Indian bottled water market: Confused regulation puts pressure on producers
Since the early 1990s, Indian attitudes have changed and people are flocking to the cities at a frenetic pace - one-third of Indians now live in urban areas.
But in many parts of the country, quality of water is still a major concern. Given the extreme climatic conditions in India, especially the heat and dust, plus the fact people are now prone to dehydration because they commute further for work and social activities, the issue of safe drinking water is more prevalent than ever.
The current Indian bottled water market is estimated at $250m. Bisleri (manufactured by Ramesh Chauhan) has a 45%-50% market share, followed by his brother Prakesh Chauhan's brand, Bailey, though the exact share is not known, the figure varies wildly from 8% to 23%.
And due to the demand for water, a large number of "mineral water manufacturers" have been spawned, selling little more than tap water to the unsuspecting consumer, the majority of whom are still very naive about 'mineral' water.
Bisleri is the market leader, Bailey is the second largest player in the market and the company has recently extended its Bailey brand name to its soda water.
PepsiCo's Aqua Fina and Coca-Cola's Kinley have only gained an 8%-9% market share and PepsiCo is still only a regional player. Its Aquafina brand which debuted the bottled water business in September 1999, targets the youth sector and concentrates on just one pack size, 750ml priced ten rupees.
Coca-Cola is the most recent entrant (May 2000) with its Kinley brand, and in a controversial and unsuccessful marketing campaign, it obtained an endorsement from the Federation of Family Physicians' Association of India (FFPAI), a lesser known body of doctors for its brand.
Other strong players are Levers, which is believed to be keen to buy an existing brand, and Nestle with its costly Perrier.
Nestle also plans to launch its premium brand San Pellegrino and is confident it can crack India with its cheaper brand Pure Life, after being very successful in developing countries like Pakistan and Mexico.
Estimates show that there are around 100 small regional players in the bottled water market and the numbers have been growing at an unbelievable 70%-100% per year, year on year, for the past four years.
Numbers have been growing at an unbelievable 70%-100% per year, year on year, for the past four years.
This has enticed a number of international brands in the market besides Coca-Cola and PepsiCo - Nestle (Pure Life), Britannia, Levers, United Breweries and Shaw Wallace. Danone Paris launched Evian some time back and even imported hundreds of cases for VIP guests celebrating the Hindu festival, Kumbh Mela.
The government has been forced to sit up, take notice and tighten regulations after comprehensive sample tests were taken by consumer groups and found that a number of the smaller and more unscrupulous, "opportunistic" players were selling little more than tap water.
Until recently the government had set standards only for mineral water and even the PFA (Prevention of Food Adultration Act) and BIS (Bureau of Indian Standards) were deficient when compared to international markets. But new regulations mean separate standards for natural mineral water and packaged drinking water as per international practices. Most notably is the certification mark of the BIS, which is to become mandatory.
Internationally the standards for drinking water are HACCP (Hazard Analysis Critical Control Points) and Indian companies comply with these for export. But they do not comply with HACCP for local sale, where there are no compulsions.
Under the new regulations 48 specifications are to be met for water to be called mineral water and for packaged drinking water, there are 43 specifications. But some players are bound to fall out of the market by April 1, 2001 when the new regulations are supposed to be enforced.
The new regulations also prohibit any claims relating to beneficial properties of the product and the immediate casualty will be Coca-Cola with its FFPAI endorsement.
Furthermore in a bid to provide standards for both drinking water and mineral water and to regulate the quality and price of bottled water, BIS approval was made mandatory from the end of 1999.
However the BIS does not lay down any guidelines or practices for processing water and there is no specific industrial licensing policy for the bottled-water sector. So in effect anyone can set up a plant without establishing the source of the water and the technology used to purify it.
Till recently India was not a potential consumer for packaged water, hence the prospects are now huge. But with regulations somewhat confusing and contradictory it is likely to be a while before the manufacturers are able to realise their full market potential in a country which is fast becoming one of the principal global markets in bottled water.
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