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[Contn.] Water Wars The Bulk-Water Boom
Verma doesn't lose much sleep over these brands. His company, Prime Water, was one of the first to realise the opportunity presented by the 'bulk-water' market. Bisleri, Kinley, Prime, and Hello are the major brands in the segment-the water comes in 5, 10, 20, or 25 litre containers-which accounts for 25 per cent of the total market for water. In some markets, though, this proportion could be as high as 50 per cent. Chennai and parts of Tamil Nadu are a case in point. Almost 50 per cent of the water sold in these markets is in the form of 12- or 20-litre packs. ''Bulk-packs make sense in Chennai as there is a perennial water shortage here,'' says Ravishankar. Bisleri is the dominant player in the segment, although it faces competition from local companies-Apollo in Chennai and Prime in Delhi-in specific markets. However, these equations could change with Kinley's recent entry into the market. ''Bulk water sales is a great opportunity and we use direct marketing to sell (bulk) water to institutions and households,'' says Behr. Not everyone shares his enthusiasm. PepsiCo's Executive Director (Marketing), Vibha Rishi is certain that her company will not extend the Aquafina brand into the bulk water segment. ''Never mix the bulk and bottled stuff,'' she warns. ''The bulk segment is dependant on franchising and that impacts quality.'' That isn't the only problem, adds Prime's Verma. ''A bulk container costs anywhere between Rs 200 and Rs 300. These have to be retrieved and sent back to the company or franchisee for refilling. Distributors are loath to wait and fill the jar themselves.'' Still, with most urban areas facing a shortage of drinking water-ask people from Chennai and Bangalore; they'll tell you stories-the bulk segment looks set to boom. A National Sample Survey conducted by the Central Statistical Organisation in 1988, showed that 72.1 per cent of urban households had access to piped water; by 1998, this proportion had reduced to 70.1 per cent. And with most urban 'consuming class' customers aware of the importance of pure drinking water, the future looks promising for companies vending the commodity.
Differentiating Drinking Water Traditionally, mineral water brands have differentiated themselves on taste. But there are only three mineral water brands in India-Himalayan, Catch, and Lifespring-and the market is dominated by packaged drinking water brands. Explains Satish Chander, Additional Director General, BIS: ''The difference between the two is that mineral water isn't to be processed, while packaged drinking water needs to be processed and treated.'' It won't be easy for the brands to differentiate themselves. Coke and Pepsi claim their water is purer than pure, but building a brand around purity in a market where everyone else claims the same product-feature is tough. The premium end of the market is the least crowded with just four brands: Danone's Evian and Ferrarelle and Nestlé's Perrier and San Pellagrino. Evian retails at Rs 85 a litre; Perrier (a sparkling water-that means it is carbonated), at Rs 90 for 750 ml. Not many companies are keen to enter this segment, and Danone itself isn't averse to moving a step below. Danone may go mass-market with the Britannia brand of water. ''But for the moment, we are sticking to the concept of 'lifestyle' beverages,'' says Suveen Sahib, Country Manager (India and South Asia), Danone. The popular segment-brands priced at between Rs 8 and Rs 12 a litre-is where the action is. ''This is a man eat dog kind of segment,'' laughs an executive at a market research firm. Coke and Pepsi have positioned themselves snugly in this segment, and a mix of high-decibel advertising, smart merchandising and a focus on distribution have seen them carve out a third of the market between them. The lower-end comprises water sold in polythene pouches, but the market for these is almost non-existent in the northern and western parts of the country, and it is dominated by small companies. The real battle, then, is between Coke and Pepsi. With the cola market remaining stagnant for the past few years, the water one, with its 40 per cent growth, should come across as an attractive option for these companies. Coca-Cola expects to invest Rs 70-75 crore in its water business over the next three years; for PepsiCo, the corresponding amount is Rs 80-100 crore. Already, Kinley contributes 5 per cent to Coke's revenues in India, and Rishi claims that by the end of 2002, Aquafina will account for 7 per cent of PepsiCo's Indian revenues. The dark horse is Ramesh Chauhan; his brother Prakash Chauhan's Bailley brand has seen its share dip to 10 per cent and is no longer a threat to Aquafina and Kinley. For the moment, Ramesh Chauhan has put on hold his plans to sell a 49 per cent stake in his company (Danone and Nestlé were reported to be interested). The buzz in the market is that Chauhan will wait until 2003, when his business will touch the Rs 1,000 crore turnover-before bailing out. Only, given the rapidity with which Kinley and Aquafina have eroded Bisleri's marketshare that may be too late. 1 | 2 |
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