Packaged Drinking Water in India


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A freelance work analysing the prospects of packaged drinking water business in India

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Packaged Drinking Water in India

  1. 1. Packaged Drinking WaterAssessing the prospect in India Presentation by Mr. ABC
  2. 2. India is among the most water stressed countries Source: United Nations Department for Economics and Social Affairs Note: Map is not to scale. Only for theNature, September 30, 2010 Source: purpose of illustration 2
  3. 3. And therefore, the prospect for packaged water Is it “pure” Is it water environment friendly? Who owns the Tap Vs. Bottled water?Despite all controversies, the fact is, global market for packaged water has been growing at CAGR of 10% 3
  4. 4. Indian market: US$ 2 bn market, doubling every 2 year Packaged water market in India (US$ bn, 2010 to 2015) US$ 11 bn US$ 4 bn US$ 2 bn 2010 2012 2015 4
  5. 5. …with significant space for expansion Top 10 countries by consumption of bottled water 1999 2004 Country Per capita consumption (in lt) 30 Global average 25 25 20 United States 130Billion lt 15 Mexico 269 10 Italy 245 5 India 1.7 0 Source: Beverage Marketing Corporation 5
  6. 6. …and poised for growth Increasing disposable income Increasing On-the-Go behavior Increasing awareness about health and hygiene Increasing availability Affordable price points 6
  7. 7. Half of the market is controlled by water pouches Market share by package Bulk water (> 5 lt) 6% 0.5 lt pack 2% Pouches 1 lt pack 49% 34% 2 lt pack 9% Pack type 0.5 lt 1-2 lt Pouches % growth 13% 28% 22% Source: PepsiCo India 7
  8. 8. Geography: South India, Demography: Urban Market share by Region Rural Vs. Urban market East 5% Rural North 20% 15% South 52% West 600 of the approximately 28% 1,200 bottling water plants in India, are in Urban Tamil Nadu 80%Region South West North East Region Metro RoU Rural% growth 26% 20% 25% 31% % growth 12% 28% 38% Source: PepsiCo India 8
  9. 9. Top 4 brands constitute three fourth of the market Market share of major brands 0% Others 25% MountEverest, Manikchand, Kingfis Bisleri her, Mohan Meakins, SKN 40% Breweries , Indian Railways Major brands + Aquafina (PepsiCo) 10%Nearly 200 smaller brands Kinley (CocaCola) 25% Source: PepsiCo India 9
  10. 10. Bisleri: the pioneer of Indian packaged water industry Bottled water in India under the name Bisleri was first introduced in Mumbai by Bisleri Ltd., a company of Italian origin in 1965. 
 Parle bought over Bisleri (India) Ltd. In 1969 and started bottling Mineral water in glass bottles under the brand name Bisleri’ In 1990 Parle Bisleri had become synonymous with branded water & had a market share of 70%. Since 1995 Bisleri expanded operations substantially and the turn over has multiplied more than 20 times over a period of 10 years and the average growth rate has been around 40% over this period. With the entry of Coca Cola and Pepsi in 2000-01, the competition increased and market share declined. Presently they have 9 plants and 45 franchisees all over India. 10
  11. 11. Economics of branded packaged water in IndiaCost heads Cost per bottle (in INR)Cap 0.25PET bottle 1.50 - 2.50Treatments 0.10 - 0.25Labour 0.15 - 0.25Carton 0.50Transportation 0.10 - 0.75Others 0.25Total cost (excluding labour, marketing and tax) 2.85 - 4.25End-market price 10.0 - 15.0 Source: Center for Science and Environment 11
  12. 12. Analysis of market attractivenessBargaining power of Suppliers - Low Increase in the cost of Raw Material (cap cost , labeling cost, bottle cost, carton cost) Suppliers supply raw material to local players If plastic bottle gets banned another substitute will be glass bottleThreat of substitute - High Substitute are fruit juices, health drinks ,soft drinks, beer and others such as Real and Slice. Beverages such as tea, coffee and milk Water Purifier industry growing at a CAGR of 20-25% in IndiaIntensity of rivalry - High Local brands are major contributing 80% of market share Around 200 registered brands in IndiaBargaining power of Buyers - Moderate Cheaper local brands and numerous alternative products available Buyers have choice from wide variety of suppliers Demand is more in the market but branded suppliers is less compare to local suppliersBarriers to Entry / new product - Low Market is growing which attracts new entrants Not capital intensive and does not involve proprietary technology 12
  13. 13. A gulp for Life Thank you!