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India's packaged drinking water market set for new launches

New Delhi : The packaged drinking water market in India is expected to witness launch of many new brands in coming weeks, with Yoga Guru Baba Ramdev’s Patanjali Ayurved set to launch its bottled drinking water Divya Jal even as global packaged foods and nutrition major Nestle saying it would foray into new categories including water.

Patanjali's Divya Jal will see water being sourced from the foothills of the Himalayas while its bottling will begin in Patanjali's factories at Haridwar and Lucknow.

The company's spokesperson SK Tijarawala said Patanjali aims to make Divya Jal available across India in six months. The sales target for this product in 2018-19 has been set at an ambitious Rs 1,000 crore.

The Lucknow factory is capable of bottling 1,00,000 litre of water in a day. Patanjali may look for third-party contracts and joint ventures in the future when the volume grows.

The Indian bottled water category has seen strong growth in past few years as people turn to packaged water in the absence of clean potable water from water utilities and due to increasing health awareness.

A Euromonitor report of 2015 had put India’s per capita consumption at 13 litre, about one-fifth of China’s per capita consumption of 62 litres. In 2016, bottled water sales in India were estimated to be to the tune of Rs 7040 crore, with the trade volume of 4.4 billion litre.

As per Euromonitor, the Indian bottled water industry is expected to grow at 20 per cent CAGR between 2016 and 2021 in volume terms. In value terms, the segment is expected to have a market size of Rs 21,500 crore.

With the launch of Divya Jal, Patanjali could pose a serious challenge to existing packaged water providers such as market leaders Bisleri, Pepsico, Coca-Cola and Tata Global Beverages in the organised category. With a slew of ayurvedic products, Patanjali has already established a robust network of stores and distribution centres across the country in the past two-three years.

Industry official said Patanjali has the potential to gather as much as 10 per cent of the overall market in the first year or so of its launch. Bisleri is currently the leader in the bottled water market with an estimated 24 per cent value share.

Bottled water from the Himalayas is already available in the Indian market from NourishCo, a joint venture between Tata Global Beverages and PepsiCo India Holdings. The company says its bottled water is sourced from the Himalayan foothills.

Meanwhile, Nestle said in a recent investors’ presentation that water and pet care categories are very much on its radar in terms of India and it will evaluate their potential.

The FMCG major told analysts recently that between January 2016 and May 2017 it had launched 43 new products across various segments and plans to continue with this strategy.

“The company will be devoting resources towards products that have the potential to emerge winners on both national and regional scale......As for venturing into new categories, Nestle India would enter categories with global presence...Key global categories for Nestle like water, coffee machine and pet care are being evaluated for launch in India,” a report by Edelweiss Securities said.

The bottled water sector is also expected to see regional players expand their capacities. One such company, Gujarat-based Sheelpe Enterprises said recently it was looking to invest Rs 100 crore for setting up another bottling unit in the state and was scouting for strategic investors to expand its footprint.

The company is known for its ‘Aava’ natural mineral water brand and has been witnessing strong growth. With a confined aquifer capacity of 4.1 billion litre, it is reportedly the only natural mineral water provider centrally located with logistical advantages in Western India, as per news reports.

“We are setting up another mineral water supplying unit having capacity of 1.5 lakh water bottles per day near our existing unit at Ahmedabad in Gujarat. The cost of the project is estimated at Rs 100 crore, of which Rs 25 crore will be invested in setting up of the plant and machinery. The company is planning to launch flavoured water as well as energy drinks at the new unit,” Sheelpe Enterprises Managing Director Behram Mehta was quoted as saying in a PTI report.

“We are also seeking partnership with strategic investors who can invest and take the company to newer heights. A pan-India distribution tops our list of priorities. We are also inviting partners for global distribution to fill the vacuum for quality natural water,” Mehta added.

Sheelpe Enterprises sells as much as 50 per cent of its products currently to leading domestic airlines while the remaining is being sold to luxury hotel chains and through the retail channel. After having exported its product to countries like New Zealand and South Africa, the company is looking for opportunities in the Middle East, South East Asian and Eastern European markets.

While several companies are gearing up to enter the bottled water market in India, Tata Global Beverages (TGB), through its subsidiary, has signed an agreement with US-based Talking Rain Beverage Company, makers of Sparkling Ice flavoured sparkling waters, for a phased launch of Himalayan in the US market.

The agreement will give Himalayan the benefit of Talking Rain’s extensive go-to-market and execution capabilities in the US, which synergize well with TGB’s product expertise and marketing capability. The premium end of the water market in the country is growing rapidly and Himalayan is well positioned to leverage the growth in this segment, the company said.

Tata Global Beverages is hoping that the strength of its US partner's distribution network and category expertise will help its brand make a strong foray into the US market.

"Since 2012, we have worked diligently to create a strong and strategic direct-store-delivery distribution network, comprising more than 300 distributors...in the US. We look forward to playing an instrumental role in the successful US market entry for Himalayan natural mineral water," said Talking Rain Beverage Company President Marcus Smith.

Tata Global Beverages Regional President (Canada, America and Australia) Stephen Rice said, "With this entry, our product portfolio in the USA market will extend to the water category in addition to our existing coffee and tea portfolio. Himalayan is one of the first premium Indian FMCG brands to target the broader American audience and we look forward to working with Talking Rain to establish a strong market presence for Himalayan natural mineral water".

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