Mineral Water Segment On The Boil

A decade ago it was very rarely that a customer walked into the neighbourhood shop asking for a bottle of mineral water. Growing at 12 per cent, the mineral water industry was small, confined to a couple of big cities and devoid of large-scale advertising. There was only one big brand, Bisleri, from Parle Exports with little or no major competition.

Growth rates in the nineties are up to nearly 60 per cent. The number of players has leaped to 140 with more to come and ad budgets are rocketing skywards.

Says Sudhee Ranjan, director, marketing, Atco Healthcare, one of the many players ready to foray into this market, "A decade ago there was no market worth the name. But then different segments like the mobile customer and so on were created eventually leading to a rapidly expanding market." Total gross volumes hover around 450 million litres (90 million litres in 1992) and the market today is worth nearly Rs 400 crore. Most of the market is dominated by one litre bottles though the 1.5 and two litre bottles are also making a headway.

 

Bisleri from Parle Exports has 70 per cent of the market but is feeling the heat from other competitors. Bailley, launched by brother-turned-rival Prakash Chauhan in 1993 has expanded fast grabbing 18 per cent of the market. Competing with them are many regional brands like Spakel, Brindavan, Ganga, Aqua etc.

Among the reasons behind the rush are low input costs, greater awareness of health and higher disposable incomes. "The entry barriers are low compared with other industries. This prompts a lot of me-too brands to throng the market. Moreover, the consumer is now more conscious of his health than ever before," said a senior executive of Parle Exports. Sources project that current growth rates will continue till 2000. Players at the top are fortifying and fine-tuning their distribution network, while the lesser players are trying to create better ones. While smaller players such as Spakel are localised, Bisleri and Bailley are steadily spreading their distribution network across the country. Bailley has a few plants which are its own and also operates through franchisees. In a business which is predominantly distribution driven, franchisees form the most important link.

Says Jagdeep Kapoor director, Samsika Marketing, "Production in this industry has to be localised. You can't survive in the industry with a standard FMCG distribution network. There have to be processing plants handled by franchisees at various places if you want to widen your reach." The bigger players are already sprucing up their act by investing in distribution and beefing up their brand value. Parle Agro is expanding capacity at its Patalganga plant in Maharashtra from the current three million cases annually. Bailley's plant in Mumbai has a capacity of 2,400 bottles an hour.

Bisleri, which initially had its bottling plant in Mumbai, has since expanded its network to over 15 to 20 franchisees. Sources add that the mineral water major is also planning to set up a plant in New Delhi.

The fight is also constantly on for registering better brand differentials. Says Ravi Garg,senior brand manager, Parle Bailley, "All our efforts are aimed at differentiating Bailley from the competition. The major differentiator with Bailley is quality. We have the best of imported machinery where water is treated as much as seven to eight times."