A Case Study On Competition in the Bottled Water Industry in 2006

Presented To:- Prepared By :-Prof. K.S. Prasad Anand Katkiyajadav(11F05) Jayesh Sonagara (11F18) Parth Trivedi (11M25)

G.H. Patel Post Graduate Institute of Business Management,Sardar Patel University,Vallabh Vidhyanagar

Introduction of Bottled Water Industry :-

Water is the most important necessity for life. The drinking-water needs for individuals vary depending on the climate, physical activity and the bodyculture. but for average consumers it is estimated to be about two to four litres per day. 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 just like other consumer items. Scarcity of potable and wholesome water at railway stations, tourists spots, and role of tourism corp. Etc.

Indians currently spending about $330m a year on bottled water, analysts estimate. The packaged water market constitutes 15 per cent of the overall packaged beverage industry, which has annual sales of at least $2.6bn.Almost all the major international and national brands water bottles are available in Indian market right from the malls to railway stations, bus stations, grocery stores and even at panwala's shop. Before few years bottle water. was considered as the rich people's choice, but now it is penetrated even in rural areas. The growth and status of Indian Bottled Industry in comparison with Western or Asian market, India is far behind in terms of quantum, infrastructure, professionalism and standards implementation. The per capita consumption of mineral water in India is a mere 0.5-liter compared to 111 liter in Europe and 45-liter in USA. Also As per UN study conducted in 122 countries, in connection with water quality, India's number was dismal 120. In comparison to global standards India's bottled water segment is largely unregulated. The bottled water category is growing at a rapid pace. The branded`market is 40 % of the category and non- branded contributes to 60% of the market. The category is growing at a rate of 30%. Bisleri is the market leader in mineral water in India with a 60% market share within organized mineral water category. Three key players mainly dominate the Indian Bottled Water Market Parle Bisleri, Coca Cola India Inc Kinley and Pepsico India Holdings Pvt. Limited. This market is expected to grow at a 30% rate in the next 7 years. In 2010 the revenue generated by this market was over $250 million.

The overall packaged bottled water in India is estimated to touch the Rs 10,000 croremark in the 2012-13 fiscal, growing at a compound annual growth rate (CAGR) of 19%, says a new report by IkonMarketing Consultants. Presently, this market is estimated at Rs 8,000 crore, and could touch Rs15,000 crore by 2015, the report adds. While Bisleri continues as the top brand with a 36% share among national players, Coca-Cola's Kinley follows with 25% share, followed by Aquafina at 15%. Other smaller brands include Parle Agro's Bailley, Kingfisher and McDowells No. 1, according to the report. The global bottled water market, which saw an increase of 40-45% over the past five years, is currently valued at close to US$ 85-90 billion, the report adds.

Q-1 Analyse the factor of Bottled Water industry or sector for its survivability .

Millions of people, both in rural and urban India,suffer from inadequate or no tap water supply. Even some parts of Mumbai, the country's financial capital,get a mere two hours of daily water supply. Thecity's Virar suburb gets 45 minutes. So bottledwater is much in demand by residents - even thoughthe businesses profiting from the sales arethriving from access to public water sources.

The bottled water industry has spent billions over the past decade to sell you on the idea that bottled water is better than tap water. Well the short answer is they are both unhealthy. One of the most ironic parts of the bottled water tragedy is that the water bottling industry gets the water free, filters it, bottles it and sells it back to us at 1,900% profit. The ironic part is that tap water is legislated to be 7.0 pH neutral. They first dump a TON of cholrine in the water to kill off all the bad bacteria, this makes it highly acidic.

Factor for survivability bottled water industry are:- Higher disposable income Increased preference for hygiene Improved affordability Easier availability of packaged drinking water Shortage of safe drinking water Awareness Purity factor

Q-2 Analyse the competitive advantage the organization has with respect of the any of the sources. For analyse the competitive advantage we analyse Mount Everest Mineral Water:

Himalayan natural mineral waters simple, yet striking bottle design was a creation of Re diffusion DY&R, and has been actualized by SIPA, Italy. This simple packaging also strengthened the positioning by conveying a message through a message on the packages label itself.

Even the television commercials that were used strengthened the same positioning with the statement in the ad using the statement: Go Back to the nature with untouched, unprocessed pristine water from the Himalayas that took 20 years gathering natures goodness for you. Himalayan Natural mineral water. The ad ends with the new bottle design being displayed along with the slogan Live Natural and the name of TATA appearing at the bottom saying A TATA product.

Strength of Himalayan is the brand name. Himalayan offers instant imagery of the Himalayas and brings in the visuals of Cool, Pure, Indian and Natural imagery. This message is strengthened through the statement on the label: -I spent my youth never questioning destiny that led me from the top of the Sivalik range of the foothills of the Himalayas. Nor the decades I spent gathering the natural goodness of minerals like sodium, calcium and potassium. Where I come from, destiny is a good thing. And now that yours has led you to me, dont hesitate to drink up.

Differentiation was done using the bottle design and visual design to differentiate using the label color and graphics and the pink color being used on the label was the most appealing to the prospects of the brand that attracted the prospects a lot. The USP of Himalayan Natural water is that it is naturally pure and has a distinct taste derived from the source of origin.

The Company's strategic intent is to ride on this growing opportunity with a threepronged strategic platform. 1) Going beyond safety into health with fortified water whichis aligned to the needs of the populace through cutting - edge science. 2) Sustaining /improving the current price equilibrium, by offering a price lower than competition and ata psychological price point advantage through innovative and convenient packaging 3)Building product trust through the Tata Branding.

Q-3 What were the different strategies adopted by the organisatin in three to five years.

For analyse different strategies adopted by the organisatin we analyse Parle Bisleri Ltd companys strategies:-The Indian bottled water category is led by Parle Bisleri Ltd, which held a 43% off-trade volume share in 2011. It was followed by PepsiCo India Holdings (15%) and Coca-Cola India (11%). Bisleri, Aquafina and Kinley (Parle Bisleri Ltd, PepsiCo India Holdings and Coca-Cola India respectively) are the dominant brands, accounting for a 69% off-trade volume share in 2011. Bisleri led sales in 2011 due to its strong distribution network and strong brand image. In 2011 Parle Bisleri launched Bisleri hubs to drive consumption, with local stationery shops and dairies exclusively selling the Bisleri brand.Bisleri differentiates by it breakaway seal as an assurance of purity. Market research conducted by Bisleri revealed that the overriding concern for set of buyers is the tampering of the seal and the reuse of bottles. Many have witnessed used bottles being refilled at railway stations. So when a consumer buys mineral water, he would like to be assured that the water has not been tampered with. Bisleri is promoted by an aggressive print-and-TV backed by hoardings and point-of-sale material. Every interface with the consumer is being used as an opportunity to reinforce the message. For instance, all vehicles used for supply have been painted in bright blue, bear the Bisleri logo and sport catchy baselines like drink and drive.Apart from creating consumer pull with an advertising campaign bisleri is boosting their tail pus has well. Distribution is the key. The consumer will pick up whatever inconveniently available and is pushed by the retailerSchemes: One Litre: One Box free on 5 Box. Half Litre: One Bottle free on 1 Box.Bisleri plans to take its mountain water brands international, to Europe, America and West Asia. It has not yet started exporting because it is still working on getting the packaging right, looking for innovative, light-weight and sturdy packaging material.In August 2000, Coca Cola saw potential in bottled water industry and entered this market by introducing its brand Kinley. The market saw entry of big players like Pepsi through its brand Aquafina and Nestle through its brand Pure Life. The other players in the market include the Tatas through its brand Himalaya, Manikchand through brand Oxyrich and Parle Agro through its brand Bailey. The organized bottled water segment which was initially dominated by Parle Bisleri saw entry of many players. Currently there are about 8-10 players in the organized sector. In the response to the growing competition Bisleri started using hybrid strategy. According to this strategy differentiation was based on quality; however with number ofcompetitors the differentiation based on quality became difficult. Bisleri has now used differentiation in the form of packaging, price and distribution. The company differentiates through distribution by targeting new channels like chemists and stationery shops which were not used earlier. The company has used its own fleet of about 2000 trucks to manage the distribution network (Iyer, 2010). The company differentiated in the terms of packaging by making available the products in different shapes and size. The company has used tamper proofseal to assure good quality. The company has patented the tamper proof seal technology and has created barriers for its competitors. The packaged water industry has bifurcated in two segments, retail and bulk water segment. The company has in response to entry of new players have used refocusing strategy. The present strategy of Bisleri involves targeting the bulk water segment,pricing competitively, strengthen distribution, and innovate on packaging and product line extension. The company by passes the competition and reduces operational cost by targeting the bulkbottled water segment. The company has shown innovation in packaging by changing the shape and color of pack from blue to aqua green. The company operates in hyper competitive environment, so it is necessary that company changes its strategies according to the dynamic environment. We have found that the company can be located on position 3 on the strategic clock. However, the company can switch between hybrid and differentiation strategy in accordance with changing environment. The company however presently uses hybrid strategy where in it has differentiated its offering from its competitive and at the same time making it available at cost lower than its competitors.