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BottledWater CaseStudy

BottledWater CaseStudy

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Published by Nilay Thakur

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Published by: Nilay Thakur on Jan 22, 2011
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Case Study: Bottled Water Industry

The category
‡ The bottled water market is estimated at around Rs. 1,250 crores ‡ The market is growing at around 25-30% a year and is expected to continue to its momentum in future as well ‡ The per capita consumption of packaged water in India is pitifully low at less than 5 litres a year compared to the global average consumption of 24 litres ‡ The annual bottled water consumption in India had tripled to 5 billion liters in 2004 from 1.5 billion liters in 1999 ‡ Global consumption of bottled water around 200 billion liters in ¶06

The category (contd.)
‡ Over 1,200 bottling plants across India
± An estimated 600 in Tamil Nadu alone!

‡ There exists more than 150 brands of which nearly 90% are local
± Making bottled water is a cottage industry in this country

‡ Bulk of the growth of the Indian market attributed to two reasons:
± Poor public water infrastructure ± Increasing disposable income

‡ Per capita consumption in India is less than 5 litres/year
‡ The global average is around 24 litres

‡ Indians are ranked tenth in bottled water consumption

the first mover in the Indian market ‡ When it introduced Bisleri in India 25 years ago . this industry is dominated by big players ± ± ± ± ± ± Parle Coca-Cola PepsiCo Parle Agro Mohan Meakins SKN Breweries ‡ Parle.The competitors ‡ Despite the large number of small producers.


110 a litre ‡ Natural Mineral Water ± Himalayan and Catch ± Priced at Rs. 12 a litre . Kinley..20 a litre ‡ Packaged drinking water . San Pellegrino and Perrier ± Priced between Rs.Treated water ± Bisleri. ± Priced around Rs.80 and Rs. Aqua fina etc.Price-based category segmentation ‡ Premium Natural Mineral Water ± Evian.

Share of market Market Share 21% 40% Bisleri 17% Kinley Aquafina Others 22% In the 20-litre bulk water segment .supply to offices and homes ± Kinley & Bisleri are neck-to-neck (in the market not otherwise!) .

‡ Plans to hike advertising and promotional spend by 46% in 2010 to meet rising competition ‡ Rs 35 crore on ad and promotion of the regular Bisleri in the current fiscal and Rs 12 crore on Himalayan ‡ Bisleri plans to put up 32 new plants over the next two years and plans to invest Rs 10 crore in each of them .

‡ Grocers are among Aquafina·s key distribution points ‡ Company launched 2 litre & 500 ml packs to suit various consumer requirements ‡ Recently revamped the Aqua fina 500 ml carry pack and introduced a new enhanced translucent blue label giving the brand a new look ‡ It·s looking at building strong consumer engagement across geographies through campaigns and trade promos .

‡ Kinley went for an all-new packaging recently ‡ Has plans to introduce its global brand ¶Bonaqua· in India very soon ‡ It is within the realm of possibility that Coca-Cola·s next step will be to introduce flavoured water in India .

Pack sizes ‡ Pouches.40% in 2002 alone ± 25 litre HDPE can ± 20 litre bubble top PET . glasses and cups ‡ 200 ml (popular in flights) ‡ 330 ml bottles ‡ 500 ml bottles ml (a huge hit among the youth) ‡ 1 litre bottles (Hotels and travel sector) ‡ Large 2 litre bottles ‡ Bulk water .grew at a rate of 30 .

Manufacturing cost .

Key industry trends .

is making it mandatory to drink packaged water ‡ Drinking mineral water used to be a fad but now a necessity ‡ Home delivery of jars highlights need for pure water at home too ‡ Consumers believe it is better to be safe than sorry! . led by metros. trustworthy and hygienic beverage solutions ‡ Increased health and wellness trends across the country. B & B+ income groups reflecting changing lifestyles and consumption trends ‡ Increasingly cool to be seen with bottled water ‡ Fast-paced life is making them look for convenient.The consumer ‡ SEC A.

Consumption pattern ‡ Consumption of bottled water in India is linked to the level of prosperity in the different regions ± The western region accounts for 40% of the market ± The eastern region accounts for just 10% ± Bottling plants are concentrated in the southern region .

combined contributes to 24% .Consumption pattern (contd.) ‡ PET is growing in South ‡ Accounts for 48 per cent of the total market ‡ South India is the largest consumer of PET material for packaging mineral water ‡ South India commands a market share of 48% ‡ West India accounts for 28% ‡ North and East India.

hygienic water ‡ The rural market ± Dominated by tourists and travelers ± Packaged water now an essential appendage to any form of travel .The new consumer ‡ The main consumers no longer restricted to the upper class but include: ± Middle class ± And lower-middle class families as well ‡ Driven to the category by lack of clean.

1 crore daily! ‡ Ratio of each player's market share to the entire packaged water market is the same in both lean and peak seasons . bore wells ± With modern reverse osmosis techniques.TN Focus ‡ 370 authorized supply units have sprung up across TN ‡ The regional players: ± Operate plants replete with wells. UV radiation units ‡ About 220 water units operate near Chennai alone ‡ Companies rake in Rs 80 lakh to Re.

Apollo and Team are among the chosen ones .Chennai: In focus ‡ The water market is worth over Rs 1.250 crore ‡ Water-starved Chennai alone accounts for a quarter of that pie! ‡ 70 lakh litres of water are sold in the city everyday ‡ 3 lakh litres by multinational water brands ‡ 2 lakh litres are supplied by Parle¶s Bisleri ‡ High-income group & corporates tend to choose Kinley ‡ Middle-income households prefer local suppliers ± Bisleri.

000 20-25 litre bubble-top containers from Rs. 1 each ‡ 75. 30 each ‡ 25. 38 ‡ 10. 18 to Rs. 700 to Rs.000 12-liter cans @ Rs. 10 to Rs.12 each ‡ 100. 900 / tanker .000 water tankers carrying 12.000 1-liter bottles @ Rs.000 litres each @ Rs.Chennai: In focus ‡ 5 million quarter-liter packets @ Re.

35 per can ‡ The residents are collectively spending more than Rs.000 units a day ‡ MRP Rs. 15 lakh every day on potable water ‡ Residents got used to packaged drinking water during the successive drought years (a few years back) and there has been no going back! .Rs.The Chennai consumer ‡ Majority of city households depend on packaged water for cooking and drinking purposes ‡ The bubble top has become the mainstay in most homes despite round-the-clock supply by Metro water ‡ Daily sale of 20-litre bubble tops exceeds 75. 15 .

the railways order 10. are fast movers among the train-travelling crowd ‡ According to officials at Cherio.A great opportunity ‡ Railways is a huge potential market ‡ Water bottles.Railways .000 cases (of 12 bottles each) a day ‡ It accounts for 5% of Cherio·s water sales . especially the 2 litre variety.

The Marketing Challenge! .

or enhanced waters ‡ Large number of players and increasing competition have been pushing the prices and margins down .. nationally. purified. mineral. regionally. sparkling. internationally.Summary of category learnings ‡ Competitors compete globally. and locally ‡ All brands are pretty much identical ± Though there are sub-segments in the bottled water industry viz.

bottled water is a low-involvement category for them ‡ They might ask for a ¶Bisleri· or ¶Water bottle· to the retailer and take whatever is handed to them ± As long as it looks and feels like a mineral water bottle! ± Incidentally. to the consumer ¶Bisleri· means ¶Mineral Water·! ‡ Brand loyalty is almost non-existent! ± (Or is it?) .Summary of consumer learnings ‡ Though most consumers are health-conscious and all that.

Summary of the advertising scenario ‡ Though there has been sporadic advertising. most brands seem to be disinterested to advertise ± Given the low consumer involvement in the category ‡ Very few consumers can even recall advertising of the brands that have done so ± Again. due to low category involvement ‡ Some brands do resort to ground-level initiatives and activities like sponsorships ± Aqua fina and Kinley are cases in point .

tasteless and odourless liquid!· .. here·s what you are supposed to do« ‡ Help launch a bottled water brand for a small company ± Small compared to the likes of PepsiCo. ‡ A company that can spend some money on promotion but can·t match the budgets of the biggies in the category ‡ The bottled water you are planning to launch would be no different from the other brands in the market ± As my good-looking science teacher in school used to say ¶water is a colourless. Coco-Cola. Parle etc.Now.

‡ Review competitive advertising« .Remember« ‡ The facts given in the case are just indicative« ‡ You are expected to do some level of research on your own« ‡ Talk to consumers« ‡ Talk to yourself«« ‡ Do some desk research«.

And« ‡ «help launch a brand in this category ‡ «suggest a persuasive and pocket-friendly promotion strategy ‡ «keeping mind the constraints ± Of the category that is low-involvement ± A client who doesn·t have huge budgets ± And a consumer with fickle loyalty levels! .

Good luck! .Un-bottle your strategic and creative acumen.

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