Bottled Water IN India- MARKET REPORT
Headlines
·
Off-trade bottled water sales
grew by 26% in value in 2008, to reach Rs28.5 billion
·
Major brands have undergone
image makeovers
·
Still bottled water dominates
the sector, with flavoured, functional and carbonated products still having a
negligible presence
·
Unit prices increased
marginally in 2008
·
Competition is heating up as
players vie for consumers’ attention
·
Off-trade bottled water sales
are expected to record CAGRs of just over 16% in volume terms and approaching
17% in constant value terms over the forecast period.
Trends
·
With more and more companies
recognising the potential in bottled water in India, competition heated up in
2008, and leading companies updated their offerings with revamped bottle
shapes, label designs and new communication campaigns. In an effort to carve
out market share in an increasingly crowded space, brands such as Bailley,
Kinley, Aquafina and Himalayan underwent changes in packaging and labelling to
gain more stylish looks. While Bisleri had undergone an image makeover in terms
of colour and bottle shape in 2007, plans were set in motion in early 2008 to
ramp up the brand’s image by extending it to flavoured water.
·
2008 off-trade value growth was
in line with the review period CAGR. With growing health consciousness and a
lack of reliable supplies of safe drinking water in urban and semi-urban areas,
more and more people have adopted bottled water for on-the-go consumption, as
well as bulk bottled water for at-home consumption. The increased availability
of cheap home delivery of bulk bottled water from local and regional suppliers
also increased the penetration of bottled water in the review period.
·
The bottled water sector in
India is dominated by still bottled water, with flavoured and carbonated bottled
water having a very small presence. With all the leading brands undergoing
makeovers, and companies emphasising the health benefits and purity of bottled
water, still bottled water saw robust growth in 2008.
·
The home delivery of bulk
bottled water is thriving in the off-trade bottled channel, as bulk bottled
water is a convenient and low-cost solution to the problems of unreliable
municipal water supplies in cities and towns in the summer months. An
increasingly educated and health conscious urban consumer base is also wary of
consuming contaminated water outside the home, and people frequently consume
bottled water bought from independent grocers and convenience stores.
·
On-trade volumes grew at the
same rate as off-trade volumes in 2008. Consumption of the more upmarket
mineral water is much higher in on-trade channels compared to off-trade trade
channels, and brands like Evian and Himlayan are frequently offered to
consumers by high-end on-trade establishments. Fountain sales of bottled water
are not available in India.
·
Average off-trade unit prices
moved up marginally in 2008, with increases in input costs putting pressure on
companies.
·
Direct selling accounted for
18% of off-trade volume sales of still bottled water sales in India in 2008.
While national players such as Parle Bisleri and PepsiCo India do undertake
direct selling of bulk bottled water, the channel is dominated by local and
regional players, which are able to offer consumers discounts and free home
delivery. The unorganised sector also has a very large presence in direct
selling of bottled water, and the supply of counterfeit products by tampering
with the seals of organised players’ products is common.
·
Flavoured water in India has a
very niche presence, and is dominated by DS Foods’ brand, Catch, which is
available in several variants, such as peach, blackcurrant and lemon. While the
brand is predominantly a regional brand from North India it was extended to
high-end supermarkets in Bangalore and other large cities in 2008. The brand is
priced at a premium of approximately 500% to regular still bottled water. Parle
Bisleri and Tata Tea’s Mount Everest Mineral Water initiated plans to extend
their brand portfolios to include flavoured water in 2008.
Competitive Landscape
·
Bottled water sales are led by
Parle Bisleri Ltd, with the Bisleri brand commanding a 39% share of total
volume sales in 2008. Bisleri is the leader in both on-trade and off-trade
volume sales. In 2008, it was followed by Coca-Cola India Pvt Ltd’s Kinley
brand, with just over 20% of total volume sales. PepsiCo India Holdings Pvt Ltd
ranked third with its brand, Aquafina, which accounted for almost 14% of total
volume sales. In addition to the national level players, there are numerous
regional and local players crowding the market. Prominent amongst these is
Dhariwal Industries Ltd, with 9% of total volume sales, thanks to its Oxyrich
brand, which enjoys strong prominence in West India.
·
Parle Bisleri increased its
off-trade volume share by one percentage point in 2008. In addition to its
significant first mover advantage, with Bisleri being almost synonymous with
bottled water, the company dominates the marketing environment, with high
advertising expenditure. Its growth in sector share is also attributable to its
continuing to expand its distribution and manufacturing capabilities to new
regions in 2008.
·
Domestic brands, such as
Bisleri, Bailley and Oxyrich, account for well over half of off-trade volume
sales of bottled water in India. The notable multinationals operating in
bottled water are Coca-Cola India and PepsiCo India. International brands, in
the form of Kinley and Aquafina, account for a significant portion of sales,
but have been unable to stem the growth of Bisleri. International premium
brands, such as Evian and Schweppes, have an extremely niche presence, which is
confined to high-end on-trade channels, due to their high prices.
·
In mid-2008, The Narang Group
launched Qua – a premium mineral water bottled at source in the Himalayas. The
product has a distinctive minimalist bottle shape and label design, which make
it stand out among other mineral water brands, and is being targeted at
affluent consumers who wish to indulge themselves with a luxury mineral water,
but would still consider Qua a bargain at half the price of Evian.
·
As a part of the Kinley brand’s
repositioning, Coca-Cola India launched a new outdoor and TV advertising
campaign with the slogan “Boond boond mein vishwas” (“Trust in every single
drop”). The campaign highlighted the purity and safety of the product, and
introduced the new shape and colour of the Kinley bottle. PepsiCo India’s
Aquafina also initiated a broad cross-media campaign to introduce its new
labelling initiative, which called for more sustainable water usage.
·
Several brands launched new
label design and bottle shapes in 2008, including Kinley, which was introduced
in a blue curvy bottle which made it easier to grip, and Bailley, which was
introduced in a shapely bottle reminiscent of the curves of the human body.
Aquafina acquired a new translucent blue label that announced that PepsiCo
India will soon be a “positive water balance” company. Mount Everest Mineral
Water’s Himalayan underwent a complete brand makeover to be launched as a
premium brand with an attractive pink coloured cap and a soothing Zen
illustration on the label.
·
In bottled water, mineral water
is considered a premium product, whereas distilled packaged water brands from
national players are considered standard. The local and regional brands, such
as Hello by Hello Minerals Water Pvt Ltd, are priced at a discount to national
brands, and are considered to be economy brands. The difference lies in their
pricing, as well as their distribution. The majority of national brands, such
as Bisleri, Aquafina, Kinley and Oxyrich, fall in the standard segment, while
brands such as Evian and Himalayan, which are limited to upmarket on-trade and
retail outlets, are positioned in the premium segment, which remains very much
a niche segment of the market.
·
There is a marginal private label
presence in bottled water, with private label accounting for a 2% off-trade
volume share in 2008. The private label presence is restricted to
supermarkets/hypermarkets such as Big Bazaar’s Fresh N Pure. As off-trade sales
of bottled water are mainly through independent grocers and paanwalas (street
vendors) for on-the-go consumption, private label products have yet to develop
a significant presence.
Prospects
·
After the rebranding exercises
of 2008, the leading brands are expected to concentrate on expanding their
market shares by increasing their distribution reach in the forecast period.
The plans for expanding product portfolios to introduce premium variants, such
as flavoured water, that were initiated in early 2008, may be pushed back in
the short term as the uncertain economic climate has resulted in the tightening
of purse strings in urban areas. Nonetheless, the market for bulk bottled
water, which is a necessity in areas with unreliable water supply, is expected
to remain robust in the forecast period.
·
The forecast off-trade volume
CAGR, of 16%, while quite robust, is expected to be lower than the review
period CAGR of 21%. As the consumer base for bottled water expands, growth
rates are expected to slow year-on-year although they will still remain in
double digits.
·
New water purification devices,
such as HUL’s Pureit, which are able to supply safe drinking water at costs as
low as Rs1 per litre, are a potential threat to the expansion of bulk bottled
water. The spread of such devices, which purify tap water, are a particular
threat to local and regional players, which depend on bulk water sales to homes
for revenues.
·
Still bottled water is expected
to continue to dominate the sector in the forecast period, as consumers have
very low awareness of flavoured, functional and carbonated water products.
Flavoured water products, such as Catch and Perrier, are not expected to expand
beyond a very select consumer base of tourists and highly affluent Indians.
·
Unit prices are expected to
rise over the forecast period, due to rising input costs. Players are currently
operating on slim margins, due to high costs of transportation and packaging.
Discounting of home delivery of bulk water is also expected to reduce, as
players try to develop sustainable models for expansion, and introduce
added-vale features, such as tamper proof packaging. At the same time,
regulatory pressure on the sale of counterfeit products is expected to
increase.
·
Qua mineral water is expected
to enjoy a degree of success as a suitable substitute for other premium
products, such as Evian, Perrier and Schweppes, which are almost twice as
expensive. Its stand out packaging will also help it to build brand recall and
generate trials.
·
Sector leader Parle Bisleri is
expected to continue expanding its manufacturing and distribution capacity in
the forecast period. While Coca-Cola India, PepsiCo India and Tata Tea are
known to be considering the launch of flavoured and fortified water, the lack
of a ready and sizeable consumer base for such products, as well as the global
economic downturn, may delay their plans to the latter part of the forecast
period. Other domestic FMCG players, such as Gujarat Cooperative Milk Marketing
Federation, are expected to foray into bottled water, as it will continue to be
a strong growth market which can accommodate new players with regional
economies of scale.
·
The national players are
expected to expand their presence in bulk water by capitalising on their brand
equity. Regional bulk water players are expected to differentiate themselves
from counterfeiters by introducing tamper proof seals, such as the ones
initiated by Parle Bisleri.
Sector Data
Institutional Bottled Water Sales
·
Institutional sales of bottled
water grew by 20% in terms of volume in 2008. Growth was fuelled by the
expansion of multinationals and the IT and BPO sector in tier I and tier II
cities. The poor state of public infrastructure for drinking water in congested
urban and semi-urban areas has necessitated the purchase of bulk drinking water
for these institutions. Since the purchase of retail bulk water has become
highly economical, and delivery is usually free, institutional sales of bottled
water have been on the rise. However, low prices, a lax regulatory environment
and stiff competition among local and regional players has spurred a large
unorganised market for the supply of drinking water to institutions, as well as
counterfeit suppliers, which merely refill the bottles from recognised
companies.
Million litres
2003 2004 2005 2006 2007 2008
Sales 1,083.6 1,354.5 1,652.5 1,983.0 2,350.0 2,820.0
Source: Company research, store checks, trade
interviews, Euromonitor International estimates
million litres
2003 2004 2005 2006 2007 2008
Still bottled
water 1,059.9 1,293.4 1,549.6 1,827.7 2,185.8 2,734.3
Carbonated
bottled water - - - - - -
Flavoured bottled
water - - - - - -
Functional
bottled water - - - - - -
Bottled water 1,059.9 1,293.4 1,549.6 1,827.7 2,185.8 2,734.3
Source: Official statistics, trade
associations, trade press, company research, store checks, trade interviews,
Euromonitor International estimates
Rs million
2003 2004 2005 2006 2007 2008
Still bottled
water 9,011.8 12,339.3 15,842.3 18,853.3 22,660.6 28,541.0
Carbonated
bottled water - - - - - -
Flavoured bottled
water - - - - - -
Functional
bottled water - - - - - -
Bottled water 9,011.8 12,339.3 15,842.3 18,853.3 22,660.6 28,541.0
Source: Official statistics, trade
associations, trade press, company research, store checks, trade interviews,
Euromonitor International estimates
% volume growth
2007/08 2003-08 CAGR 2003/08 TOTAL
Still bottled
water 25.1 20.9 158.0
Carbonated
bottled water - - -
Flavoured bottled
water - - -
Functional
bottled water - - -
Bottled water 25.1 20.9 158.0
Source: Official statistics, trade associations,
trade press, company research, store checks, trade interviews, Euromonitor
International estimates
% current value
growth
2007/08 2003-08 CAGR 2003/08 TOTAL
Still bottled water 25.9 25.9 216.7
Carbonated
bottled water - - -
Flavoured bottled
water - - -
Functional
bottled water - - -
Bottled water 25.9 25.9 216.7
Source: Official statistics, trade
associations, trade press, company research, store checks, trade interviews, Euromonitor
International estimates
% off-trade
volume
Company 2004 2005 2006 2007 2008
Parle Bisleri Ltd 29.0 29.0 31.5 37.5 39.0
Coca-Cola India
Pvt Ltd 28.0 24.0 23.0 21.0 20.0
PepsiCo India
Holdings 12.0 13.0 13.5 13.5 13.5
Pvt Ltd
Dhariwal
Industries Ltd 5.0 7.0 9.0 9.0 9.0
Parle Agro Pvt
Ltd 6.0 4.0 2.0 1.5 1.4
Mother Dairy
Calcutta - 0.5 0.5 0.5 0.5
Private Label 2.0 2.0 2.0 2.0 2.0
Others 18.0 20.5 18.5 15.0 14.6
Total 100.0 100.0 100.0 100.0 100.0
Source: Trade associations, trade press,
company research, trade interviews, Euromonitor International estimates
% off-trade
volume
Brand Company 2005 2006 2007 2008
Bisleri Parle
Bisleri Ltd 29.0 31.5 37.5 39.0
Kinley Coca-Cola
India Pvt Ltd 24.0 23.0 21.0 20.0
Aquafina PepsiCo
India Holdings 13.0 13.5 13.5 13.5
Pvt
Ltd
Oxyrich Dhariwal
Industries Ltd 7.0 9.0 9.0 9.0
Bailley Parle
Agro Pvt Ltd 4.0 2.0 1.5 1.4
Mother Dairy Mother Dairy
Calcutta 0.5 0.5 0.5 0.5
Private label Private Label 2.0 2.0 2.0 2.0
Others 20.5 18.5 15.0 14.6
Total 100.0 100.0 100.0 100.0
Source: Trade associations, trade press,
company research, trade interviews, Euromonitor International estimates
% off-trade value
rsp
Company 2004 2005 2006 2007 2008
Parle Bisleri Ltd 28.0 27.5 31.0 37.0 38.0
Coca-Cola India
Pvt Ltd 26.0 23.0 22.0 20.5 20.0
PepsiCo India Holdings 13.5 14.0 14.5 14.5 14.5
Pvt Ltd
Dhariwal
Industries Ltd 5.5 7.5 9.5 9.5 9.5
Parle Agro Pvt
Ltd 6.0 4.0 2.0 1.5 1.4
Mother Dairy
Calcutta - 0.5 0.5 0.5 0.5
Private Label 2.0 2.0 2.0 2.0 2.0
Others 19.0 21.5 18.5 14.5 14.1
Total 100.0 100.0 100.0 100.0 100.0
Source: Trade associations, trade press,
company research, trade interviews, Euromonitor International estimates
% off-trade
value rsp
Brand Company 2005 2006 2007 2008
Bisleri Parle
Bisleri Ltd 27.5 31.0 37.0 38.0
Kinley Coca-Cola
India Pvt Ltd 23.0 22.0 20.5 20.0
Aquafina PepsiCo
India Holdings 14.0 14.5 14.5 14.5
Pvt
Ltd
Oxyrich Dhariwal
Industries Ltd 7.5 9.5 9.5 9.5
Bailley Parle
Agro Pvt Ltd 4.0 2.0 1.5 1.4
Mother Dairy Mother Dairy
Calcutta 0.5 0.5 0.5 0.5
Private label Private Label 2.0 2.0 2.0 2.0
Others 21.5 18.5 14.5 14.1
Total 100.0 100.0 100.0 100.0
Source: Trade associations, trade press,
company research, trade interviews, Euromonitor International estimates
million litres
2008 2009 2010 2011 2012 2013
Still bottled
water 2,734.3 3,338.5 3,976.2 4,616.7 5,222.1 5,744.6
Carbonated
bottled water - - - - - -
Flavoured bottled
water - - - - - -
Functional
bottled water - - - - - -
Bottled water 2,734.3 3,338.5 3,976.2 4,616.7 5,222.1 5,744.6
Source: Official statistics, trade
associations, trade press, company research, trade interviews, Euromonitor
International estimates
Rs million
2008 2009 2010 2011 2012 2013
Still bottled
water 28,541.0 35,092.1 42,215.6 49,376.6 56,273.0 62,391.6
Carbonated
bottled water - - - - - -
Flavoured bottled
water - - - - - -
Functional
bottled water - - - - - -
Bottled water 28,541.0 35,092.1 42,215.6 49,376.6 56,273.0 62,391.6
Source: Official statistics, trade
associations, trade press, company research, trade interviews, Euromonitor
International estimates
% volume growth
2008-13
CAGR 2008/13
TOTAL
Still bottled
water 16.0 110.1
Carbonated
bottled water - -
Flavoured bottled
water - -
Functional
bottled water - -
Bottled water 16.0 110.1
Source: Official statistics, trade
associations, trade press, company research, trade interviews, Euromonitor
International estimates
% constant value
growth
2008-13
CAGR 2008/13
TOTAL
Still bottled
water 16.9 118.6
Carbonated
bottled water - -
Flavoured bottled
water - -
Functional
bottled water - -
Bottled water 16.9 118.6
Source: Official statistics, trade
associations, trade press, company research, trade interviews, Euromonitor International
estimates
