Corporate: Getting High On Water

CORPORATE: MARKETING
Getting High On Water

The branded water market is witnessing a flood of players as the
consumer gives second preference to soft drinks.

By Shamni Pande

''The only water I stocked was the one which I got in a cool keg from home. Now, I stock branded water bottles. The sales have picked up ten-fold in the last two years,'' says the owner of an up-market south Delhi departmental store.

''I have paanwallas in small towns who don't just stock Bisleri water bottles, but eagerly display them. That's the real test of success,'' says Ramesh Chauhan, 59, the former cola king and now CEO of Parle Bisleri.

So, this summer, what are people likely to reach for to quench their thirst: a can of Coke or Pepsi, a tetrapak of fresh juice, or a bottle of branded water? Branded water! That sounds preposterous, especially when bottled soft drinks account for nearly four-fifths of Rs 5,100-crore (organised) market for soft drinks, fruit juices, and bottled drinks. But it isn't when one considers that branded water accounts for the fastest-growing segment in the market. The Rs 700-crore segment, which is crowded with 186 brands, witnessed a 70 per cent growth last year.

That explains why Ramesh Chauhan is excited about Bisleri, which clocked a turnover of Rs 350 crore last year and is estimated to become a Rs 1,000-crore brand in three years. Explains Kunal K. Sinha, 33, Director (Consumer Insight), McCann-Erickson India: ''It's amazing to see the number of people opting for branded water. Also, we saw during our in-home segment study that customers were ordering large packs (up to 20 litre) of branded water for in-house consumption.'' Add to all this the fact that while the per capita consumption of fruit juices is insignificant and that of soft drinks is five glasses per year in the country, the minimum prescribed water intake per person is eight glasses per day.

In fact, a clear differentiation is happening among the medley of water brands in terms of both pricing and positioning. While Bisleri is touting itself as ''pure and safe'' and trying to break the price barrier with the launch of 500-ml bottles for Rs 5, brands like Bailey, Yes, and Hello are riding the mineral water wave. And Evian, launched by French transnational Danone and priced at Rs 80 for a one-litre bottle, is selling itself as ''water from the French Alps'' and competing with premium soft drinks.

The low fizz among cola makers

The case for water becomes stronger when one looks at the growth in other segments of the market: like bottled soft drinks and fruit juices. Bemoans Rahul Dhawan, 47, Director (External Affairs), Coca Cola: ''The industry has seen minimal growth for two years, and sales are expected to remain flat this summer.'' Vibha Paul Rishi, 40, Executive Director (Marketing), Pepsi Foods, is just a wee bit more hopeful: ''This year, the sales in April were good and, hopefully, May will be better.''

For cola makers, the ability to open up new price points would ensure further growth. Agrees Jagdeep Kapoor, 39, Managing Director, Samsika Marketing Consultants: ''The low growth in bottled soft drinks is related to pricing and sizing.'' Indeed, both Coke and Pepsi have tried to change that by introducing 200-ml bottles at the low-end and the two-litre pet bottles at the other extreme. But sales of the high-volume packs haven't picked up since 80 per cent of soft drink consumption is away from home.

Although marketers are gung ho about the Rs 100-crore fruit juice segment, it is still early days. And estimates about the near future vary. While Amit Burman, the CEO of Dabur Foods, which launched Real in 1996 and claims a marketshare of 55 per cent in the segment, projects an annual growth of 30 per cent, Kapoor feels it will be higher at 50 per cent. Abhay Manglik, Country Manager, Tropicana Beverages Company, estimates the market at Rs 300 crore in two years.

What favours growth in the branded-water segment is the country's changing demographics. Typically, cola and orange drinks appeal to younger people in the age group of 10-25 years. And the growing population of yuppies in the 25-35 years category would opt for the conservative fruit juices or branded water for health reasons. Explains Gautam Nath, 40, Vice-President, MBL India: ''While the majority of India's population lies in the 10-35 age-group, there are at least twice as many people in the 25-35 age group compared to the 10-25 band.''

Today's customer is not driven solely by hygiene reasons into opting for branded water. The product is fast becoming part of the millennial lifestyle. Ironically, lifestyle has been the main positioning plank for all soft drink manufacturers. Therefore, the consumer divide between soft drinks and branded water is narrowing, especially since most water-like soft drinks-is consumed away from home. That explains why soft drink manufacturers are entering the branded water segment.

The high fizz among competitors

Given the dynamics, and the fact that distribution and logistics hold the key to success in the branded water business, who is best-placed to emerge as the leader? Ramesh Chauhan's Bisleri and his brother Prakash Chauhan's Bailey are going to thrive for sure. But soft drink majors like Coke and Pepsi will definitely tap this market too. And foods giants like Nestlé and Hindustan Lever Ltd (HLL), which are considering entering the market, and Britannia (which distributes parent Danone's Evian) are expected to do well given their existing distribution networks.

Indeed, most of these companies will soon have a presence in all segments of the liquid-refreshment market. Pepsi is already entrenched in these segments with Tropicana fruit juices, Aquafina branded water, and a clutch of soft drink brands. Coke can easily launch its water brands, a business it entered a year ago globally. Says Dhawan: ''Globally, we adopt locally-focused strategies.'' And Nestlé and HLL have ambitious plans for the foods sector. Clearly, in their strategy, hawking branded water would be an important ingredient.

Issue Contents Write to us Subscriptions Syndication