Project on Mineral Water Industry

A STUDY ON MINERAL WATER BOTTLES ____________________________________________________________________ _

Om I wil give le

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1 INTRODUCTION Water forms an essential part of every living being. After air, water is the most important necessity for life. Water plays a number of functions for the body. It serves as the body's transportation system, it acts as a lubricant, it regulates the body temperature etc. The eulogy for water is an unending thing. In fact more than 2/3rd of the human body is made of water. The importance of water for human body can be well accessed from the fact that if the amount of water in our body is reduced by just 1-2%, we feel very thirsty. If it's reduced by 5%, our skin will shrink and we will have difficulty moving our muscles and if it's reduced by 10%, we will die. Moreover with this commodity being a human necessity it makes best sense to do business in. As a normal human being requires on an average needs 2-3 litres of water everyday and world population is more than 6 billion (growing at 2-3% annually), the business opportunity is humongous and the potential is largely untapped. These facts about water added to the growing number of cases of water borne diseases, increasing water pollution, increasing urbanization, increasing scarcity of pure and safe water etc. have made the bottled water business quite lucrative. In addition with getting pure drinking water from municipal taps in cities and towns becoming a luxury the scenario has become so lucrative in business sense that the opportunity is being misused by a number of companies especially in our country. These companies are selling plain tap water under the name of mineral water and are be-fooling consumers. The situation has got aggravated by lack of awareness among common people about mineral water and also due to lack of initiatives on part of the government both on count of setting stringent norms as well as on taking action against non-compliers. In fact one of the major factor for flourishing of the sector is the public fear that water supplied by civic bodies is impure.

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1.1 HISTORY OF MINERAL WATER

INTERNATIONAL SCENARIO: POPULARITY OF MINERAL WATER: The tradition of bottled water and mineral water is not very old. Even in western countries the practice of bottled drinking water started in 1950s. The trend of having mineral water gained grounds in the market. Since ancient time people have used water from mineral springs, especially hot springs, for bathing due to its supposed therapeutic value for rheumatism, arthritis, skin diseases, and various other ailments. Depending on the temperature of the water, the location, the altitude, and the climate at the spring, it can be used to cure different ailments. This started the trend of using mineral water for drinking purpose to exploit the therapeutic value of the water. This trend started gaining momentum in mid 1970s and since then large quantities of bottled water from mineral springs in France and other European countries are exported every year. The concept of bottled has been quite prevalent in western countries due to greater health consciousness and higher awareness about health and hygiene. The international standards regarding bottled water are so stringent that for a particular brand of water to be certified as bottled water it has to get approvals on four levels: federal, state, trade association and individual company levels. In United States, the bottled water industry is regulated on four levels: federal (by the U.S. Food and Drug Administration as a food product), state, industry association, and individual company. EPA (Environment Protection Agency) regulates public water systems. FDA regulates bottled water that crosses state lines. _______________________________________________________________________ _


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SOME OF THE STANDARDS GOVERNING THE BOTTLED WATER INDUSTRY IN US ARE:  Water is classified as bottled water or drinking water, if it meets all applicable federal and state standards, is sealed in a sanitary container and is sold for human consumption.  Bottled water cannot contain sweeteners or chemical additives (other than flavors, extracts or essences) and must be calorie-free and sugar-free.  Flavors, extracts and essences -- derived from spice or fruit -- can be added to bottled water, but these additions must comprise less than one percent by weight of the final product.  Beverages containing more than the one-percent-by-weight flavor limit are classified as soft drinks, not bottled water.  Bottled water may be sodium-free or contain "very low" amounts of sodium.  Tap water uses Chlorine as a disinfectant bottled water uses Ozone as a disinfectant.  Bottled water should not contain chlorine.

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1.2 HOW IS BOTTLED WATER DIFFERENT FROM TAP WATER?

Consistent quality and taste are two of the principal differences between bottled water and tap water. While bottled water originates from protected sources - largely from underground aquifers and springs - tap water comes mostly from rivers and lakes. Another factor to consider is the distance tap water must travel and what it goes through before it reaches the tap. In compliance with international regulations, bottled water is sealed and packaged in sanitary containers. If a bottled water product is found to be substandard, it can be recalled. This can't happen in case of tap water. According to regulations in the US, when bottled water is source from a community water system the product label must state so clearly. However, if the water is subject to distillation, deionization or reverse osmosis, it can be categorized that way, and does not have to state on its label that it is from a community water system or from a municipal source. Processing methods such as reverse osmosis remove most chemical and microbiological contaminants.

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1.3 1.

TYPES OF WATER

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ARTESIAN WELL WATER:

Bottled water from a well that taps a confined aquifer (a water-bearing underground layer of rock or sand) in which the water level stands at some height above the top of the aquifer. Another name for bottled water. Accordingly, drinking water is water that is sold for human consumption in sanitary containers and contains no added sweeteners or chemical additives (other than flavors, extracts or essences). It must be calorie-free and sugar-free. Flavors, extracts or essences may be added to drinking water, but they must comprise less than one-percent weight of the final product or the product will be considered a soft drink. 2.

MINERAL WATER:

Bottled water containing not less than 250 parts per million total dissolved solids may be labeled as mineral water. Mineral water is distinguished from other types of bottled water by its constant level and relative proportions of mineral and trace elements at the point of emergence from the source. No minerals can be added to this product. 3.

PURIFIED WATER:

Water that has been produced by distillation, deionization, reverse osmosis or other suitable processes can be labeled as purified bottled water. Other suitable product names for bottled water treated by one of the above processes may include "distilled water" if it is produced by distillation, "de-ionized water" if the water is produced by deionization, or "reverse osmosis water" if the process used is reverse osmosis. 4.

SPARKLING WATER:

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A STUDY ON MINERAL WATER BOTTLES ____________________________________________________________________ _ Water that after treatment and possible replacement with carbon dioxide contains the

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same amount of carbon dioxide that it had at emergence from the source.

5. SPRING WATER: Bottled water derived from an underground formation from which water flows naturally to the surface of the earth. Spring water must be collected only at the spring or through a borehole tapping the underground formation finding the spring. 6. WELL WATER: Bottled water from a hole bored, drilled or otherwise constructed in the ground, which taps the water of an aquifer.

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1.4

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PURIFICATION PROCESS

Purity and safety are two major factors that should be taken care in sourcing and processing of bottled water. Under ground water is used by it for filling the water. Underground spring is carefully selected based on its portability and pathogen free water. Great care goes in tapping this source. Only water below 25 meters is tapped. This is to avoid any surface contamination to percolate and mix with underground water source. Area surrounding the water collection tube at the surface is protected and kept clean. The under ground water goes through seven stages of purification process which is as follows:

1) CHLORINISATION : First of all water is taken out from six bore wells and stored in the tank and chlorine is mixed in it. This is done to remove bacteria from water. 2) SAND FILTRATION: Chlorine mixed water is passed through seven layers of sand in a tank. This way all the major bacteria are taken out from water. 3) CARBON FILTER: After sand filtration water is passed through carbon filter to remove the chlorine that was mixed earlier. 4) ULTRA FILTRATION: Under this method water is passed through a filter, which has the pores of _______________________________________________________________________ _

A STUDY ON MINERAL WATER BOTTLES ____________________________________________________________________ _ .2 microns, and even the biggest r of bacteria is of .5 microns, hence

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through this filter even the remotest bacteria and dust particles are taken out.

5) REVERSE OSMOSIS: As per the law TDS (total dissolved solids) are required to be maintained at the level of 70 - 110 ppm, through reverse osmosis TDS is maintained at 100 ppm. 6) OZONISATION: Under this method ozone gas is mixed with water. 7) ULTRA FILTRATION: Under this method ultra violet rays are passed through the water to kill water. This is basically a precautionary step to purify water as after reverse osmosis no bacteria remain in water. After whole this process at last step bottles are passed through a white screen where a quality in charge inspect each and every bottle to ensure that there are no dust particles in the bottles and if they are found then those bottles are rejected.

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1.5 LABELLING

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STANDARD PERTAINING TO LABELING OF PRODUCT IN THE INDUSTRY: Label should have consumer brand name. Label should have the name of the product category. Label should have name and address of the manufacturer. Label should have net weight or volume. Label should have the batch number. Label should have the name of source or place of origin of the product. Label should have the date of packaging. Label should have the date of expiry. Label should have direction for storage. Label should have treatment for disinfections. Label should have the license or certification from the concerned authority.

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2 BACKGROUND OF INDIAN SCENARIO In 1967 Bisleri set up a bottling plant for manufacturing and marketing its mineral water but failed. The brand was later sold off to Parle in 1968-69. Mineral water market had its seeding as early as 1968-69 when Parle Group acquired the Bisleri brand from Bisleri of Italy for launching Soda water but later launched bottled water also. The launch at that time was a big flop as concept of buying water that too in bottled form was not accepted by the Indian public. The market remained dormant for quite long (for a period of 20 years or so). The market through out this period was formed only by the premium products that too available through 5-star hotels. In early 1990s with onset of liberalization policy by the Indian government , coming in of cola majors, sell off of local soft drink brands of Campa, Thumps up, Gold Spot etc by Parle to Coke and other factors led Bisleri to test waters again. Bisleri re-launched its bottled water in 1994. By this time with exposure of media and exposure to international life styles, deteriorating levels of potable water, increase in a number of water borne cases, increase in awareness about health and hygiene and other related factors led to acceptability of concept of mineral water. The market has not looked back ever since then and has grown leaps and bounds to such an extent that a number of genuine as well as fly-by -night operators have entered it to milch it.

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2.1 BIG PLAYERS KEEN TO GET INTO BOTTLED WATER The Rs. 500 crore bottled water market is witnessing hectic activity with many players entering the fray in the last one-year and still more to come. Part of the fast moving consumer goods (FMCG) sector, bottled water is the only segment to have shown phenomenal growth of about 50 per cent in the last one year. Hindustan Lever (HLL), the consumer goods giant, has initiated plans to enter this sector. The company is considering whether to set up its own facilities for bottled water or go in for an acquisition. Nestle India is the latest to enter this market with the launch of its brand `Pure Life' in New Delhi last week. It plans to grab a 50 per cent market share in the next two years and emerge as a strong player. The company has not ruled out acquiring existing brands. The product will be available in other cities as well soon. The water is bottled at Nestlé’s new plant at Samalkha in Haryana. Nestle has already launched two of its global premium mineral water brands `Perrier' and `San Pellegrino' which are targeted at niche markets. The market is expected to continue to grow at a healthy clip. In fact, in the last two years, there has been a doubling of growth. Major players include Parle Bisleri, Parle Agro, Coca Cola, PepsiCo, and among domestic players UB and Britannia. The success of bottled water could be attributed to two factors. First, it has been an underdeveloped business for a while now and, second, soft drink manufacturers have priced themselves out by a long shot. The prices of soft drinks have, in fact, doubled in the last ten years and this has happened because the price of concentrates has shot up during this period. In fact, soft drink major Coke launched its Kinley brand of bottled water and Pepsi its _______________________________________________________________________ _

A STUDY ON MINERAL WATER BOTTLES 12 ____________________________________________________________________ _ global brand Aquafina. Pepsico is reportedly contemplating two more pack sizes for its bottled water. Kinley's new product follows the launch of `Chhotu' Bailley, which is a 350 ml bottle introduced by Parle Agro. Kinley water was launched in August 2000 in one-litre bottles for Rs.10. The water is produced at Coca-Cola's three Greenfield manufacturing plants at Bidadi near Bangalore, Dasna in Uttar Pradesh and Goa. The company plans to either add more water bottling operations or go for contract bottling as it goes national. Marketing Consultants, with a current market share of 38%, Bisleri offers the maximum number of pack sizes. Kinley follows it with a 28% share. The other brands including Aquafina and Bailley constitute 11% & 6% per cent market share in the bottled water market. The Samsika survey further says that there are as many as 186 brands in the water market. Out of this, two are national brands, 17 regional and 167 local brands. Apollinaris, a natural sparkling mineral water brand, has been introduced close on the heels of Nestle coming out with its sparkling water brands - Perrier and San Pellegrino. The product is being imported and distributed by the Mumbai based company, Veekay Food & Beverages. It is now available at restricted retail outlets in Mumbai and Delhi and a separate sub-brand is simultaneously being launched to take care of institutional sales. It is also being launched under the sub-brand of Big Apple and Lemon. But the product is in a different price bracket altogether with the 750 ml Apollinaris Big Apple pegged at Rs. 99 and the one litre Apollinaris Classic sparkling water at Rs. 90. With over 200 players jostling to be the thirst-quenching favorite of the Indian consumer, the business is growing at a rate of over 50 per cent annually. The country's bottled water business is estimated to be around Rs. 1,100/- crore, of which the branded _______________________________________________________________________ _

A STUDY ON MINERAL WATER BOTTLES ____________________________________________________________________ _ market accounts for Rs. 700 crore and about 700 million litres in volume.

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India’s 1 billion plus population needs between 1-2 billion litres a day.

More than 200 brands of bottled water are being retailed across the country. An estimated 850 million liters of bottled water is bought every year.

sales 100 80 60

sales

40 20 0 rainy

winter

summer

As we can see from the diagram above that most of the sales of Bottled water comes in the summer season. Therefore, the right time to launch such type of product is summer season. In monsoon time also a good response can be generated because there are people who are very much conscious of their health and this makes them to go for packaged water. Therefore, the sales are good in rainy season. In winter season the sales are very low because of climatic conditions.

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2.2 POPULATION MUMBAI MARKET POPULATION : Estimates of the present population are in the range of 14 to 15 million. The 1992 census found that 12.5 million people lived in the Mumbai Metropolitan Region. Of these, 9.9 million lived in Greater Mumbai. Mumbai's population has grown most rapidly in the years after India's independence. In the decade between the censuses of 1982 and 1992, there have been some signs of a leveling off in the growth. YEAR WISE COMPARISON: YEAR WISE POPULATION 2005 2000 1995 1990 1985 1980 8.5 MN

12.5 MN

15 MN

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A STUDY ON MINERAL WATER BOTTLES ____________________________________________________________________ _ YEARS POPULATION 1982

8.5 Million

1992

12.5 Million

2002

15 Million

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POPULATION ACCORDING TO AREA:

YEARS

GREATER MUMBAI

REST OF MUMBAI

1992

9.9 Million

2.6 Million

2002

10.5 Million

4.43 Million

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POPULATION AS PER AGE COMPOSITION:

Population - AgeClassification

5% 37%

0-14 15-69 69 +

58%

AGE 0 - 14

PERCENTAGE 37%

POPULATION 8.7 Million

15 - 59

58%

5.55 Million

60 Above

5%

0.75 Million

NOTE:

* All the figure for 2002 are estimated _______________________________________________________________________ _

A STUDY ON MINERAL WATER BOTTLES ____________________________________________________________________ _ Source: Report On Population, Tata Energy Institute, New Delhi.

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2.3 PER CAPITA CONSUMPTION Overall per capita consumption is merely 0.04% (Source Financial Express). Nearly 80 per cent of the demand for bottled water comes from metros. 20 LITRES JAR: SR . NO

CITY / AREA

JAR PER OFFICE

1

SOUTH MUMBAI

44

2

NORTH MUMBAI

50

3

WEST MUMBAI

48

4

EAST MUMBAI

60

5

TOTAL

202 JAR PER OFFICE

MARKET SIZE BY VOLUME AND VALUE : The market size of Packaged Drinking Bottled water is around 1000 crore, and Mumbai market constitute around 10% which is 100 crores. Market has grown by around 500 crores in the last few years. Current growth rate estimated is 55%, which is one of the highest of all industries.

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2.4 BRANDS AVAILABLE :

Various brands that are available in Mumbai. Few of them are as follows: BRANDS

LITRES - 1 LITRE. ETC

20 LITRES

Bisleri

Yes

Yes

Kinley

Yes

Yes

Aquafina

Yes

No

Bailley

Yes

Yes

Brilliant **

Yes

Yes

Hello **

No

Yes

Spakel

Yes

Yes

Harnil *

No

Yes

Apurva *

No

Yes

Bally *

No

Yes

Krishna*

No

Yes

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2.5 RETAIL OUTLETS

There are above 1,00,000 retail outlets in Mumbai. SR. NO

CLASSIFICATION

PERCENTAGE

1

GROCERY & GENERAL STORES

40%

2

DEPARTMENTAL STORES

03%

3

COLD DRINK HOUSE

02%

4

HOTELS & RESTAURANTS

5%

5

BEER BARS

02%

6

PAN BIDI SHOPS

28%

7

OTHERS

20%

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2.6 BRAND WISE SHARE

Others 17% Bisleri 38%

Bailley 6% Aquafina 11%

Kinley 28%

BRAND WISE MARKET SHARE % The ORG-MARG survey conducted recently shows that the market leader Bisleri is having 37.6% market share followed by Kinley, Aquafina, Bailley and others with 28.2%, 11.11%, 5.7% and 17.4% respectively. One thing is very clear from the two surveys conducted that the market leader is Bisleri with Kinley, Aquafina, and Bailley are the trailers, and now with Manikchand into mineral water, the competition is becoming tough.

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3. MARKET CATEGORISATION

The market of packaged drinking water is categorized as follows: Ø Theatres / cinema halls/ multiplexes. Ø Corporate. Ø Caterers. Ø Picnic spots, Clubs, Gymkhanas. Ø Hotels, Resorts. Ø Resorts. Ø In-flight kitchens. Ø College canteens. Ø General Stores etc.

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3.1 CATERERS

BrandShare:

24%

Bisleri 44%

Bailey Kinleys McDowell

12%

Brookes Others 10% 7%

3%

POPULARITY OF VARIOUS BRANDS AMONG CATERERS

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Usage Pattern: USAGE

65%

users non users

35%

USAGE PATTERN IN CATERERS _______________________________________________________________________ _


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Payment Terms:

PAYMENT IN TERMS - CATERERS & GYMKHANA

26%

Cash Credit

74%

Other Findings:

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A STUDY ON MINERAL WATER BOTTLES 25 ____________________________________________________________________ _  Price closely followed by Service, Storage, Ease of operation & Availability are the key factors affecting the buying decision process. They are willing to pay only unto a maximum of Rs 2.50 per liter which is too below the price that any branded player can afford to sell 

Credit is a key factor that was revealed by most contractors after intensive probing.

The credit period expected by most was from 15 days to a month. They mostly avoid dealing directly with companies for this very reason & prefer to buy through the company’ intermediaries who provides them the necessary credit 

Most contractors expect the provider to supply directly to the wedding/party site, as

they generally do not have the space to stock the bottles. 

Brand name has absolutely no relevance to them

3.2 CINEMAS

Brand Share:

MARKET SHARE OF VARIOUS BRANDS IN CINEMA HALLS IN 1 LITRE PACK

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A STUDY ON MINERAL WATER BOTTLES ____________________________________________________________________ _ BAILLEY 19%

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BIS LERI 11%

BISLERI

A'FINA 18%

KINLEY A'FINA

KINLEY 52%

BAILLEY

Payment Terms: Here payment is done by both the ways i.e. : By CASH -

PAYMENT TERMS - IN CINEMA HALLS

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Credit 30%

Cash Credit

Cash 70%

Frequency of Visit: Twice a week Other Findings: Price closely followed by Brand Name, Convenience, & Service are the important factors that affect the buying decision process Cinema halls, Cyber Cafes, Bowling Alleys, Video game parlors are some places

where

people generally go to have a nice time. The average time that a person spends at the above ranges between 2-5 hours for a cinema hall to an hour for a cyber café. The above centers already have the kiosks of the cola companies like Coke, & Pepsi along with the vending machine of Nescafe. Thus there definitely is a potential for the introduction of a kiosk vending pure water in these categories of outlets Purchase frequency would vary to as low as thrice a month in a cyber café to as high as twice a week in case of Amusement parks like Essel world & Water Kingdom

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3.3 HOTEL AND RESTAURANT Availability Share:

9%

4%

36%

Bisleri Kinleys

21%

AquaFina Bailey Others 30%

AVAILABILITY SHARE - HOTELS & RESTAURANTS

Payment Terms: _______________________________________________________________________ _


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35%

Cash Credit 65%

PAYMENT TERMS - HOTELS & RESTAURANTS Service Frequency: Alternative Day Findings:  Price closely followed by Service, Taste of water and Ease of operation are the important factors that affect the buying decision process.  Hygiene is a very important factor when a customer decides to snack/eat in a particular outlet. More so when we interviewed food stalls in Juhu Chowpatty a majority of the food stall owners said that they now provide their customers with the 1 liter Bisleri bottle as many customers refuse to accept the water offered to them.  Respondents showed a fair level of brand awareness but there was no distinct preference to any particular brand. Bisleri had a fair level of unaided recall vis-àvis other brands like Bailey, Kinley, etc.

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3.4 RETAIL OUTLET FINDING:

Small Space Less Quantity and more frequency of purchase Prefer Credit facility Look out for schemes. Bigger Margin, More preferences.

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4. BRAND WISE DETAILS

A Survey Format of ‘Distribution- Network’ of “Packed Bottled Water” Name of Company: Brand: Name of Distributor: Area: Address & Tel. No: No. of vehicles used: Company Owned: Distributor Owned: Total:

List of Staff Appointed for Distribution A.S.M.

S. Officer

S. Rep.

Driver

Loader

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4.1 PARLE BISLERI PRIVATE LIMITED Company: Parle fisleri Private Limited. Brand: Bisleri Address: Parle Bisleri Pvt. Ltd., Western Eastern Highway, Andheri (E). Product: Packaged Drinking Water Design:

Quality: ISI Marked. Packaging: Pet Bottles Target Market Segment: Health Conscious people Positioning: Safe Water Trade Promotion: Corporate Event, Play safe Campaign, Mobile Van, Stressing on Seal Distribution: q

Bottling plant (Andheri)

For 1 Litre, etc. The Company directly approaches the retailer. They have tracked Mumbai through various routes and accordingly they service. Their major hub is Santacruz, Vile Parle & Andheri in Suburbs.

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A STUDY ON MINERAL WATER BOTTLES ____________________________________________________________________ _ Schemes:

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One Litre One Box free on 5 Box Half Litre One Bottle free on 1 Box For 20 Litre. jar Bisleri sell their product through their own network and they have also appointed Distributors for each area to sell their product.

Bisleri-DISTRIBUTOR Details for 20 Ltr.- South Mumbai Distributor: Nos. 16 Average sales per Distributor: 110 Jar per day. Vehicle: Nos. 7 (for Distributor) MRP: Rs. 60 Net Cost Price (for Distributor): Rs. 43 Margin of Rs. 17 (39.53%)

Bisleri on their Own. (South Mumbai) Service Frequency: Alternate days Vehicle: Nos. 12

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A STUDY ON MINERAL WATER BOTTLES ____________________________________________________________________ _ Manpower per Vehicle

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1 loader 1 Driver 1 salesmen

Schemes: 1 Jar Free on 10 jars. 88 Jars free on 700 jars, if bought within 4 days. All Schemes are for Distributors in South Mumbai. Distribution channel Distribution Weakness: Company is not addressing the compliant from distributor and end user. Company does not use Polycarbonate Jars in 20 Litre, which result in loss of face value and ultimately losing customer.

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4.2 HINDUSTAN COCA COLA BEVERAGES PRIVATE LIMITED Company: Hindustan Coca cola Beverages Private Limited Brand: Kinley Product: Packaged Drinking Water Design:

Quality: ISI Marked. Packaging: Pet Bottles, Polycarbonate Jars Target Market Segment: Health Conscious people Positioning: Safe Water Trade Promotion: Effective TV ads (Boond Boond mein vishwas), Banking on Parent Brand, Mobile Van. Distribution: q

Bottling plant (Wada, Thane District) Three C&F for catering Mumbai Market Vidyavihar Kandivali Sewri

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A STUDY ON MINERAL WATER BOTTLES ____________________________________________________________________ _ For 1 Litre. etc.

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The Company directly approaches the retailer. They have tracked Mumbai through various routes and accordingly they service. Schemes: One Litre One Box free on 2 Box (Net Rs. 80 per Box) Half Litre No scheme For 20 Litre. Jar Kinley sell their products through their own network only. They have appointed HDA (Home delivery Agent) for some area to sell their product. Service Frequency: Alternate days Manpower per Vehicle 1 loader 1 Driver/salesmen 1 salesmen MRP: Rs. 65 Lowest Selling Price to Corporate Rs. 50. Distribution Weakness: Not been able to penetrate in interior area since they have not appointed Distributors in most of the area.

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4.3 COMPANY: PEPSICO INDIA LIMITED Brand: Aquafina Product: Packaged Drinking Water Quality: ISI Marked Packaging: Pet Bottles Target Market Segment: Health Conscious people Positioning: Safe Water Trade Promotion: Banking on Parent Brand, Banners. Distribution:



Bottling plant (Chembur, Roha)



Distributor for catering Mumbai Market



o v

Jogeshwari

o v

Sewri

o v

Chembur, Kanjur Marg

Resources o v

Large Vehicle (Soft Drink Vehicle

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For 1 Ltr. etc. The Company directly approaches the retailer. They have tracked Mumbai through various routes and accordingly they service. Schemes: One Litre One Box free on 3 Box (Net Rs. 80 per Box) Half Litre No scheme

For 20 Ltr jar The Company has not entered the 20-litre Packaged water Market ‘Distribution Weakness: It seems that the Company is not pushing their packaged water brand “Aquafina” and concentrating on Beverages market. Many times their products are not available in the market. Aquafina packaged Bottles water is given in a scheme to promote their Beverages brand.

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4.4 COMPANY: PARLE AGRO PRIVATE LIMITED. Brand: Bailey Product: Packaged Drinking Water Quality: ISI Marked Packaging: Pet Bottles, Polycarbonate Jars Target Market Segment: Health Conscious people Positioning: Safe Water Trade Promotion: Mobile Van Distribution: Bottling plant (Patalganga, Panvel)

q

q

Two Godowns to cater Mumbai Market Jogeshwari Vikroli

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For 1 Ltr. etc. The Company directly approaches the retailer. They have tracked Mumbai through various routes and accordingly they service. For 20 Ltr. jar Bailey sells their product through their own network in South Mumbai. They have appointed Distributors in North Mumbai and other parts.

Service Frequency: Twice in a Week. Vehicles: There are 2 dedicated Vehicles for South Mumbai. (20 Ltr jar) Manpower per Vehicle 1 loader 1 Driver/salesmen MRP: Rs 60 Net Cost Price to Distributor: Rs. 46-48 Margin to Distributor: Rs. 14 Distribution Weakness: The Company is losing out its share on every front. Lethargic Approach towards Market. No Advertisement, Lack of Aggressiveness.

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4.5 COMPANY: BAISARA Brand: Himalayan Product: Natural Mineral Water Quality: ISI Marked Packaging: Pet Bottles, Polycarbonate Jars Target Market Segment: Health Conscious people Positioning: Mineral Water Trade Promotion: Direct Selling Distribution Channel:

q

Bottling plant (Himachal Pradesh)

For 1 Ltr. etc. The Company is targeting Star Hotels and has penetrated in most of the star Hotels. MRP Rs. 15 (One Litre)

For 20 Ltr. jar They have not ventured the 20 Litre Market.

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Distribution Weakness:  Not been able to penetrate in the Market  Failed to create awareness for their USP  Low on Advertisement and other awareness program

Other Information  It is an ISO-9002 certified Company  The Company is one of the integrated natural Mineral water bottling plant in Asia  It is a subsidiary of Balsara group for Companies

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4.6 COMPANY: BRILLIANT Product: Packaged Drinking Water Quality: ISI Marked Packaging: Pet Bottles, Polycarbonate Jars Target Market Segment: Health Conscious people Positioning: Pure Water Trade Promotion: Direct Selling, Push Strategy Distribution:

For 1 Ltr. etc. The Product is available at very few selected places Company direct handle the distribution of their product. MRP: Rs. 12 (One Litre)

For 20 Ltr. jar They have appointed 4 Distributors in South Mumbai. (Nariman Point, Nepeansea road, Fort, Central Mumbai)

MRP : Rs. 70 Net CP to Distributor: Rs. 52

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Deposit: Rs. 350 per jar

* Can be the Biggest Competitor to KINLEY in the near future in the 20-litre segment?

Distribution Weakness: v

Not been able to penetrate in the Market.

v

Low on Advertisement and other awareness program.

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4.7 COMPANY: HELLO Product: Packaged Drinking Water Quality: ISI Marked. Packaging: Pet Bottles, Carbonated Jars. Target Market Segment: Health Conscious people Positioning: Safe Water Trade Promotion: Direct Selling Distribution: 1. Bottling plant (MIDC, Andheri) 2. Three Company owned Stockist (MIDC, Dhobitalao) 3. Large Vehicle (Nos. 4) For 1 Ltr. etc. The Company deals only in Jars (24 litre and 20 litre) For 20 Ltr. jar Hello sells their product through their own network consuming 1000 jars per day.

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46

Resources With Hello for 20 Ltr - South Mumbai Stockist: 1 Average sale per Stockist: 350 Jar per day. Vehicle: 1 Large Vehicle for Distributor and 2 three-wheeler. MRP: Rs. 72 for 24 litres MRP: Rs. 60 for 20 Litre Manpower per Vehicle v

1 loader

v

1 Driver

v

1 salesmen

Distribution Weakness: v

Lack Aggressiveness

v

Slow and steady approach

Other Information USP: 24 Litre Jars. Handle in the Jars.

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5.

SWOT

ANALYSIS

OF

THE

PACKAGED

47

WATER

INDUSTRY STRENGTH ØThe industry is growing @ 40%. ØIn India the market is huge & untapped ØGrowing awareness among the people about the importance of mineral water

WEAKNESS Ø Many players entering in the race. Ø Any local person can start manufacturing. Ø Rural population is not using the packaged water. Ø Not very economical Ø Quality not properly maintained e.g. Bisleri & hence has bad effect on the whole

OPPORTUNITY Ø Sustained Market growth increase in coming years Ø Literacy rate growing and hence the awareness of safe drinking water to avoid the diseases. Ø Huge population & untapped market.

THREAT Ø Many substitutes available Ø Too many players will dilute the market & the profit margin

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48

6. MARKET SEGMENTATION The mineral water market is segmented according to the type of consumers:

Ø Foreign Tourists: Foreign tourists have been the main consumers of the mineral water as they face a lot of digestion problems due to different food habits.

Ø Domestic Tourists: Domestic tourists have switched to mineral water mainly because of safety and hygiene factors.

Ø Fashion Conscious: Like soft drinks, drinking mineral water is also considered fashionable by some people. The mineral water consumer is mainly in the age group of 2035 years and is an educated middle class person. This is also the segment of fruit drinks, which have usually been positioned as fun and health drink for young adults. The mineral water market is also segmented along pack sizes:

Ø One litre bottle: it is meant to spell safety and security for consumers. It is positioned on a prestige platform for the achiever segment - who like to make a fashion statement by drinking mineral water. This segment gets the maximum sales.

Ø 500ml bottle: This size has been introduced in the market to target the individual and local travelers.

Ø PET bottles: The size of the PET bottles varies from 10 to 20 litres. These are mainly for institutional sales (Wedding parties, Hotels, Corporates, etc.)

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49

7. CONSUMER HABITS AND PRACTICES Ø

Consumers are growing more health conscious and are more careful of their drinking habits.

Ø

Brand loyalty is very low as all the products taste the same so they can buy just any product which is on the shelf, same as that of soft drinks and fruit beverages.

Ø

Availability in the chilled form and brand awareness plays a crucial role in purchase decisions.

Ø

While there is no aversion to consumption of mineral water by any age group, this product is mainly consumed by the people in the age group of 2035 years who have less attraction of soft drinks or other synthetic drinks whereas youngsters look in for soft drinks and fruit beverages to quench their thirst.

Ø

Visibility is another factor that should be taken care of by the companies as consumers are not very brand loyal and consume whatever is in front of them

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50

8. LEGAL REQUIREMENTS The bottled water industry is governed by PFA and BIS standards. Some of the key highlights of these legislations are: Ø Mineral water is covered under the Prevention of Food Adulteration Act (PFA), while drinking water is not under its preview. Ø Drinking Water is excluded from the purview of the (PFA) Prevention of Food Adulteration Act, 1954. Except for the specification that water used in the preparation of a food article shall be free from micro organisms likely to cause diseases and should be free from chemical constituents that might impair health. Ø The Prevention of Food Adulteration Act (PFA) of 1954, whose stipulation is mandatory, has set standards only for mineral water and defines it as water obtained directly from potable natural or drilled sources that contain a substantial amount of non-toxic, health-related mineral salts. Ø The PFA rule on mineral water is that it must be free from dirt, foreign matter or any other ingredients injurious to health and has to be packed in clean and sterile containers. Ø The Bureau of Indian Standards (BIS) has provided standards for both drinking water and mineral water but compliance hitherto was voluntary Ø To regulate the quality and price of bottled water, BIS approval has been made mandatory w.e.f. end of 1999 Ø Mineral water shall be packed in clean, colourless, transparent and tamperproof bottles made of polyethylene conforming to the IS 10146 standards. Ø The standards laid down under PFA Act do not prescribe any minimum quantity of minerals to qualify as mineral water. Ø Hitherto Indian laws do not stipulate the minimum mineral content level required for water to be labelled as a mineral water Ø The BIS does not lay down any guideline or practice for processing water. _______________________________________________________________________ _


51

Ø There is no specific industrial licensing policy for the bottled-water sector. Thus any one can set up a plant can do so without establishing the source of the water and the technology used to purify it. Ø Both the PFA Act and BIS state that the water must be completely free of bacteria like salmonella, E-coli, faecal streptococci, v. cholera and shigella that cause a range of illnesses such as cholera, typhoid, dysentery and various types of gastro-enteritis Ø Both the PFA and BIS lay down standards for metals like lead, mercury, arsenic, aluminium and barium which cause a range of disorders Ø The BIS lays down a minimum of 150mg/l and a maximum of 700 mg/l of TDS for mineral water. Ø The PFA rules do not prescribe any minimum TDS levels but does mention the maximum of 1500mg/l Ø There are no government laboratories for testing water samples for all the parameters involved

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52

9. TAXES & ADVERTISING STRATEGIES The cost of processing the water is around 20-30 paise/litre the major cost is of the taxes Also the taxes are quite high. The taxes are as under: SR.N

Types of Taxes charged &

%

O

cost incurred.

contributio n

1

Octroi

4.5

2

Sales Tax

7.5

3

Excise

15

4

Transportation

10

5

Distribution Margin

12

6

CNF’s

2-3

7

Retailers Margin

40

8

Advertising – cost varies

--

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A STUDY ON MINERAL WATER BOTTLES ____________________________________________________________________ _ ADVERTISING

53

Advertising is any paid form of non-personal presentation & promotion of ideas, goods or services by an identified sponsor. Modes of advertising: Ø

Newspapers, billboards, glow signs, banners, inflatable etc.

Ø

TV.

Ø

Mails.

Ø

Radio.

Ø

Magazines.

Ø Yellow pages. Ø

Newsletters.

Ø

Brochures.

Ø

Telephone.

Ø

Internet.

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54

10. CSE REPORT ON MINERAL WATER BRANDS Your bottled water is contaminated by pesticides. Gaping holes in regulations and corporate irresponsibility in the fastest growing segment of the beverage industry make a mockery of public health New Delhi, February 4, 2003: We take it for granted that the bottled water we drink is safe. But a Down To Earth exposé, based on tests conducted by the Pollution Monitoring Laboratory of the Centre for Science and Environment (CSE) shows otherwise. After analysing 17 brands of packaged drinking water sold in and around Delhi and 13 brands from the Mumbai region, the CSE lab found the samples to contain a deadly cocktail of pesticide exceeding the standards specified as safe for drinking water. The samples had enough poison to cause in the long term, cancer, liver and kidney damage, disorders of the nervous system, birth defects, and disruption of the immune system. Pesticides do not kill immediately, but can cause irreparable health disorders as they accumulate in the body fat. The CSE lab tested for two types of pesticides: organochlorine and organophosphorus. The findings were appalling. The four most commonly found pesticide residues were lindane, DDT, malathion and chlorpyrifos. Using European Economic Commission norms for maximum permissible limits for pesticides in packaged water, the CSE lab tests of samples from the Delhi region showed that on average, each sample contained 36.4 times more pesticides than the stipulated levels. The Mumbai samples were a shade better, primarily because the source water used by the industry was relatively less contaminated. CSE used European norms because the standards set for pesticide residues by the Bureau of Indian Standards (BIS) are vague and undefined. The standards say, "pesticide residues shall be below detectable limits". This, one would assume, means that there ought to be no pesticide residues at all in the bottled water. But no, it actually means that

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55

one should not be able to find the pesticide residues in the water. The BIS has specified the methodology for detecting pesticide residues and this methodology, which is not very sensitive, does not detect pesticides unless present in extremely high quantities. Even for drinking water, the BIS norms specify that pesticide residues should be "absent". What is plainly absurd is that if drinking water norms specify that pesticides should not be present, how can packaged drinking water norms be so vague, and use a non-quantifiable phrase, such as "below detectable limits"? Even going by drinking water norms, all the bottled water brands tested by the CSE lab would fail the test of quality.

What was found? Top seller Bisleri was third from the bottom, with pesticide concentration levels 79 times higher than the stipulated limits (see graph). Kinley had concentration levels 14.6 times above the maximum permissible amounts. Aquaplus — favoured by the Indian Railways — topped the dubious list, crossing the limit by 104 times! Contamination levels were significantly lower in packaged natural mineral water brands Himalayan and Catch from Himachal Pradesh, a state with lower pesticide use. In the Mumbai region, the worst brand was Oxyrich, with 16.7 times higher pesticide concentration levels than the prescribed standards. Bisleri and Kinley fared better in the Mumbai samples – they were ranked 7th and 4th respectively. The lab also collected raw water from bottling plants to verify its findings. In all cases, tests showed that the pesticides found in the source water matched the toxins found in the bottled water — proof that the source of the pesticide residues is contaminated groundwater. Plants manage to eliminate somewhere between 20 and 80 per cent of the residues. But no regulations exist to ensure that bottled water plants are set up in clean groundwater zones.

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56

The study is important because of the implications for public health. Pesticides ingested in small quantities over time are known to have severe effects on the human immune system. What will it take for regulatory bodies to tighten controls? Should the bottled water industry be allowed to play havoc with public health and breach consumer trust?

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57

11. FUTURE OUTLOOK While the unimaginable growth rates of more than 60% and even 100% can be explained due to lower base the present growth rate of 25-30% is sustainable for another 5-6 years. Today the demand of bottled water is increasing at a much higher rate that that of carbonated soft drinks. The market size of bottled water too is expected to surpass the size of soft drinks market in near future. The next player which is waiting I wings to launch its brand in the market is Nestle. Nestle had made its intentions very clear about its prospective entry into the market early 2000. The company has already tasted success of its massmarket brand, Pure Life in developing countries like Pakistan and Mexico. The company is planning to launch the same brand in first quarter of the current year. The next in queue seems to be HLL, which too has identified the bottled water as a growth area for future. The company is presently looking or some suitable brand for acquisition. Britannia too evinced some initial interest in the market but now seems to have postponed its plans. The existing players too are set to expand their distribution network to have their presence across the country. The market is also expected to undergo a major consolidation phase. As one of the major factors that's important for success in the market is the distribution network, the players with deep pockets are expected to go for acquisition of existing small regional players o spread their network across the country. Already Coke has tied up with Yes for manufacturing of its brands in areas where it doesn’t have presence. Though Coke and Pepsi have both, well established distribution network as well as bottling & manufacturing plants, they seems to be at an advantage but players like HLL and Nestle with strong financial muscle can easily turn the tables in their favour through acquisition route acquisitions. It is expected that the market would continue to grow at a healthy rate of 25-30% for few years from now and the market size too, is expected to increase to Rs17bn by 2004-5. _______________________________________________________________________ _


58

Parle Bisleri chalks out Rs 260-cr growth thrust

Source : The Hindu Business Line MUMBAI, March 9 THE Rs 400-crore Parle Bisleri Ltd will be investing Rs 260 crore for expanding its facilities including its bottling capacity and distribution network. This investment is expected to facilitate the company to achieve a turnover target of Rs 1,000 crore by 2003, said Mr Ramesh Chauhan, Chairman, Parle Bisleri Ltd. The company will initially invest Rs 60 crore in expanding its bottling capacity from the current 50 million cases to 200 million cases a day. The additional Rs 200 crore will be invested in Bisleri's distribution network in the next years spanning 2,500 towns and cities in India. The fund requirement for this expansion plan will be met mainly through internal accruals; Mr Chauhan said adding that plans for going for an initial public offering would be taken up 2-3 years later if the need arises. Parle Bisleri currently has 25 bottling units, a fleet of 2,000 vehicles and 1,20,000 retail outlets spread across the country. The company is targeting a distribution network of 10 lakh retail outlets backed by a fleet of about 5,000 vehicles over the next two years. The Bisleri brand, which holds a 60 per cent market share in the country's Rs 700-crore branded mineral water industry, is growing at 70 per cent per annum, Mr Chauhan said. _______________________________________________________________________ _

A STUDY ON MINERAL WATER BOTTLES 59 ____________________________________________________________________ _ The company has introduced home delivery facility for its 20-litre pack which will be delivered by a specially designed fleet, Mr Chauhan said. He said the company is targeting a turnover of Rs 50 crore from its 20-litre jumbo economy pack segment in the first year. This facility will be extended to 50 more centres over the next six months. Unperturbed by the stiff competition from multinational companies, Mr Chauhan said Bisleri has been growing geographically. The company now plans to enter areas such as Kerala and Madhya Pradesh where Bisleri's presence is negligible. Pic.: Mr Ramesh Chauhan, Chairman, Parle Bisleri Ltd, at a press conference with the 20-litre mineral water jar.

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60

11. CONCLUSION After seeing the different sales trends and market shares graphs, one can easily derive that at present the foreign brands like Kinley & Aquafina are going share equally the market share and the Indian companies like Bisleri & Bailey who show a good market share would surely come down as the modern marketing skills and technologies used by Coke & Pepsi would cover the large part of the market. After the cola wars now as Manikchand has entered it has become water wars. With Manikchand entering the industry with its excellent marketing staff, latest technology & the financial strength I can see the shares of Kinley & Bisleri going down & Manikchand is becoming the future leader after three yrs from launch.

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61

BIBLIOGRAPHY: 1. A & M Magazine 2. Financial Express 3. Business world

WEBSITES: 1. www.google.com 2.

www.rediff.com

3.

www.lycus.com

4. www.search37.com 5. www.yahoo.com

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Project on Mineral Water Industry

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