AT the fourth World Water Forum held in Mexico City in March 2006, the 120-nation assembly could
not reach a consensus on declaring the right to safe and clean drinking water a human right. Millions of
people the world over do not have access to potable water supply. But it is good times for the bottled-
water industry, which is cashing in on the need for clean drinking water and the ability of the urban elite
to pay an exorbitant price for this very basic human need. Our ancestors might have thought and
imagined about any impossible face of the modern world other than to buy water for drinking. But
friends it is a poignant fact that we happily buy different brands of packaged water and show our trust in
quality of water we exchange for money

The fortunes of this more-than-$100-billion global industry are directly related to the human apathy
towards the environment - the more we pollute our water bodies, the more the sales of bottled water. It is
estimated that the global consumption of bottled water is nearing 200 billion litres - sufficient to satisfy
the daily drinking water need of one-fourth of the Indian population or about 4.5 per cent of the global
population.

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AN INSIGHT INTO BOTTLED WATER INDUSTRY IN INDIA

The bottled water industry is one of the most thriving sectors in India. The market is growing at a
whopping rate of about 55 per cent annually and is expected to cross Rs. 1000-crore mark within the
next couple of years.
Almost all major national and international brands have taken a plunge. Parle's Bisleri that virtually
monopolized the bottled water market is now vying with Nestle, Coca Cola, PepsiCo, Manikchand, UB
and Britannia. According to a national-level study, there are close to 200 bottled water brands in India.
Nearly 80% of these are local brands.

In India, the per capita bottled water consumption is still quite low - less than five litres a year as
compared to the global average of 24 litres. However, the total annual bottled water consumption has
risen rapidly in recent times - it has tripled between 1999 and 2004 - from about 1.5 billion litres to five
billion litres.

The rise of the Indian bottled water industry began with the economic liberalisation process in 1991. The
market was virtually stagnant until 1991, when the demand for bottled water was less than two million
cases a year. However, since 1991-1992 it has not looked back, and the demand in 2004-05 was a
staggering 82 million cases. 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
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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.

Bottled water is sold in a variety of packages: pouches and glasses, 330 ml bottles, 500 ml bottles, one-
litre bottles and even 20- to 50-litre bulk water packs. The formal bottled water business in India can be
divided broadly into three segments in terms of cost: premium natural mineral water, natural mineral
water and packaged drinking water.

Premium natural mineral water includes brands such as Evian, San Pelligrino and Perrier, which are
imported and priced between Rs.80 and Rs.110 a litre. Natural mineral water, with brands such as
Himalayan and Catch, is priced around Rs.20 a litre. Packaged drinking water, which is nothing but
treated water, is the biggest segment and includes brands such as Parle Bisleri, Coca-Cola's Kinley and
PepsiCo's Aquafina. They are priced in the range of Rs.10-12 a litre.

Attracted by the huge potential, that India's vast middle class offers, multinational players such as Coca-
Cola and PepsiCo have been trying for the past decade to capture the Indian bottled water market.

Today they have captured a significant portion of it. However, Parle Bisleri continues to hold 40 per
cent of the market share. Kinley and Aquafina are fast catching up, with Kinley holding 20-25 per cent
of the market and Aquafina approximately 10 per cent. The rest, including the smaller players, have 20-
25 per cent of the market share.

25%

40%

bisleri
kinley
aquafina
others

10%

25%

market share of different companies

Consumption of bottled water in India is linked to the level of prosperity in the different regions. The
western region accounts for 40 per cent of the market and the eastern region just 10. However, the

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bottling plants are concentrated in the southern region - of the approximately 1,200 bottling water plants
in India, 600 are in Tamil Nadu. This is a major problem because southern India, especially Tamil Nadu,
is water starved.

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The majority of the bottling plants - whether they produce bottled water or soft drinks - are dependent on
groundwater. They create huge water stress in the areas where they operate because groundwater is also
the main source - in most places the only source - of drinking water in India. This has created huge
conflict between the community and the bottling plants.

Private companies in India can siphon out, exhaust and export groundwater free because the
groundwater law in the country is archaic and not in tune with the realities of modern capitalist societies.

Treatment and purification account for the major cost. Even with the state-of-the-art treatment system
with reverse osmosis and membranes, the cost of treatment is a maximum of 25 paise a litre
(Rs.0.25/litre). Therefore, the cost of producing 1 litre of packaged drinking water in India, without
including the labour cost, is just Rs.0.25. In a nutshell, in manufacturing bottled water, the major costs
are not in the production of treated and purified water but in the packaging and marketing of it.

The cost of a bottle, along with the cap and the carton, is the single biggest cost - between Rs.2.50 and
Rs.3.75 for a one-litre bottle. For water sold in big plastic jars (20-50 litres), which are also reused, or in
pouches, this cost is much lower. It is precisely owing to this that companies sell water at even Re.1 a
litre in a 20-50 litre jar and still make profits. Labour and establishment and marketing costs are highly
variable and depend on the location and size of companies. Informal discussions with industry members
reveal that the gross profit of this industry can be as much as between 25 and 50 per cent.

The reason that companies do not have to bear the cost of the main raw material - water - has made this
industry highly profitable. But the real cost of the industry is huge.

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The cost of fast-

depleting groundwater is
incalculable and so is
the cost of disposal of
plastic bottles and
pouches. These are
hidden costs that society
and the environment pay
and will pay in the
future. The sale of
bottled water is therefore
not environmentally
sound by any stretch of
the imagination.

COMPANY PROFILE

Bisleri was originally an Italian Company created by Signor Felice Bisleri who first brought the idea of
selling bottled water in India. Bisleri then was introduced in Mumbai in glass bottles in two varieties –
bubbly & still in 1965. Parle bought over Bisleri (India) Ltd. in 1969 & started bottling Mineral water in
glass bottles under the brand name ‘Bisleri’.
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Parle Bisleri's Bisleri brand launched in 1971 was the leader with 70% market share. After 1993, the
branded mineral water industry saw some hectic activity. In the early 1990s, the branded mineral water
industry was worth Rs 3 billion, producing around 95 million liters in 1992. On an average, every three
months, a new brand was launched and another died. In the late 1990s, many international brands were
planning to enter the mineral water market. Currently Bisleri enjoys a market share about 40% in India
and is facing stiff competition from other national and international players.

Mr. Ramesh Chauhan is the vintage boss of Parle Bisleri Ltd. The brand has some 18 manufacturing
locations spread across the country. Bisleri continues to lead in the Rs 700-1,000 crore organized,
packaged water market with an estimated 40 per cent market share, In terms of volumes, the North and
West remain Bisleri's biggest performing markets, despite the brand's sustained national-level presence.
The brand name Bisleri is so popular in India that it's used as generic name for bottled mineral water.

Products profile

• Bisleri Mountain Water

• Bisleri Mineral Water

SWOT ANALYSIS:

Strengths:

• It enjoy a huge customer base

• It has a good brand image.
• Quality of product is of highest quality.
• Bisleri has a very good distribution structure in India.
• It enjoys monopoly in metropolitan and Tier-1 and Tier-2 cities along with Aquafina and
Kinley.

Weaknesses:

• Bisleri distinctly lacks in sales promotions in comparison to its competitors.

• It is expensive for common people.
• It is not easily available outside metropolitan and other big cities.

Opportunities:

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• It can explore international markets specially developing market.

• To minimize costs it can introduce pouches to reach common people.
• It should spend more on sales promotions to reinforce its brand image in the market.

Threats:

• Other Indian and international bottled water players, cola drinks, juices and beverages.
• Small-scale producers and vendors who sell non-branded products and serve small markets
• Rigid government trade policies are big threats which are hampering growth of this industry.
• Bisleri counterfeits are eating up its revenues and damaging its goodwill in the market.

Aquafina is a brand of bottled water. It was first distributed in Wichita, Kansas (USA) in 1994 and was
distributed across the United States, Canada, Turkey, Vietnam, Pakistan and India. As of 2003, it had
become the United States’ top-selling bottled water brand in measured retail channels.

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Aquafina uses PepsiCo's own seven-step purification system, which it calls HydRO-7, which includes
charcoal filtration, reverse osmosis, and ozonation. PepsiCo states in marketing material that this system
removes substances that may be in other brands of bottled water. As of July 27, 2007, PepsiCo put a
disclaimer stating the water comes from a "public source" on each bottle. Aquafina uses the term
"Purified Drinking Water" on its label

PepsiCo produces several other products under the Aquafina label:

• Aquafina Sparkling, carbonated flavored water, available in Berry Blast (Raspberry), and Citrus
Twist
• Aquafina FlavorSplash, flavored water (without carbonation), and artificially sweetened with
Sucralose, available in Grape, Citrus Blend, Wild Berry, and Raspberry.
• Aquafina Alive, a low calorie, vitamin-enhanced water beverage, available in Berry
Pomegranate, Peach Mango and Orange Lime.
• Aquafina plus+, a low calorie (120 calories per 591mL bottle), vitamin supplement water
beverage available in "Blackberry Grape", "Pomegranate Cherry","Passionfruit Citrus" and
"Orange Tangerine".

The brand is being manufactured out of seven plants in Roha (Maharashtra), Bangalore, Kosi, Bazpur,
Kolkata and Kerala. The seventh plant at Guntur has gone on stream recently. While five of these plants
are company-owned bottling operations, two plants in Kosi and Guntur are franchise-owned operations.

Aquafina has an overall market share of about 25% in India and it has emerged as the leading bottled
water brand in the UP market, followed by Bisleri and Kinley.

SWOT ANALYSIS

Strengths:

• It has a good back up from its parent company that is Pepsoco. So it can afford to invest huge
funds in marketing and R&D
• It enjoys an excellent distribution structure of PepsiCo. in India.
• It has a good brand image and also benefits from the brand image of PepsiCo.
• Quality of product is highly reliable and of highest quality.
• It enjoys monopoly in metropolitan and Tier-1 and Tier-2 cities along with Bisleri and Kinley.

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Weaknesses:

• Pricing is high for the common people.

• It is facing huge resistance from the local people and authorities, wherever its processing plants
are located because these plants are very rapidly exhausting the ground water resources of that area.
• Aquafina has virtually no presence in rural or economically backward areas.

Opportunities:

• It should introduce pouches to minimize costs and hence making it more affordable to common
people.
• It should utilize the distribution facility of PepsiCo to reach to the rural and ultimate customers.
• It should enhance its quality to establish itself in niche or premium market.

Threats:

• Other Indian and international bottled water players, cola drinks, juices and beverages, local
brands and unorganized local water vendors.
• It is falling victim of cannibalization from its parent company as cola drinks are posing threats
to its market share.

Kinley is a brand of still or carbonated water owned by The Coca-Cola Company and sold in many
Central European countries and India. Its carbonated forms are used for mixers, and also available in a
variety of fruit flavors.

The Kinley brand is used by Coca-Cola for two types of drinks:

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• A Carbonated water with a wide array of variants: tonic, bitter lemon, club soda and fruit
flavored. Available in Austria, Belgium, Bulgaria, Czech-Republic, Denmark, Germany,
Hungary, India, Israel, Italy, Lithuania, Luxembourg, Maldives, Moldova, Nepal, Netherlands,
Norway, Poland, Romania, Slovakia, Sweden, Switzerland, United States and Zambia.
• An High quality bottled water available in Bangladesh, Bulgaria, India, Maldives, Nigeria and
Pakistan.

Kinley has an overall market share of approximately 25% in India. It has seven production lines in India,
which include three company owned facilities at Bangalore, Mumbai and Delhi. The brand also has four
other production lines which are on contract agreement.

Why Kinley the brand name of Coca Cola is the most trusted health plank among all the three major
players of this industry i.e. Pepsi, Bisleri and Coca Cola. Probably the answer lies in the stringent quality
control process of Coca-Cola and its concern towards taste and purity of drinking water.

1. Quality standard of source water is checked prior to use and it’s processing. It is tasted for
potable drinking water quality. It is tested periodically if selected for use. All the tastes are done
with third party testing laboratories. Source water is protected and observed to avoid any
contamination.
2. Source of water id disinfected from microorganisms and metal ions by Clorination.
3. Molecular filtration is done by one of the methods of either reverse osmosis or coagulation.
4. Multi media filtration is done. Water is conveyed through different media to catch any impurity.
5. Water is purified through granular carbon filters. Here organic traces are removed.
6. Water is passed through high efficiency 5-micron meter filters to trap any activated carbon
particles.
7. Minerals are added to enhance the taste and to comply with the optimum mineral needs of
drinking water.
8. Water is filled and packed in sterilized plastic bottles.

Kinley ensures to provide minerals in packaged water. This is the reason why does taste of this brand
never alters. Consistency in the taste and composition makes Kinley the most favored brand among all
available drinking water brands. Kinley meets the Indian standard of drinking water IS 14543.

To maintain the consistency of quality Coca-Cola has selected three green field-manufacturing plants
located at Bidadi near Bangalore, Dasna in UP and plants in Goa and Maharashtra.

Treated water with mineral is an advantage when one consumes Kinley because other brands do not
give minerals in treated water. Less number of manufacturing plants always ensures quality of treated
water and consistency of source. One can witness the variation in taste of other brands and sometimes-
bitter taste too. Coca-Cola has a strong international audit system to monitor compliance to
international and local standards. Manufacturing facilities get audited against quality management
standards.

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SWOT ANALYSIS

Strengths:

• Kinley follows one the most stringent quality control process in the industry.
• It has maintained Consistency in the taste and composition over the years.
• It has a good back up from its parent company (Coca Cola). So it can afford to invest huge
funds in marketing and R&D
• It enjoys an excellent distribution structure and penetration of Coca Cola in India.
• It has a good brand image and also benefits from the brand image of Coca Cola.
• It enjoys monopoly in metropolitan and Tier-1 and Tier-2 cities along with Bisleri and
Aquafina.

Weaknesses:

• It’s not affordable for lower income groups of the society as they are very price sensitive.
• It is facing huge resistance along with Aquafina from the local people and authorities, wherever
their processing plants are located because these plants are very rapidly exhausting the ground water
resources of that area.
• Kinley has virtually no presence in rural or economically backward areas as is the case with
other mineral water brands.

Opportunities:

• It should introduce pouches to minimize costs and hence making it more affordable to common
people.
• It should utilize the distribution facility of Coca Cola to reach to the rural and ultimate
customers.
• It should enhance its quality to establish itself in niche or premium bottled water market.
• It should explore new business horizons in underdeveloped and developing economies of Latin
America, Africa and Asia.

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• It can look for the growth opportunities in EU an USA in the Bottled Water segment as it
already has its presence in Carbonated and Flavoured Water segment.

Threats:

• Other Indian and international bottled water players, cola drinks, juices and beverages, local
brands and unorganized local water vendors.
• It is falling victim of cannibalization from its parent company as cola drinks are also its
competitors in the market.

RECOMMENDATIONS:
(1) During Development stage every company should first analyze the market. Company should arrange
the market research in a most efficient and manner effective because the company's whole future
depends upon the proper analyses of the market.

(2) Every company should plan effectively to enter into the market. Company should focus on all the
aspect like social environment, political environment, cultural environment, demographical
environment etc.

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(3) When company introduces its product in the market it should first try to achieve break even point.
Initially the profits are negative or low at the introduction stage company should develop promotional
expenditure because of following needs.

(a) Inform potential consumers

(b) Induce product trail

(c) Secure distribution in retail Outlets Company should focus on those buyers who are the
most ready to buy.

(4) During growth stage when the product clicked in the market, then marketer should build intensive
distribution centers and build awareness and interest in the mass market and offer product extension,
service warranty because numbers of competitors get increased .during this stage company should use
several strategies to sustain rapid market growth.

(a) Company should improve its product quality and adds product features and improving
styling.

(b) Company should add new model and flanker products (i.e. product of different size, flavors,
and so forth that the main product.)

(c) Company should lower prices to attract the next layer of price sensitive buyers.

(5) During maturity stage company should try to diversify brand and items models, and try to edge over
the competitors .at this stage company should try to influence non- users into users to increase profit as
well as try to modify the product according to market requirements and build more intensive
distribution channels.

(6) During decline Stage Company should focus on the new product as sales and profits decline, some
companies withdraw from the market. Those remaining may reduce the number of products offer. They
may withdraw from smaller market segment and weaker trade channels, and they may cut their
promotion budget and reduce price further. And at this stage company should strongly focus on new
products to remain in the market and to maintain profit in the market.

CONCLUSIONS:

These are boom times for the Indian Bottled Water Industry - more so because the economics are sound,
the bottom line is fat and the Indian government hardly cares for what happens to the nation's water
resources.

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The majority of the bottling plants - whether they produce bottled water or soft drinks - are dependent on
groundwater. They create huge water stress in the areas where they operate because groundwater is also
the main source - in most places the only source - of drinking water in India. This has created huge
conflict between the community and the bottling plants.

Private companies in India can siphon out, exhaust and export groundwater free because the
groundwater law in the country is archaic and not in tune with the realities of modern capitalist societies.

The existing law says that "the person who owns the land owns the groundwater beneath". This means
that, theoretically, a person can buy one square meter of land and take all the groundwater of the
surrounding areas and the law of land cannot object to it. This law is the core of the conflict between
the community and the companies and the major reason for making the business of bottled water in the
country highly lucrative.

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