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Packaged Water Industry In India worth USD 10B by 2020

There are more 5,735 licensed bottlers for packaged drinking water across India as of 2018. Revenue in the Bottled Water segment accounts for USD 7,062 million in 2018 excluding unorganized players.The market is expected to grow annually by 14.0%.

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Definition / Scope

Water that we buy from market comes in different type and size. The basis of difference is mainly water variant itself and its packaging. In terms of product type bottled water is categorized as:

1. Mineral Water: Apparently, it is most famous for its "pure" and "untouched" nature. Mineral water is one that is extracted from the source of water without exposing it to natural sunlight and air. It is rich in certain natural minerals and their relative proportions. The composition of mineral content is guaranteed throughout every bottling process but without making any external contamination and treatment.

2. Spring Water: Spring Water is derived from a specific underground from which water flows naturally to the surface of the earth. It must be collected only at the spring or through a borehole tapping the underground formation feeding the spring. It must have all the physical properties before treatment and must be of the same composition and quality as the water that flows naturally to the surface of the earth and is consistently fit for human consumption at the source and kept in that state until bottled.

3. Purified Water: Purified Water is water that has been produced and packaged by distillation, deionization, reverse osmosis, or other suitable processes to protect from chemical and microbiological contamination. It is also known as distilled water. The source of water could be from anywhere such as tap water, river water, borewell water, etc.

4. Carbonated Water: Water that, after treatment and possible replacement with carbon dioxide, contains the same amount of carbon dioxide that it had as it emerged from the source.

5. Flavoured Water: Flavoured water is a category of beverages that are marketed as water, but contains additional ingredients, ranging from natural or artificial flavors, sugar, sweeteners, vitamins, minerals and other enhancements.

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Market Overview

Global per capita average bottled water consumption is 29 liters. America's per capita consumption of bottled water exceeds 159 liters yearly while Saudi Arabian consumers consume average 365 liters of bottled water yearly. But in Africa, the average consumption stands at 8.3 liters yearly. The consumption is even low in India compared to Africa. In India, 21,797 million liters of bottled water was consumed in 2017 and growing at a CAGR of 9.4% thereafter.

Consumption of bottled water in India is proportional to the level of prosperity in the different regions. The western region accounts for 40 % of the market and the eastern region holds only 10%. However, more than 55% of the bottling plants are concentrated in the southern region out of the more than 3400 bottling water plants in India.

The industry is dominated by the top players, but they struggle to penetrate the tier-II and tier-III cities because of poor logistics infrastructure. This is giving an opportunity for small regional players to build their market share in the regional market. The market share of unorganized players is anticipated to grow if the demand for bottled water keeps pace taking the market share of organized players. Brand imitation is the key risk for branded players as their brand names are manipulated and sold at similar prices in the market.

There is an emulated brand, for instance, called Bilseri which has the same packaging, color and sold at the same price as that of branded Bisleri.

There are more 5,735 licensed bottlers for packaged drinking water across India as of 2018, excluding unbranded ones. Rising disposable incomes, awareness about clean drinking water is helping to boost the packaged water industry at nearly 15 percent annually. As the government has failed to provide clean drinking water at all places, private players have made lucrative business in the market.

Key Metrics

Metrics Value Explanation
Base Year 2018 Researched through internet


Market Risks

  • Brand Emulation: Many businesses are selling water bottles at many bus stations and railway stations specially in Tier-II and Tier-III cities and the water content is inferior in quality water. The buyer is less aware of the expiry date and manufacturer while buying. What they look for while buying a bottle of water is they just remember the brand name but they often get confused at the imitated product because it almost resembles with the original one though they have repositioned the letters in the brand name. Bilseri, for instance, is an emulated version of original Bisleri water. Individual phenomenal power could not identify such differences by glancing hardly for a second on it. Because of the fear of potential chronic diseases and a number of waterborne diseases consumers are reducing the use of bottled water and switching to other sources of water.
  • Quality Control: The report, led by Orb Media, a US-based non-profit, revealed widespread contamination with plastic debris including polypropylene, nylon and polyethylene terephthalate (PET) in 93 percent of the 259 individual bottles across 11 brands sold in nine countries, including Brazil, China, India, Indonesia, and the US. Indian brands tested were Aquafina owned by PepsiCo, Bisleri owned by Bisleri International, Dasani owned by Coca-Cola, Evian owned Danone and Nestle Pure Life owned by Nestle. Though they have stringent measures to meet quality standards and tested at sophisticated quality testing labs, the presence of micro-plastic particles have reverberated rumors in the market and even consumers are vulnerable to buy a local brand of packaged drinking water having skepticism that when there is a presence of hazardous particles in the water that they drink buying from top trusted brands there is little hope for quality assurance from smaller players. So it has created so many barriers to companies and fluctuations in consumer switching towards other brands.

Top Market Opportunities

  • Changing Taste Consumers are preferring drinking water over the carbonated soft drinks. There is a growing concern for the health impact of soda drink among a new generation. This shift has led to more consumption per day hence more production by the companies.
  • Value Addition: Most of the public schools particularly in rural India lack hygienic drinking water facility. Students either drink the impure water or they do not drink at all while being in the school. The big brands collaborating with the government can tap into these potential market where they can set up water purifier mechanism and provide quality drinking water to the people as well as earn money from the project run in partnership with the government. Further, they could also sell value-added water that is rich in vitamin and minerals that are essential for the growth of a person.
  • New Product Development: Since consumers prefer to try new tastes and follow the best of them, the availability of a range of flavors and options in functional water with added health benefit will boost the market growth.

Market Drivers

Growth in tourism, opening up Indian economy, rapid urbanization where 33% of India is considered urban, shortage and inferior quality of drinking water are some of the growth factors in bottled water.

Health Consciousness: It is one of the major factors driving the market growth which has boosted the demand for bottled water as opposed to carbonated soft drinks and other beverages. There has been a wider gap between choice for water and carbonated drinks.

Growth in Tourism: The growth in the travel industry coupled with the expanding foodservice also influenced the market growth. The country has a target to attract 18,655,000 tourists by 2018. And tourist spending is also rising each year.

Fitness Trend: Growing awareness regarding the benefits of bottled water coupled with the increasing preference for an active and fitness lifestyle is expected to play a significant role in driving the market. The gym-goers relatively consume more water since their muscles need more oxygen because of exercise fatigue.

Increasing disposable income and consumer preferences for bottled water over aerated drinks and rising demand for functional and flavored water are expected to further fuel demand for bottled water across the world.

Market Restraints

  • Ban on plastic: Almost 90% of bottled water is packaged on PET bottles. The polypropylene used to make plastic bottle caps were the most common particles found in water. Government actions to ban such material in a plastic package would trigger companies to search for the alternate innovative packaging that could result in a higher cost in manufacturing of bottles and hence increasing the price to end-consumer which will eventually give less consumption.
  • Home water purifiers Traditional water purifying methods and an increase in the use of water purifiers, which need a one-time investment are a big threat to the growth of the bottled water market in India.

Industry Challenges

  • Logistics: Transportation is a big challenge in the bottled water industry. Most of the manufacturing plants are set up in the Southern part of India. Delivering the packages all over India makes the logistics costlier. They go through multiple ways of transportation from Inland waterways to railways to trucks to porters and finally to consumers. Roads are not good in most parts of the country and bottled water is a bulky product.
  • Regulatory Challenge: Regulations, which have been set by the Food Safety and Standards Authority of India (FSSAI), are very stringent. Recently, Bureau of Indian Standards made it compulsory to submit a NOC (No Objection Certificate) from CGWA [Central Ground Water Authority], while applying for a license [Upcoming units] or renewal of a license [existing units]. As such, additional statutory step adds up to elongated licensing procedure leading to enhanced overheads.
  • Also, Packaged Drinking Water market is badly affected by high fuel cost, old technology, and expensive manpower.

Technology Trends

  • Advanced technological innovations in PET packaging Manufacturers are innovating PET-based water bottles using different methods to increase their barrier properties. Innovative technologies are being implemented in PET bottles to increase impermeability and eliminate the risk of harmful particles entering these containers. One such technology that is used is the plasma coating process. The protective layers that are applied to PET films have a thickness of 50 nanometers and are easy to recyclable.
  • Increasing focus on lightweight packaging This process involves re-engineering of packaging material to reduce the weight without compromising on its quality. Moreover, reducing the weight of packaging material and modifying pack formats to light configurations helps vendors to reduce the cost of transportation. An average commercial 0.5-liter PET bottle weighs 12 grams, whereas the PET bottles manufactured by Sidel weigh only 7.95 grams. These bottles have 34% less weight than average commercial PET bottles. They offer 32% more top-load performance, saving up to USD 13.09 million per year on raw materials.
  • Look matters Innovative packaging of bottled water is the latest trend in the market. The aim is to establish a brand image and differentiation in the bottled water market. It includes resealable and recyclable can packaging material, transparent sophisticated bottles, or inks and coatings applied on a can to enhance the customer experience through unique visual effects along with increasing shelf appeal.

Pricing Trends

Major food and beverage companies like PepsiCo, Bisleri International, Coca-Cola, and Tata Tea continue to offer their 1 liter packaged water brands between USD 0.17 and USD 0.55, despite a recent consumer court ordered not to price them above USD 0.17 since it is an 'unfair trade practice.'

PepsiCo's Aquafina is available for USD 0.17, while Coca-Cola's Kinley and Bisleri International's Bisleri are both priced at USD 0.16. Tata Tea's Himalayan brand (under its subsidiary Mount Everest) comes for USD 0.21. And the Narang Group, marketers and distributors of premium food, have priced Qua, mineral water from the Himalayas, 0.55 a liter.

Tata Tea had appealed for keeping the Himalaya brand mineral water's price at USD 0.21 a liter, as it was sourced from the Himalayan springs, while other mineral water brands used water taken from borewells. But the court denied on the ground of immateriality for wherever the source of water drawn.

The judgment seeks to impose restrictions on a manufacturer's right to price its products, based on quality and packaging though, Internationally, all countries permit the sale of mineral water at different prices.

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Regulatory Trends

Indian bottled water is governed under:

  1. Packaged Natural Mineral Water [ Under IS: 13428:1998, Amendment 1-5 up to 15th October 2004]
  2. Packaged drinking water [ Under IS : 14543: 2004 ]

Apart from the emphasis on packaging, hygienic conditions, lighting, medical check-ups, civil works, labelling restrictions have been set for the quality/composition of water under both categories.

  • As per the new standards, the word “natural” has been added to the new sub-regulations. Going forward the label should read “Packaged drinking water” rather than “Packaged Natural drinking water”.
  • Also, as per the new amendments by FSSAI, the drinking water can be derived from various sources like local water supply, underground water, surface water, sea or any other consistent source of water. However, the manufacturers of drinking water companies need to abide by certain guidelines for packaged drinking water before selling it to the market.

New Guidelines:

  • Water collected from any kind of source should go through a proper treatment process that involves 10 stages starting with decantation to ending at reverse-osmosis.
  • Packaged water should be completely harmless by ensuring that the water is fully disinfected by the means of physical methods and chemical agents. This would ensure that the level of microorganisms present in water is at the accepted level of consumption.
  • Water collected from the sea should go through a desalinization process in which the salt ions present in the water can be separated.
  • Post-treatment, the water should be filled and sealed in bottles. Also, it should not come in contact with any other treatment process.
  • If the water treatment process involves remineralization, only approved minerals should be used in water that is food grade/pharma quality.

• In the case of normal drinking water, the label should read “2.3.3 of FSS (Packaging & Labelling) Regulations, 2011: “PACKAGED DRINKING WATER”. • In case of mineral water, the label should read “2.3.3 of FSSAI (Packaging & Labelling) Regulations, 2011:

Other Key Market Trends

The current trend is in the packaging of a bottle in India. Earlier the pricing was the point of concern and now the packaging is concerned. In India, consumers prefer smaller packaging. Also many companies have wide a range of packaging formats.

Also there has been an entry of flavoured water in the market as well along with natural mineral drinking water. With the increased consumer awareness of the importance of having safe and high-quality drinking water and the benefits of leading a healthy lifestyle, more Indian consumers are opting for bottled water in their homes if they do not have water purifiers and when they are away from home.

Bottled water recorded further growth in tier-II and tier-III cities of India during 2014 as well due to the rising health awareness towards the end of the review period.

Market Size and Forecast

Packaged bottling water is leniently regulated and there exists a huge number of unorganized players making it difficult to measure the accurate market size. Only 5,735 licensed brands are registered with the Bureau of Indian Standards. There are more than 2,000 bottling plants across the country.

Therefore, revenue in the Bottled Water segment accounts for US$7,062m in 2018 excluding unorganized players. The market is expected to grow annually by 14.0% (CAGR 2018-2021). The average per capita consumption stands at 17.2L in 2018.

For the natural mineral water, 90% target group is institutional sales & only 10% from retail sales. And the market is expecting an annual average sales growth of around 10% in 2019.

Market Outlook

The global bottled water market size is expected to reach USD 215.12 billion by 2025, according to a new report by Grand View Research, Inc. The market is estimated to register a CAGR of 7.4% during the forecast period. It is anticipated to witness a higher growth as compared to carbonated drinks on account of better health benefits and added nutrients. Factors such as the increase in per capita spending and rapid urbanization are likely to fuel the demand for bottled water over the forecast period.

In India, sales revenue is estimated to reach USD 10,000 million by 2020 from the current USD 7,000. Mineral water segment is projected to grow at a CAGR of 21%.

Rev pak water.PNG

Technology Roadmap

  • Point-of-use water dispensers: Packaged drinking water costs around USD 0.27 to USD 0.30 per liter which is still expensive for the middle-class who are deprived of hygienic drinking water. This has increased the demand for point-of-use water dispensing machines in the market. Such coin-operated water dispensing machines and RFID-based water ATMs will be increasingly deployed in tier-II and tier-III cities in India. IoT technology will help in increasing the visibility of these point-of-use machines and preventing service disruptions through their timely maintenance.
  • Decreasing cost through integration of technology: Water purification systems and plants, their deployment and transportation of purified water entail considerable capital input. As a result, this increases the cost that customers have to pay in order to get clean water. Businesses are now decreasing these installation and operational costs by leveraging disparate technologies to lower electrical requirement and enhance water purification process.

Distribution Chain Analysis

The very first stage starts with a collection of water from the source. Then Tankers collect and transport water to the manufacturing plant. After water is delivered to the bottling plant, the purification process begins. In this stage, small microbes are killed with UV rays.

This stage completes once water is completely disinfected and is ready for bottling. After that, bottles are filled with water and then these bottles are sent to distribution centers. Then these bottles are packed in tertiary packages in the stack and sent to retail stores and other point-of-sale. Once consumers consume water, the empty disposed bottles are collected and sent to recycling centers.

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Competitive Landscape

Bottled water in India is highly fragmented with only eight key players with all India distribution. Those top players include Bisleri, Coca-Cola India, PepsiCo India, Dharibal Group, Narang Beverages, Aquasure, Himalayan and Kingfisher. These players and their brands have been able to gain the trust of consumers and have been able to outperform regional players. While in the functional water segment, the segment has witnessed the entry of multiple players including PepsiCo, Narang, Tata Global Beverages, Coca-Cola, Jeevika, Beltek Canadian, Volvic and Danone.

The market potential for drinking water is higher than that of carbonated drinks. And brands are jumping onto the bandwagon. In December 2017, Coca-Cola India launched its global enhanced water brand, Glacéau Smartwater, which claims to be vapor-distilled water with electrolytes added for taste. Earlier, in August 2017, it had launched flavoured water drinks—lemon, zeera and orange—under its packaged water brand Kinley.

PepsiCo, which owns the packaged water brand Aquafina, also recently launched two flavoured water drinks—Aquafina Vitamin Splash Kiwi and Raspberry Mint—which are marketed as “fortified with vitamins” and metals such as selenium and zinc. Patanjali is also entering the bottled water segment soon under the brand name

"Divya Jal".

The bottled water sector is also expected to see regional players expand their capacities. Western part of India occupies 41% chunk of the total market. Particularly western states, Gujarat and Maharashtra have a high consumption of natural mineral water; also the leading players like Vedica, Himalayan, Aava & Qua have a strong market presence in the region. For any new players, there will be tough competition in the western part of India.

Competitive Factors

  1. The quality standard matters a lot that must ensure quality water that is pure and safe for drinking purpose.
  2. The pricing factor adds a huge difference as products are available at a very reasonable cost to the consumers compared to the pricing factor of other brands.
  3. Products variations, which cater to different needs of people as per their requirement is another competing factor that leading brands are adopting. They offer a large range of products which attract consumers of all categories. For example, 1 and 2 liter, 200 ml or 500 ml pack is useful for individual buyers, 5 liters or 20 liters is useful for organization and the small cups are used at a lot for parties and conferences. Therefore it attracts a large number of customers. For instance, 5 liter hand carry bottle is designed for railway passengers. Passengers buy normal 1 liter bottles from the railway kiosks and other stuff occupying both hands inconveniently and rush to catch the train. R & D team then came up with new design thinking for a bottle so that they could carry the bottle hassle-free and have enough space to carry other stuff.
  4. Leveraging large fleet of trucks to supply bottled water directly to retailers through a system called 'Route Selling' where the driver of the truck is trained to be a service person ensures that water supplied is fresh and bottles are in good shape.
  5. The attractive packaging brands in the water space is obviously a key competency. People want to take the bottle home for re-use if the design is so much attractive.

Key Market Players

  1. Bisleri: It is owned by Parle. Bisleri is the most popular brand in India and is now a household name. It has a huge customer base that has been built over years of trust that the company has created with the quality of water served to the nation. It holds 40% market share in the Indian packaged drinking water industry. The Parle Group purchased Bisleri from the Italian entrepreneur Signor Felice Bisleri in 1969.
  2. Kinley: It is another trusted name nationwide. Kinley is owned by the Coca-Cola Company. The water goes through lots of purity tests before making it to the market. They use the latest technology of operation, that is, Reverse Osmosis. It has a market share of around 17% in the mineral water industry in India.
  3. Aquafina: It arrived a bit late in the Indian market but is strong enough to make the presence felt. It was launched on the market in 2000. It is owned by Pepsico company and is one of the most popular and bestselling brands nationwide. They have almost 19 plants all over the country that aims to supply pure water to the population. Aquafina has a 13% market share in the mineral water industry in India.
  4. Kingfisher: It is owned by United Breweries LTD and catering to millions of customer base. Its premium packaged drinking water is prepared by removing undesirable dissolved solids, biological contaminants, suspended solids and gases from water.
  5. Bailley: It is owned by the Giant FMCG Parle Agro LTD. It was Launched back in 1993. It’s a product of Parle Agro Ltd. and is known among users for purity and quality. This leading mineral water company in India has a market share of around 3% in the mineral water industry in India and has a production capacity of around 0.10 million liters daily.
  6. Qua: It is owned by the Rahul Narang Group. The company believes in using 100% organic products and no chemicals. The water is known to have been sourced from Himalayan Foothills. It is packaged using French bottling expertise.
  7. Himalayan Water: As the brand tag goes ‘Live Pure’, the company totally believes in the fact. A joint venture between Tata Global Beverages and PepsiCo India, this packaged water boasts of using totally natural water without any chemical processing. This is the only packaged water Indian brand that has accreditations from renowned institutes across the world including Institut De Fresenius, US FDA and the Health Ministries of Japan & France.
  8. Tata Water Plus: This is the first nutrient water of India that was introduced by the NourishCo along with a joint project among Pepsi Co and Tata Global Beverages Limited. As the brand tagline goes ‘Goodness Of Copper’ the brown label to showcases the goodness of using copper vessels to drink water that was used in ancient India. Thus the water is infused with copper that strengthens the immune system and refreshes one.
  9. Railneer: This is owned by Indian Railway and is now a brand that quenches thirsts of millions traveling by train. Indian Railways installed 4 Neer bottling plants that produce 6.14 lakhs of packaged bottles per day. The Indian Railways plans to produce 160 million bottles. Rail Neer is retailed in at more than 700 railway stations and served in over 1,000 trains to the passengers to emerge as one of the trusted mineral water companies in India.

Strategic Conclusion

Water might be a low-margin business compared to carbonated soft drinks and other segments such as juices, but at a time when sugar-fueled drinks continue to witness declining sales, the growth potential in bottled water can’t be ignored.

The mineral water industry in India is expected to grow at a high CAGR of more than 20% over the next five years driven by growing disposable income, increased rate of travel, and the rising number of tourists visiting the country, and changing lifestyles across the region. Also, the regular packaged drinking water is gaining popularity with more than 7% growth rate. Top mineral water brands in India are predicted to spend heavily on the expansion of their production capacity and distribution channels to tap the sales potential of the mineral water industry in India. In the next five years, it is forecasted that the best water companies in India will try consolidating their market position by offering the best quality and most nominal mineral water price in India in comparison to their competitors

Transport has always been a key consideration for the bottled water business. Efficient logistics to reduce the distance to consumers, explore new technology, and optimize payload is the winning formula in the water business.

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