1. INSIGHT & OUTLOOK Indian packaged water market
Modern Food Processing | January 201356
Shushmul Maheshwari
U
ntil a few years ago, packaged
water was primarily the
choice of affluent class.
However, with increasing
penetration in remote and far-flung
regions, affordable pricing, and aggressive
marketing and distribution efforts by the
packaging companies, the industry has
grown at a surprising rate. The Indian
packaged water market is currently
estimated at around ` 83 billion and is
expected to grow at a CAGR of around
21 per cent during the five-year forecast
period (2012-13 to 2016-17).
Indian packaged water market
constitutes two per cent of global
packaged water market, which is
valued at around $ 90 billion (` 4,950
billion). The market is largely driven by
small pouches and low volume bottles
(200-500 ml), which are used by students,
shoppers, tourists, etc. Apart from these,
pack size of 1/2 litre, and bulk packages of
20/25/50 litre containers are also popular
among organisations and households.
The Indian packaged water industry
has gained pace over the past few years
unlike its Western counterparts,where the
market is much more mature with high
per capita consumption. The difference
can be judged by the fact that while the
global average of per capita consumption
of packaged water is approximately
24 litre, Indian per capita consumption
is much less at just 5 litre. The packaged
water industry in India is heavily urban-
centric. Nearly, 80 per cent market is
derived from urban consumption. The
demand is expected to shift towards tier
II and III towns as further awareness and
distribution speed up.
Market dynamics
The high growth trajectory of Indian
packaged water market is eagerly tapped
by large MNCs, national beverage
manufacturers, and regional players. In
terms of number of players in organised
and unorganised market,organised players
comprise 20 per cent and unorganised
players (mostly small regional players)
form the rest 80 per cent. The ratio
just reverses in case of revenue earned.
While organised players grab around 80
per cent of the packaged water market,the
unorganised players bag just 20 per cent.
The triumph of a handful of organised
players is mainly due to economies-of-
scale, better marketing and distribution
channels, and of course, brand wagon.
The various categories of packaged
water have different price slots. Imported
premium natural mineral water brands,
such as Evian, San Pellegrino and Perrier
are priced between ` 80 and ` 110 a
ltr. Natural mineral water brands, such
as Himalayan and Catch trade at around
` 20 a litre. The packaged water (treated
water) brands, such as Bisleri, Kinley,
Aquafina etc command prices in the
range of ` 12-15 a litre. Regionally, the
consumption of packaged water depends
on the disposable income of people.South
India is the biggest market for packaged
water accounting for approximately 50
per cent marketshare, followed by West,
North, and East with respective shares of
30 per cent, 15 per cent, and 5 per cent.
In production terms, there are around
3,300 registered plants in the country, of
which around 48 per cent are located in
the South, and approximately 22 per cent
in the West. As per a study, there is a
huge number of unregistered plants too,
spanning somewhere near 12,000.
Fiercely competitive landscape
The packaged water market in India
is overcrowded with multinational and
national players. Bisleri is a leading
contender holding majority share in
the organised Indian packaged water
market with a marketshare of around
38 per cent. The popularity of the brand
is so widespread that it has become the
generic version of packaged water. While
Coca Cola’s Kinley accounts for nearly
24 per cent share, Pepsi’s Aquafina holds
15 per cent of the overall market pie.
Other brands including Bailley, Oxyrich,
Kingfisher too have a significant presence
in the packaged water market.
In a bid to capture more of the
marketshare and increased presence,
major expansion plans are taken up by
beverage makers. Coca Cola’s Indian
bottling arm, Hindustan Coca-Cola
Beverages, is all set to invest more than
` 2 billion for a huge production facility,
which is expected to come up in Gujarat
soon.The greenfield unit will be the Cola
company’s biggest such production unit
across India for the product category.
The proposed plant will have a capacity
to produce more than 700 bottles per
minute. Interestingly, the production unit
may also have production of flavoured
and fortified waters.
ON A CLEAN AND
CLEAR ROUTE
TO GROWTH
The Indian packaged water market
is taking giant leaps owing to
its perceived safer and healthier
attributes compared to tap water.
With more awareness about the
dreadful nature of water-borne
diseases, more and more people are
getting inclined towards packaged
water. Netting in large base of
consumers, the packaged water
market is growing at a stupendous
pace in the country.

2. 57January 2013 | Modern Food Processing
Indian packaged water market
Giving an entirely new direction to
the industry, Bisleri is working on creating
an exclusive retail presence to push its
products. The company is delving into the
possibility of establishing its own exclusive
retail outlets called ‘Bisleri Shopees’, which
would bring the company’s products more
closer to the customers. The concept
is yet unexplored in India. To entrap
huge opportunity, new players have also
propped in. Having earned name in water
purification arena, the well-known Eureka
Forbes has forayed into bottled water
market. The company’s packaged water
brand, Aquasure, has rocked the store
shelves in size of 500 ml. The company
has taken the franchisee route to tap
the market. State-run Indian Railways
Catering and Tourism Corporation
(IRCTC) has decided to revamp the
production of its packaged water brand
Railneer to cater to the growing demand
for clean drinking water in trains. It plans
to set up four more manufacturing plants
across Mumbai, Delhi, Hyderabad, and
Nagpur in addition to the existing three
Railneer plants. Besides, industrialists are
on their heels to further bring down the
production costs and increase affordability.
Industry challenges
Regardless of so many positives, the
industry faces certain hurdles that need
to be addressed for smooth market
growth. Differentiation from competitors
is a big issue faced by market players.
With numerable products at almost
same price points, it becomes difficult
for a manufacturer to develop a distinct
product image in the minds of consumers.
Barring a few key players, the products
are almost indistinct and hence do
not command brand loyalty. Another
challenge is the transportation cost
incurred specifically in case of natural
mineral water due to procurement from
a single source. Considering the low cost
of packaged water manufacturing and
lack of regulations, the entry barriers
for this industry are extremely low. In
southern states, for instance, various illegal
manufacturers make money during the
summer season in areas of water scarcity.
The adverse impact of these challenges
can be countered with wise strategies of
genuine industry players and of course,
the regulatory authorities. Some of the
suggestive measures include:
o Awareness programmes to increase
consumer consciousness about quality
compliance of the product
o Effective regional marketing by
local players to grab the consumer
mind space
o Strategies to bring down cost through
effective production; minimum wastage
is an area of consideration for big players
o Devising an optimal distribution
channel can itself cut competition to
a large extent
o Innovative efforts as taken up by
Bisleri (opening exclusive Bisleri
Shopees) can give a competitive edge
to the early mover
o Strict vigilance and prompt action on
unlicensed manufacturers
o Heavy penalties imposed on
products that do not comply with
regulatory norms
Future prospects
The packaged water market is majorly
driven by small pouches on one hand and
bulk packages on the other. The industry
is growing by leaps and bounds and is
expected to show double-digit growth in
the years to come. The key to growth for
the existing players is to tap the market
nerves and create distinct brand entity in
the minds of consumers as this product
category is much crowded with thousands
of indistinguishable brands. As the market
further develops, the industry is expected
to take more organised structure, with
higher penetration and quality compliance.
The growing awareness in Indian
masses shall sweep off unscrupulous
products and help sustain a healthy water
business. More channelled approach in
distribution will help improve the bottom
lines of companies.
Shushmul Maheshwari is the
Chief Executive of RNCOS
E-Services Pvt Ltd, a market
research & information analysis
company with global presence.
He has spent more than 15 years working in
the senior management teams of both, Indian
and multinational companies. He has gained
expertise in research & analysis field and
actively participated in various national and
international conferences & discussions organised
by business & trade-related associations.
Email: shushmul@rncos.com
INADEQUATE GOVERNANCE TAKES TOLL
Packaged water falls in the domain of Food Safety and Standards Act 2006, and
BIS certification is mandatory for packaged water. Indian packaged water industry
is governed under two categories. The Packaged Natural Mineral Water (PNMW)
is governed by IS:13428 and is drawn from a natural source. It should meet
the composition standard defined under IS:13428 and must be bottled without
altering the natural composition of water. The Packaged Drinking Water (PDW)
is regulated under IS:14543 and is ordinary water treated to meet the regulatory
standards. In this case, any of the processes of filtration/disinfection listed under
the IS:14543 can be used for changing the composition of water before bottling.
Apart from emphasis on packaging, hygienic conditions, labelling restrictions, etc,
exhaustive critical parameters have been established for quality and composition of
water under both categories. Despite laid out rules and regulations, numerous illegal
packaging plants are in operation. The unchecked growth of unlicensed packaged
water producers clearly reflects the irregularities on the part of regulatory bodies
in India. Despite the fact that the Bureau of Indian Standards (BIS) has made
ISI certification obligatory for water packaging units and outlined detailed testing
norms, except a few big players, scores of small manufacturers have been breaching
the norms. A yet another major issue facing the government is the lack of proper
infrastructure and expert panel to test water samples.