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Bisleri ties with US co to tap flavoured water market

Bisleri ties with US co to tap flavoured water market

Author | Source: The Economic Times | Thursday, Nov 02,2006 8:11 AM

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Bisleri ties with US co to tap flavoured water market

Bottled water major Bisleri, apart from launching enhanced water in the domestic market, is now in the process of entering the US market with flavoured water and vitamin water.

The game-plan for the US market is to enter with differentiated flavoured water piggy-backing on the wellness drive. The company has inked an agreement with the New York-based Minerva Group in this regard.

Minerva Group, which is the holding company, will manage the manufacturing, distribution and advertising of Bisleri's flavoured and mineral water, under one of its company called Apple Tree. According to Minerva Group chairman Mohan Shah, the initial investment of launching the flavoured water will be close to $5m.

While Bisleri will provide the technical know-how, Apple Tree will be in charge of all the operations and capital influx. Bisleri, according to sources in the know, will receive a royalty of approximately 5% for every dollar earned.

Bisleri flavours include rose, tamarind, cinnamon, lime & lemon, aniseed, nutmeg, Kevda (Indian wild cactus) and ginger & lemon along with vitamin water. According to Ramesh Chauhan, chairman, Bisleri International, “The water will have just a tinge of the proposed flavours, with no other preservatives and acids, so as to act as an actual health water drink.”

As of now, Apple tree will outsource the manufacturing to contract manufacturers in New York. However, in 12-15 months, Bisleri and Apple Tree plan to set up a manufacturing facility in the US jointly, and are looking at investing close $15m.

Explaining the rationale of behind tying up with Bisleri, Mr Shah said: “To be in the water business, one needs to partner with an established brand. So, while Bisleri is not known in the US today, it commands tremendous loyalty with the ethnic community, which is close to 4m people.”

The strategy with Bisleri's flavoured and vitamin water will be to first tap the Asian ethnic community and ride on Bisleri's brand name, apart from its current Maaza customer base, he added. “Once we establish ourselves with the Indian diaspora, we will then go on to broadbasing ourselves in the US market across all consumers.”

For Mr Chauhan, exporting India-bottled Bisleri water into the US doesn't make economic sense as transportation and logistic costs are not only steep, but also will pose to be a major challenge. Meanwhile, Bisleri, which is planning to set up its own bottling plant, is in the process of getting the regulatory approvals for the venture.

Two months ago, Tata Tea picked up 30% stake in US-based Energy Brands for $677m, which operates under the brand name of Glaceau. Its offerings include vitamin-water, fruit-water and smart-water. Glaceau is a growing brand in the US and commands the number two position with nearly 17% of the flavoured water market after PepsiCo's Propel at nearly 36%.

Analysts point out that developed markets show a clear trend in favour of unconventional beverages such as enhanced water, flavoured, fruit and vitamin water; enhanced water being a fast-growing, high-margin category in the US.

The Minerva Group is in the business of exporting shoes, apparels, costumes, high-end jewellery as well as water transportation systems in India, real estate and is now looking at establishing Apple Tree, its subsidiary as a full-fledged read-to-eat food and water business.

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