Todays Financial Express published in India, discusses the rapid growth of bottled water sales in the country and the emergence of home delivery of bottled water products.
The article explains how sales of bottled water are growing rapidly in India but does not mention that huge portions of the population have no access to clean public tap water and do not have the means to purchase privatized packaged water.
Water management
June 15, 2010
Financial Express
Picture this. It's the rainy season. You come home late tired and discover that your building doesn't have electricity and water and you have run out of drinking water as well. It's late, it's raining cats and dogs and shops are closed. But you still need drinking water.
Just pick up your phone and dial Bisleri and they will deliver bottled water right at your door step. Yes, Bisleri, the largest player in the Rs 2000-crore bottled water market with 60-65% market share is moving towards this direction.
The company has already set up a call centre and water helpline which currently offers its services 12 hours in a day pan-India. It is now planning to offer its services round the clock.
"We have already made all the arrangements. The delivery time is about 12 hours, of course, not midnight. But we are talking to the RTOs (regional transport offices) to allow us to park our vehicles in different locations so that we can tell the consumer that even if you require Bisleri in the middle of the night it's available. We have a set-up where we can call each other and make the delivery. But midnight permission is yet to come in. RTOs have certain restrictions about parking trucks in the night. But we are hopeful that in the next few months we should be able to roll out this service 24/7," said Bisleri director Anjana Ghosh.
The competition in the bottled water market has increased manifold and beverage makers including Parle Agro, Pepsico, Kingfisher and others have forayed into this space. And that is what's spurring Bisleri to improve its services.
"We have had the advantage of being the first mover in the sector and we have the highest market share. Because we were the first movers we have an advantage as far as the brand is concerned and there is high brand recall," said Ghosh.
"To a consumer, buying Bisleri, Aquafina or Kinley is all the same as far as the price is concerned. However the brand that will reach the consumer faster than the others will have the edge. That is where we are trying to move forward. Where we score over the others is our service levels. Because we have a plant here in Mumbai and we can reach consumers than anyone else. So service is where we will be concentrating."
Pinakiranjan Mishra, partner and national leader, retail and consumers products practice of consultancy firm Ernst and Young saids, "With people becoming more aware about health issues the concept of buying bottled water has really taken off well in India. Earlier it used to be an elite product but now it has become a part of everyday life. So there is no challenge on the demand side. Also, there is a huge scope for existing branded players to expand into small towns and cities. In these smaller markets even a local water brand is sold at similar price to that of a branded one. So people are used to paying high price for bottled water and therefore there is a huge scope for branded players to expand in these markets."
The year 2010 has been eventful for Bisleri as the brand has been experimenting with new packaging. Right at the beginning of the year it introduced a celebration pack for its 250-ml and 500-ml packs. "These packs are mostly used at parties and weddings and conferences and therefore we decided to introduce a celebration packaging for these SKUs (stock keeping units). Also, we thought we will add something new to that pack because predominantly every consumer has in mind only the 1-litre pack," said Ghosh. "Somewhere we wanted to make a conscious effort to push the sizes to the consumer. And that's where we thought we should have a communication done to this effect."
With the Indian Premier League twenty20 cricket tournament kicking off in April, the company introduced another packaging around cricket. "We introduced another pack with special cricket labels. And this has given us a lot of visibility specially within the younger generation. We have 15 such special labels around words used in the game, added some pun into it and had a special graphical representation. We spent nearly Rs 15-20 crore for advertising during the IPL. We have seen a rise of about 30-35% in these two SKUs in terms of sales and therefore we feel this was a good move," said Ghosh.
Despite the economic downturn last year, Bisleri saw a growth of 23-24%. This year in April and May it witnessed a growth of about 27% over the same period last year and expects to close the year with 30% growth over last year. In 2008-2009, its revenue was Rs 360 crore that grew to Rs 410 crore in 2009-2010.
The company has already spent Rs 30-40 crore of its advertising and marketing budget in the first half of the year against a full year budget of Rs 60-70 crore. As far as the media mix is concerned, retail activation is at the top of their list. "If a consumer walks into a store they should be able to see Bisleri and touch Bisleri. So the touch points like dealer boards, in-shop dressing, the malls, etc., remain most important for us. As far as the electronic media is concerned it is only for branding," said Ghosh.
However, transport and distribution remains a challenge for the company. "The product is very heavy, bulky and low value. So in a truck in which you could carry any other product worth Rs 10 lakh, in our case a full truck could be carrying goods worth just Rs 50,000," explained Ghosh. "The only way to grow is increase the distribution and therefore we are aggressively beefing up our infrastructure and building plants very close to the market. In tier II and tier III cities we have appointed distributors. Currently we have nine manufacturing centres of our own. And we have 52 which are contractual."
Even Mishra agrees that with growing competition, it is distribution that will differentiate one player from another. "Distribution remains the primary challenge. Globally most of the products are bottled at source. However, in India it is distilled.
The ones which are bottled at source are extremely overpriced. And, if they try to bottle the water at source and then sell it at different parts of India then distribution will become humongously expensive."
The company has also launched Vedica—natural mountain water sourced from the Himalayas—in the western and the southern markets. This marks Bisleri's entry into the premium bottled water segment.
"We will be coming up with flavoured water and that's our target for the future," said Ghosh.
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