STRATEGIC ANALYSIS OF BISLERI

PHASE 1

SUBMITTED TO
MS. AMRITA S.

SUBMITTED BY
PETHE SARANG S. MADAN LAL VIPIN Y. KRATI S. ABHILASH N.

INTRODUCTION
The global bottled water industry consist the sale of flavored and unflavored. In India there is sale of only still unflavored water. The industry in Asia-pacific region is growing at rate of 13.2% generating annual revenues of $15 billion in 2009. In India the bottled water sector is the fastest growing sector and the total market size is around Rs 2000 crores. There are more than 500 brands present in the industry and the market is mainly controlled by organized sector. The health consciousness among the people, improper water supplies and unpredictable municipal water supply are the various factors which have caused the growth of the sector. The strong growth rate and lower entry barriers have attracted many players. The major players in the market includes Parle Bisleri, Kinley, Aquafina, Oxyrich and Bailley. With the growing competition the established players are undergoing a makeover. The major players have introduced new bottle shapes, labels and communication campaign. The off-trade channel which consist of distribution of bulk bottled water is growing on the grounds of unreliable supply of water in many cities during summer. The unorganized players have major presence in the off trade business. The flavored water segment is a niche category and has presence in North India and major cities in India. As the consumer base increases the growth rate for bottled water is expected to increase. The market operates on lower margins, the unit prices are expected to increase on account of high costs in packaging and transportation. The major players after the rebranding exercise are now concentrating on expansion of their manufacturing and distribution capacities. The major players are trying to establish themselves in bulk water business through brand equity whereas the unorganized players are resisting them through differentiation.

BACKGROUND OF COMPANY
Bisleri was emanates from Italy and the brand name is derived from its founder¶s name Mr. Felice Bisleri, an Italian entrepreneur. In the year 1967, Bisleri established its plant in Mumbai to market actual mineral water which was not successful. In 1969, the company wanted to quit from the business and then it was bought by Chauhan with an intention to convert it in to a soda brand. But today it has captured a huge percent of share in Indian market and making its mark in the international market. In 1969, bottled water of Bisleri was bought from Italian company and then later it was bottled in glass bottles and then in 1980 it shifted to PVC bottles. In the mid-1980s it switched to PET bottles which is meant for more life and clearness for mineral water. In 1995, it launched 500 ml bottle and in 2000 it introduced container of 20 litres to reduce the price. In 1998, it introduces a tamper-evident and temper-proof seal. In 2009 it introduced µBisleri¶ first introduced its mineral water in Mumbai in the year 1965, in a glass bottle in two varieties namely, bubbly and still. Signor Felice Bisleri was the main man behind the idea of selling bottled water in India. Starting the year 1995, Mr. Ramesh J. Chauhan began expanding the brand of Bisleri in terms of its operations significantly, since then the turnover of Bisleri shot up remarkably to about 20 times in 10 years and the average growth rate of the brand was 40% during this phase. In the present scenario Bisleri has about 8 plants and 11 franchisees all across the country. The company dominates a 60% market share of the organized market. The devastating popularity of the brand µBisleri¶ and the fact that they initiated bottle water in India has made them synonymous to Mineral water in the country. Bisleri has developed 8 exclusive pack sizes to suit the needs of the consumer. They have come up with to two categories for that, namely, non-returnable packs and returnable packs. In the first category they have 250ml cups, 250ml bottles, 500ml, 1Ltr, 1.5Ltr and 2Ltr bottles and under the returnable packs they have 5Ltr and 20Ltr cans. In effort to offer its customers something refreshingly new, they recently introduced Bisleri Natural Mountain Water ± it is the water from the foothills of the mountains located in Himachal Pradesh. So, presently Bisleri has two variants: Bisleri with added minerals and Bisleri mountain water. The minerals found in its mineral variant contain minerals such as magnesium sulphate and potassium bicarbonate. These two minerals that are used are considered to be essential minerals for healthy living. Bisleri over the years has become the brand cum market leader in the bottled water segment primarily

because of its rigorous R&D and strict quality control procedures it follows. They maintain severe hygiene conditions in all its plants. The water packaged for consumption is put through multiple stages of purification, then it is ozonized and then only the water is packaged for the final consumption. The vision, mission and values of Parle Bisleri is given below, VISION ³Our vision is to be the dominant player in the branded water business where the second player is less than 20% of our business.´ MISSION ³We are in the business to serve the customer. He is the most important person. He is the only one who pays. He deserves the best quality and presentation at a worth of the price. We must have world class quality, at the lowest production & distribution cost. This will make us an unbeatable leader, and will have satisfied loyal customers.´ VALUES ³Integrity, Leadership, Teamwork, Co-operation, Quality, Passion, Openness and Transparency.´

PESTLE ANALYSIS
We have considered Indian mineral water industry for the analysis. The key points are given below followed by the analysis. Political y y y There are various political parties protesting against the pricing of mineral water. There is stable government at the centre with liberal policies. The government has imposed price ceiling on bottled water.

Economical y y y y y y Social y y Bottled water was earlier considered as a status symbol. Bottled water is now the only source of pure drinking water in areas where there is scarcity of water. y y The bottled water is considered to be safe as compared to ordinary tap water. There in increase in health consciousness of people. There is an increase in per capita income. Most of the people are from middle and upper middle class. Expansion of multinationals, IT and BPO companies in Tier 1 and 2 cities. There is no licensing policy adopted in this sector. There is availability of cheap labor. The government is promoting new bottling plants through public-private partnership.

Technological y The bundling of technologies like distillation, reverse osmosis, activated carbon filter, etc helps in better quality of water. y There has been a shift in packaging from bottles made of glass to bottles made of PET. This helps in recycling and reducing environmental pollution. Legal

y y

Governed by PFA and BIS standard. BIS has provided standards for mineral and drinking water. The BIS approval was made mandatory from 1999.

y

Mineral water should be packed in clean, colorless, transparent, odorless, tamper proof bottles made up of polyethylene.

y

PFA and BIS lays standard for metals like lead, mercury, arsenic, aluminium and barium.

Environmental y y The use of Plastic for bottled water increases environmental pollution. The increase in consumption of bottled water causes depletion of valuable fossil fuels.

ANALYSIS
The PESTLE analysis helps us to analyze the various factors affecting the Indian bottled water industry. We can observe that governmental policies regarding the quality of packaged water are very stringent and all the companies have to adhere to the BIS standards. The liberal government policies, growth of the IT and BPO sector in Tier 1 and Tier 2 cities and promotion of bottling plant through public private partnership are favorable to the industry. The lower cost of set up and availability of cheap labor has attracted many small as well as big players. There have been incidents where pesticide contents have been found, also there have been instances where small companies have been found using plastic unsuitable for human health. There is therefore constant pressure on companies to maintain quality of product and packaging. There has been increase in health consciousness among people and unavailability of safe drinking water in low tier cities is favoring the sales of bottled water. The technological advances in purification processes help in enhancing and maintaining quality of water. There is no industrial licensing policy present currently which attracts many players to enter in this industry. The lower margin associated and low entry barriers considerably affect the larger players. We can observe that the companies adhering to the environmental standards, using proper packaging gains advantage. The price war is not possible in this industry as the government has imposed ceiling on the price of bottled water. However there is much possibility that companies start competing through differentiation. The bottled water is considered as a status symbol so it can be possible that companies enter the unexplored area of flavored drinking water. The scarcity of safe drinking

water in many areas creates opportunity for the players to cater to this growing demand. There have been instances of protest against the bottled water companies against the pricing strategy and over the depletion of scarce resources. However this will have very meager impact on the industry considering the growing demand for pure and safe drinking water. We can observe that the overall scenario for the industry is favorable for small as well as larger players. The industry has considerable growth prospect in newer areas and the macro environmental factors attracts new players.

PORTERS FIVE FORCES ANALYSIS
Porter¶s five forces model is specially used in industry analysis. This will helps an organization to make a strategy. The bottled packaged water industry is a part of beverage industry which again comes under fast moving consumer goods. According to American agency the world¶s bottled packed water is expected to reach $65.9bn by 2012. The cause behind this is population rising, consumer buying pattern, life style trends and growing level of health consciousness.

Threat of entry: As the number of Bottled packaged water consumption is increasing in all over the world, the opportunity for other players in increasing rapidly. In the bottled packaged industry the entry barrier is low. The entry barrier is low due to local low production cost, less amount of capital, easy to access government and legal law, local production law, less legal and government barrier and low switching cost. The existing brand in beverage industry is paying attention and moving

into bottled packed water, as they have good brand image and the opportunity is very huge in this industry. Eg. Pepiso coca cola According to industry life cycle the bottled packed industry is at mature state and the most of the market is covered by the Bisleri, Aquafina, kinley and Ozone. So the pressure for new entrants to capture the market is very high. But according to still there are many local player that covered the 26% of the market. But when we observe the product on differentiation the different among product is very less or equal lent to nil. According to product differentiation the threats of entrants is high. But the overall threat of new entrants is medium.

Bargaining power of suppliers: The bargaining power of supplier is low, as the suppliers include municipal water system, bottles and plastic cap, label printer filtration and deionization equipment, plastic grains and etc. Sometimes the bargaining power of suppliers is depends on geographical location and the technology adopted by the organization. The recyclable bottle used by the company needs advanced technology or some dependant, like other packaging industry as the packaging cost is high. But the large availability of suppliers leads to less bargaining power. The bargaining power of supplier may include the inventory stock of bottles. Overall bargaining power of supplier is less.

Bargaining power of buyer: As the bottled packed water industry comes in oligopoly industry. The no of producer is less thus the bargaining power of suppliers is less. The bargaining power of buyer is depends on the price and product. The availability of product also affects the bargaining power of buyers. Availability of substitute is also affects the bargaining power. As the competition is not much high, there are mainly five to ten producer like Bisleri, Aquafina, Kinley, Oxyrich and Pure life so the customers do not have any advantage moving from one brand to other brand. The product differentiation is almost zero, so the bargaining power of customer is low. Sometimes it depend upon the geographical location, segment of consumers both rural and urban population, consumer buying behavior and consumer preferences.

Substitute product: The availability of substitute is coffee, soft drink, juice and tea. The substitute of product affects the price and market. The availability of substitute provides the option to customer and customer can switch from one product to other. The beverage industry is always appreciated by every country. The availability of various health drinks, juice, carbonic and no carbonic drinks and availability of taste changed the consumer preferences. Consumer is using various health drinks, carbonic and non carbonic drinks to quench the thirst. The total size of food industry in India is almost $ 65.6 billion and soft drinks (juices and carbonated beverage) contain $ 1 billion. Indian soft drink market consumption in a year is 284 million crates. Soft drink market is highly seasonal in nature, consumption in during offseason is 15 million crates and in peak season is around 25 million crates per month. In urban area Consumption of soft drinks is 75% of whole Indian market. Indian soft drink market is dominated by multinational companies Coca-Cola and PepsiCo. In India mineral water market is $50 million and 65 million in crates. The monthly average consumption of mineral water is 4.9 million crates that increase in peak season to 5.2 million (Non-alcoholic beverage market in India, 2009). So we can draw that the bottled packed water consumption in India is one third of the total beverage industry.

Rivalry: The degree of rivalry and the competition affects the price, quality, profit and revenue in an industry. As the market is almost on saturation state, and the industry refers the oligopoly competition so there is a high competition to increase the market share. The market is dominated by the very few players like bisleri(%), aquafina(%), kinley(%) and oxyrich, and they are trying to increase their market share by product introduction, price, packaging and volume of water. As there is no much difference among the product by different competitor, the rivalry is only in terms of service and of marketing strategy. The intensity of rivalry is low as there is limited player and the product is not price sensitive. According to Indian beverage association the market will grow by in 2012 , the market shows the high growth rate so the competition is less

Conclusion: On the basis of porter analysis we can draw that the market is safe for beverage industry. According to producer perspective there is a huge opportunity and the control over market cannot be influenced by one competitor or one supplier. The dependency of industry over supplier is less also the rivalry is low among competitor.

SWOT ANALYSIS OF BISLERI Strength
y Extensive range of products

BISLERI is a providing a wide range of products to pull all types of customers. E.g. twelve litres and twenty litres of bottle are for organization¶s purpose and 500 ml and one litre is suitable for individual purpose. Strong brand image BISLERI has been a generic name for mineral water and that is the reason maximum people purchase BISLERI water only. Around seventy lakhs people have put their trust in BISLERI. For example- when consumers go to purchase the mineral water then they ask for BISLERI even though other brands are available in the shop. High quality standard BISLERI has been maintaining its quality standard for last few decades. Each bottle of BISLERI goes through a précised process of multi stage purification which consists of ozonisation and micron filtration. It holds six phases of distillation procedure which guarantee the quality, safety and purity of water which is suitable for drinking purposes. It is examined very accurately at every stage of manufacture which adds one more unit to its strength. Marketing Bislery has a strong and effective strategy for marketing of its products. It is using print and electronic media for its marketing and hoardings at the point of sale to supports their TV advertisements. For example vehicles are painted in light green with logo of BISLERI easy punchline as ³drink and drive´

Increasing popularity The popularity of BISLERI is growing at rapid pace. It has become the first preference of people when they go to purchase the mineral water. BISLERI is enjoying a growth of 50% per year. Its small pack is increasing its popularity for individual purpose and its bulk pack is creating huge demand which is conducive to captivating the market. The bulk segment of BISLERI is generating 60-70% of total revenue and company is looking forward to augment it to 80%. Distribution channels BISLERI has around eighty thousands outlets in India. It distributes products directly to retailers through its large fleet of truck by using a system known as route selling in which truck driver is trained as a service man. This helps in maintaining the freshness of water and shape of bottles. The safety seal In order to deliver the quality product to the customer every bottle of BISLERI is sealed with a unique cap which is patented and cannot be replicated. This is a technical strength of the company which guarantees that customer will get product of standard quality not duplicated.

Weaknesses
Reusable bottles According to some relevant market research it is found that bottles are reused and refilled with unhealthy water at railway stations. The tampering of seal and reuse of bottles is a matter of concern for consumers and for company also. It defame the brand image of the company. For example- some local sellers fill BISLERI bottles with impure and unhealthy water and they sell it to uneducated customers as BISLERI water which affects their health and brand image of the company.

Errors in production Some faults have been found in the production process of Bisleri products. In some purity tests pesticides were found in water. In the year 2002, tests were conducted by authorities they found 2 cm insect in Bisleri bottle. That has reduced its sales and brought down the reputation of the company. Some factories lost their license due to faults in production. Government pressure FDA has stopped the production of BISLERI due to insects and pests were found in BISLERI bottles. Later, Government gave the permission to resume their production but consumers were not satisfied and moved towards other brands. It is tested by various authorities constantly. Unable to fulfill the demand of the customer In some parts of south India big BISLERI bottles are in great demand but the company is not able to fulfill the demand of consumers for individual purpose. It is reducing the demand for BISLERI and that is why people are bound to purchase other brands of mineral water.

Opportunity
Field growing at rapid pace Water seems to be the best beverage for India in the upcoming time period. In last several years, it has been indicated that drinking water market has shown high level of activity with several new competitors. The worth of the bottled market is expected to be increased from Rs.1000 crore to Rs.5000 crore by 2010. Effective utilization of distribution chain It is becoming a generic name for mineral water and if company can use the distribution channel in order to provide the product to place where consumer require it most then company can gain more success in this field. This company can establish good relations with dealers and other distributors to market the product all across the world.

Expansion in Europe Bisleri has introduced its product in European market which has brought lots of opportunities for the company in the bottled water market. It will recover the loss of brand image; the company has faced when insect was found in the market. It will be a strong response to critics and it will enhance the trust of the consumer in Bisleri. It will improve the quality and provide international brand image. Introduction of premium pack Bisleri has a range of its premium products. This is manufactured for use in five-star hotels and other first-class consumers. The cost of this pack will be Rs. 20 per litre. It will create tough competition with EVIAN, the greatest player in this field whose product costs Rs. 85 per litre. Alteration of image The company has changed its colour from blue to green and by doing this company has offered a new product to the customers and they will enjoy a fresh product. Increasing production The company is focusing on the market and looking forward to increase the production by establishing new more plants. It will enhance the capacity of production of the company.

Threats
Entry of big players The market growth is showing that the demand for the mineral water is increasing. Therefore, big players are focusing on the market; players like Pepsi, Coke, Britannia and nestle are curious to increase their stakes in the market. Due to the tough competition between Pepsi and Coke, BISLERI can be dissolved. Entry of new players New players are entering the market in order to capture some shares. Some of the players like Tata-Tea and Godrej are looking forward to launch their product and this will heat the

competition. There are some other brands like EVIAN, ATCO, BRILLIAN water, DS FOODS are also looking forward to launch their products. Hindustan lever is also looking forward to launch its product in the product and this will lead to a tough competition. Water filter manufacturing companies It is facing competition from water filter manufacturing companies like Eureka forbes. They are marketing their product in the market which has reduced the sales volume of bottled water. Unauthorized manufacturers In rural areas BISLERI is facing a tough competition from unauthorized manufacturers. The local manufacturers sell their products at a low price than branded products. New Government policy Previously, government was not charging any tax on extracting the water from the ground. According to new policy, government will impose tax on extracting the ground water and this increase the cost of production. This will lead to high price of products which every consumer cannot afford. The high production cost can be compensated by cutting down the market expenses but this will affect the quality of the product.

CORE COMPETENCIES
There are tangible as well as intangible resources. The tangible resources are termed as the physical assets of the organization whereas the intangible resources are termed to be nonphysical assets such as the information or knowledge of the product. Bisleri as a brand gains the competitive advantage. It has goodwill in the market. The concept of the bottled water is prevalent in the western countries as people are very health conscious. The bottled water slowly and gradually came into existence as Coca-Cola and Pepsi entered the market. As people think of the mineral water Bisleri is the first name which came into their mind. Bisleri has launched itself into many different brands, as Bisleri mountain water and many more. Bisleri whenever advertise itself on television or on press the only one message which is delivered is Bisleri is safe and pure. The bottles are sealed and refilled and recycled on timely basis. The seal of Bisleri bottles help the customers to remove the doubts which were created in their minds about the purity of the brand. Thus, the brand itself is the core competency of Bisleri. It dominates the market. As packaged water industry is growing at a fast rate (2.5%PA). Bisleri has a market share of 60%. Bisleri maintains the physical and financial resources very efficiently and effectively. These resources when combined helps in maintain and retaining customer¶s expectations to achieve the targets of the company. Entering into various segments of the society as it produces premium, popular and bulk invests a large number and an efficient human resources. The intellectual capital of the brand is playing the major role as the bottle seal of Bisleri is patent. Bisleri provides a safe drinking water which maintains and take care of the health of the people leading and attaining the threshold resources. As Aquafina and Kinley the major competitors of Bisleri are entering with various strategies to beat the competition Bisleri also focused itself to increase the awareness of the brand through advertising and fulfilling customer¶s minimum requirements by giving them pure and safe mineral water to drink. The various segments it entered into covers different price ranges. The price ranges within 10 to 110 which can be easily available for every section of the society. Bisleri keeps on advertising again and again that it works on safe and pure form of bottled water, which shows its complementary resources and competencies. Analyzing these threshold resources and competencies is important for the organization to sustain itself in the market with the same position. The seal of Bisleri is also acting as its unique resource as it has got the patent and other organizations cannot imitate it. The brand Bisleri itself acts as a unique resource as it is so popular in the minds of the people

that they don¶t switch to other bottled water easily from Bisleri. This shows that the organization is good in attracting new customers as well as retaining old customers and people turn out to be brand loyal. The packaging was done in such a way that the customers can easily view the sparkling clear water inside the bottle. It made the packaging transparent to gain the trust and confidence of the customers on their brand. It started reinventing and focusing on its distribution network which also plays its major core competency. There were about 15 bottling plants of Bisleri and three franchisees all total there were 350000 outlets of Bisleri. It works through manufacturers to clearing and forwarding agents to distributors and finally to the ultimate customers. It has 52 bottling plants all over the country as in Delhi, Goa, Mumbai, UP, Jaipur, Chennai, Rudrapur and Bangalore. It is going to expand it by setting up new 25 bottling plants across India which will help it achieve 40percent more of the growth rate in the fiscal. The new bottling plants are being placed in Maharashtra, Karnataka, Tamil Nadu, Orissa, Kashmir, Jharkhand, Kerala and north Bengal. These plants are going to be partly set up the franchisees and partly by the company itself. The company is also going to double the capacity of manufacturing in Mumbai and Nagpur. The company has outlined a dual distribution plan this way to gain competitive advantage. Parle Bisleri also tried to launch and introduce bottled water in stationary, chemist shops where other soft drinks were not sold so it was easily available to the customers. The company worked on its dual-distribution strategy to gain competitive advantage. It kept on working and entering into rural India, interior markets and penetrating into smaller markets of the country, pushing the brand in the roadside of metros and new territories. The government institutions, hotels, railways were targeted as the major chunks of the market. (Johnson, Scholes, & Whittington, 2006) (Press Trust of India, 2009)

REFERENCES
Agrawal, S. (2010). Packaged water firms ignore Rs 12 dikat. Retrieved on 3rd April 2010 from http://www.business-standard.com/india/news/packaged-water-firms-ignore-rs-12-pricediktat/353342/ Bisleri¶s Chauhan sees big business in small packs. Retrieved on 3rd April 2010 from http://www.financialexpress.com/printer/news/151843/ Bottled water of India. Retrieved on 3rd April 2010 from http://www.finewaters.com/Bottled_Water/India/index.asp

Bottled water- India. (2009) Country sector briefing: Euromonitor International.

Commitment. Retrieved on 3rd April 2010 from http://www.bisleri.com/commitment.html Iyer, B. (2010), Bisleri¶s expansion thrust. Retrieved on 3rd April 2010 from http://www.business-standard.com/india/news/bisleri\s-expansion-thirst/389299/ Johnson, G., Scholes, K., & Whittington, R. (2005). Exploring Corporate Strategy Text and Cases (7 ed.). Essex: Pearson Education Limited.

Slater, J. (2000). Water wars. Far eastern economic review, 163(8), 45.

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