The water purifier slugfest

Pureit and Acquasure are fighting hard for leadership in the entry-level market.

The advertisement war in the entry-level water purifier market saw a court-mandated pause last week, but the two main players – Hindustan Unilever (HUL) and Eureka Forbes – are in no mood to give up the larger battle for leadership in a fast-growing market.

Analysts say the court battle highlights the pitfalls of entering the lower end of the water purification market. Within the constraints of price, companies have to come up with effective and harmless ways for disinfecting water.

But the efforts are obviously worth it, as at stake is the huge bottom-of-the-pyramid market where HUL’s Pureit brand has the first mover advantage. While HUL says Pureit has already entered around two million households in 1,500 towns across India since its launch five years ago, Eureka Forbes has been trying hard to bridge the gap with Acquasure, its model in the low-end segment.

When it entered the market in 2004, HUL’s main gambit was pricing – Pureit cost just Rs 2,000, less than half of the popular varieties of water purifiers at that time. The cost of Pureit water was pegged at 35 paise per litre, in contrast to the 47 paise per litre of boiled water (on LPG) and 64 paise per litre of the high-end ultra-violet purifiers.

The pricing gamble worked as Pureit entered one million households in southern India alone where the product was first launched. That was enough to force entrenched players such as Eureka Forbes, the market leader in the high value-high margin segment, and others such as Kent to rush in with cheaper products.

In June 2008, Eureka went pan-India with Aquasure, which was priced in the same bracket as Pureit.

For now, HUL seems to have its nose ahead in the race. Vikram Surendran, HUL General Manager (Water) says, “We have added nearly one million consumers in 2009 alone." In contrast, according to Eureka Forbes, Aquasure, the bromine-based purifier that comes for Rs 1,950, has been able to enter close to half a million homes so far this year.

But that could change as Eureka Forbes seems to have reached the rural areas faster. The company says it has set up close to100 community centres with the help of NGOs to offer villagers water from its basic Aquasure model. Eureka Forbes CEO Marzin R Shroff says, “We are trying to bring down customer acquisition costs further.”

However, HUL, which has already begun pilot projects in some villages with the help of NGOs, says it won’t take much time to speed up its entry into rural areas – the main battleground for these kinds of products. Experts say the FMCG major already has a strong distribution network in villages through initiatives such as Project Shakti.

The intense battle in the marketplace had reached the courts two months back when HUL moved the Bombay High Court after it found competitor Eureka Forbes’ recent Acquasure ad “offensive and disparaging” to Pureit. In its response, Eureka Forbes agreed to withdraw the ad.

But Eureka Forbes also extracted its pound of flesh as HUL agreed to send Pureit to NSF International, an apex forensic laboratory in the US. The lab will test the purifiers of both the companies to verify their claims on purity of the output water.

The problem started when Eureka Forbes ran a TV campaign that spoofed HUL's claims in its advertisements that Pureit meets the germkill criteria set by the Environmental Protection Agency (similar to boiled water), needed no electricity and running water and had an auto-switchoff that stopped water-flow once the device needed a change of kit. Anyone who can prove to the contrary would be offered Rs 1 crore, the ad said.

But Eureka Forbes came out with a counter-ad, implying that unlike Pureit, Aquasure did not use chlorine, which could have harmful side-effects. HUL struck back by moving the court.

KPMG Advisory Manager (Consumer Markets) Anand Ramanathan says, “The legal battle won't affect sales much. It could, however, make the companies more cautious with future investments in the brand”.

HUL, doesn’t seem to have any such doubts. The second leg of its Pureit campaign is on, which says that the Rs 1 crore remains unclaimed.

For HUL, the withdrawal of the spoof ads by Eureka Forbes is a relief. But the company knows that mass media campaigns alone are not enough in a category that has an indisp ensable component of after-sales service and requires education of consumers.

First, the features of the device. Pureit’s battery or its chorine-discharger kit lasts for 1,500 litres, after which it has to be replaced.

The purifier has an in-built indicator that reminds the consumer thrice about replacing the kit, after which the machine automatically switches off so that he cannot collect water that is not purified.

HUL says it has subsidised the machine as it knows it can bank on making money through the replacement of battery kits that cost Rs 365.

Four years of testing waters in the southern markets — from Tamil Nadu, on to Karnataka and Andhra Pradesh — also allowed the company hone its skills of creating awareness among its target consumers through its foot-soldiers — the direct salespeople.

The recently-launched PureIt Auto-fill is another brand extension priced at Rs 3,200 that lets HUL address the affluent markets, which do not have water shortage and hence, might find manual filling of the 18 litre storage tank of the purifier tedious.

Floats in the device, once connected to the tap, regulate the supply of water to the device to maintain the right amount inside for purification.

Since Eureka Forbes is also planning such brand extensions, the water purifier battle seems set to be a long-drawn one.