The bottled water industry is one of the country’s fastest-growing industries. It is worth Rs 2,200 crore and is growing at 40 per cent year on year. Currently, it constitutes 15 per cent of the overall packaged beverage industry. And that’s the reason, the category is witnessing huge action from marketers (both from organised and unorganised space).
Ajay Konale, Sr. Brand Manager, Still Beverages, Coca-Cola India says, “There’s a lot of latent potential in the India bottled water market and as an industry we have just about started to unlock the potential. The key to growth in this industry is to be able to provide the consumers with the product of their choice at the right place at the right time and at the right price.”
The packaged water business is divided broadly into two segments in terms of cost: premium natural mineral water and Packaged Drinking Water (also called table water). Premium natural mineral water is bottled at source, capturing all the natural minerals while Packaged Drinking Water is nothing but purified water. Booming Indian middle class characterized by disposable incomes and additional purchasing power has spurred consumption of this industry.
Place: the most important P
Consumers today have ‘on-the-go lifestyle’ and they look for hygienic drinking water. Thus, distribution of the product is the most important P for this category. The key to success is to make the roduct available at every distribution point right from high end malls to railway stations, bus stations, grocery stores and even local Paan kiosks. Availability is the key factor in the water segment since most retailers stock a single brand in their outlets. Abraham Koshy, Professor Marketing, IIM Ahmedabad, says, “The category survives on strong distribution network. If there is visibility, then a brand sells. There has to be availability of the product for it to win consumer’s confidence. Consumer is confident about a brand when there is visibility of the brand.”
However, the biggest challenge is that being a very heavy product, reaching every consumer when he demands the product is not an easy task. Anjana Ghosh, Director, Business Development, Bisleri International says, “Bisleri works on a model of putting up manufacturing plants closer to the market, so that the product can be placed on every shelf in that locality. We have 52 plants all over India, 3,000 vehicles, and around 2,500 strong sales force working in the market.” Apart from ensuring availability, this strategy also helps in bringing down high logistic costs and operations. A similar strategy is adopted by Bailley from Parle Agro. And while Bailley targets consumers across India, it has a stronger focus on Tier II and Tier III cities. Nadia Chauhan, Joint Managing Director & CMO, Parle Agro, says, “National players have plants in major towns and cities only where they have their bottling units. Bailley has plants in Tier II and Tier III cities as well. Consumers in these cities don’t have much of a choice and they have to compromise by consuming local brands.”
To capture a larger share of the market, Coca-Cola is distributing two packaged water brands: Kinley and BonAqua, both priced at par at Rs 15 per litre. Coca-Cola’s Konale explains, “Our flagship packaged water brand in India, Kinley, has done well in an extremely competitive segment. With the increase in on-the-go lifestyle, the market for packaged water category is growing extremely fast and there exists huge untapped potential. Hence, we have rolled out Bonaqua in select channels- convenience and organized retail to strengthen our leadership in the category.”
Low on advertising
The Table Water Category is very aggressive on price and thus the focus is less on advertising. Sample this: According to TAM Adex, in the year 2010, the total advertising hours on TV by this category was 280 hours which is a mere 0.1 per cent of the total TV advertising Volume of 2,26,506 in the same year. Ambi MG Parameswaran, Executive Director & CEO, DraftFCB+ Ulka says, “Bottled water brands have been caught in price wars that reduce their margins, as a result they have not had the money to do serious brand building like advertising. If they succeed in moving consumers up to premium water, or spring water, then they will have the margins to invest in advertising.”
The brands from Coca Cola and PepsiCo: Kinley and Aquafina are the two brands that advertise in the media as they focus on building brand value and brand recall. Kinley from Coca-Cola has positioned itself on trust and the campaign, “Boond Boond Mein Vishwas” focused on the same. “Kinley brand personifies trust, which is a key attribute in the packaged drinking water segment. Our product attribute matched with the brand positioning is a key reason that the brand has done so well in market despite aggressive and often low priced competitors,” says Konale.
Taking the same idea of trust to the next level, Kinley launched, the ‘Vishwas Karo’ campaign a few years back, which urged consumers to choose trust and give trust a chance to transform their lives. The campaign was very successful and had played a key role in establishing Kinley as a trustworthy brand in the consumer’s mind.
PepsiCo’s Aquafina, on the other hand, has positioned itself as a modern and youthful product. A brand expert, requesting anonymity, doesn’t understand how a youthful imagery can help a brand operating the packaged water category. “Maybe, Pepsico has done it, because, as group it has a youth focus. But I don’t see that helping them in this category,” he says.
Himalayan, from Tata Global Bevereges has positioned itself as a lifestyle brand has adopted the premium pricing strategy. Bisleri, which is the leader in the category with a market share of 60 per cent, does not believe in advertising as it has the first movers’ advantage. As Koshy says, Bisleri, which has been in the industry for a long time now and probably is the first player in the category, has won the consumer’s confidence and hence doesn’t advertise. Bisleri’s Ghosh believes that Bisleri has become a generic word for packaging water. “Every bottled water in India is sold as Bisleri. And that’s our target market - every consumer, who want to drink pure and safe water,” she says.
Experts feel that water is a category where there is very low scope of differentiation in terms of product, yet brands have managed to segment the category. And so we have: Premium Natural Mineral Water and Packaged Drinking Water. However, the packaged Drinking Water still dominates this category with 90 per cent share, while the mineral water segment contributes 10 per cent. There have been a few players getting into the tonic water and flavoured water space too.
The natural mineral water brands are priced between Rs 30 and Rs 50 and key brands in this space are Qua, Bisleri Vedica, Himalayan and Catch. Parmeswaram feels, “The more exciting game is being played out in the spring water space. Here, marketers have the option of charging a premium and make sure that sufficient investment is made on brand building. Himalayan is a brand that has a good chance of taking early lead in this space. It remains to be seen if they can justify the premium to Indian consumers who are intrinsically value driven.”
Ghosh too believes that Natural Mineral water is an emerging/evolving product. “It’s an aspirational product. Like a consumer aspires to move from a medium sized and low priced vehicle to a bigger car and more expensive car, it’s the same in Natural Mineral water. Consumers want to move from a bottled water to a more premium water, and we are observing a natural shift,” she adds.
However, there are certain challenges in marketing the premium natural mineral water. Retailers are not very keen on stocking these brands as the volumes are low. Also, freight costs are high in this segment as the water is sourced from the mountains. Ghosh says, “There is no major challenge in marketing Vedica, except for transporting it from the Himalayas (Uttarakhand) to various part of the country. Vedica is growing at a pace of 50 to 60 per cent but the base is very small as yet.”
Some brands are using different distribution system for marketing premium natural mineral water. For instance, for Himalayan, the distribution is handled by Nourishco a joint venture between the Tata Global Beverages and Pepsico. Pepsi uses the Tropicana Juice distribution network to distribute Himalayan, which is different from the distribution network used for Aquafina, the mass brand. Similarly, Qua the Narang Group’s premium narural water is distributed through the network used for energy drink Red Bull (also distributed by the Naranag group).
Meanwhile, the key players in the tonic water are Dharmpal Satyapal Group (Catch) and Catch Coca-Cola India (Schweppes). In the flavoured water segment, Catch Clear is the only player. Catch Clear flavoured water is actually a combination of sparkling spring water and natural fruit flavor, which is low on calories. Catch Beverages is targetting the high end consumers and that’s why the focus on niche products like tonic and flavoured water. As Puesh Gupta, Director, Dharampal Satyapal, says, “Catch Beverages, bottled at the source in Himalayas, is meant for the niche and high end customers. The different flavours and the categories have been developed keeping in mind, the well travelled, health conscious niche customer.”
For Indian consumers to develop the taste and liking for tonic water or flavoured water, it may take some time. Key players like Bisleri, Pepsico, Parle Agro and Tata Global Beverages don’t have any product in the niche segment like tonic or flavoured water. Parle Agro’s Chauhan feels, “While the water industry is large in size and growing at a good rate, it is still at a nascent stage.”
However, the biggest challenge for the category is battling the unorganised players. As per Neilson data, almost 70 per cent of the entire bottled water industry is unorganised. As these unorganised players offer higher margins, the retailers also push these local brands. And this product being an impulse purchase, consumers also tend to take what is pushed by the retailer. Another challenge for this industry in the future may come from the debate on eco-friendliness or the eco-non-friendliness of bottled water as a category. But that movement is yet to rear its green head in India.
(With inputs from Purba Das)