Reinventing Bisleri

Presented by:

Tarique Ansari ( )

Zuhair Mandviwala (121)

Yusuf Hotelwala ()

Samarth Wagh (89)

Qasim Ladiwala (80)

MMS “B” 2009-2011

Brief Case AnalysisThe case study talks about the problems faced by the name synonymous with bottled water in India – Bisleri. The company had a dominant market share of 70% until the economy opened up in 1991 and later through the entry of Cola majors into the segment. Listed below are the main pointers that we have worked on in the case study.

- The scenario in 1990’s was complete domination for Bisleri, but 1993 onwards due to the opening up of the economy the bottled water saw hectic activity & new brands were created and destroyed every month.

- The bottled water sector was very lucrative as it had CAGR of 25-40% (depending on the region the person served)

- Bisleri’s positioning as a pure and safe brand and later repositioning it to “Play Safe”

- The entry of the Cola Majors Pepsico with their brand “Aquafina” & Coca Cola India with their brand “Kinley”.

- The resultant erosion of market share due to the better Distribution channels of the Competitors*.

- Similar positioning & low visibility harming the Bisleri Brand

We endeavor to look at the reasons behind market share erosion and try and offer solutions and recommendations that would help Bisleri target new customers, new markets and still keep its brand strong in the existing market.

(* Within 25 months of its launch, Coca-Cola India's bottled water brand, Kinley, has displaced Bisleri from the number one slot in the country, claims a national retail stores audit by ORG MARG for the period ended July 31, 2002. Coca-Cola’s Kinley has become the number one packaged drinking water brand in the country in the retail (500ml-2 litre) segment. Coke’s Kinley has overtaken once-popular Bisleri to bag the number one position. The latest national retail stores audit by ORG-Marg (July 31, 2002) has put Kinley’s market share at 35.1 per cent against Bisleri’s 34.4 per cent, a Coke release said. Kinley sells in four sizes—500ml, 1 litre, 1.5 litre and 2 litre. On Kinley’s steady growth, Coca-Cola India deputy president Sanjiv Gupta said, “Quality and easy availability have made Kinley a popular brand. A strong marketing and distribution network of Coca-Cola has made the easy availability of Kinley possible. It was not easy to displace the country’s number one water brand for two decades in just about two years)

The Indian Bottled Water Industry

In India, the per capita bottled water consumption is still quite low - less than five litres a year as compared to the global average of 24 litres. However, the total annual bottled water consumption has risen rapidly in recent times - it has tripled between 1999 and 2004 - from about 1.5 billion litres to five billion litres. These are boom times for the Indian bottled water industry - more so because the economics are sound, the bottom line is fat and the Indian government hardly cares for what happens to the nation's water resources.

India is the tenth largest bottled water consumer in the world. In 2002, the industry had an estimated turnover of Rs.10 billion (Rs.1,000 crores). Today it is one of India's fastest growing industrial sectors. Between 1999 and 2004, the Indian bottled water market grew at a compound annual growth rate (CAGR) of 25 per cent - the highest in the world

With over a thousand bottled water producers, the Indian bottled water industry is big by even international standards. There are more than 200 brands, nearly 80 per cent of which are local. Most of the small-scale producers sell non-branded products and serve small markets. In fact, making bottled water is today a cottage industry in the country. Leave alone the metros, where a bottled-water manufacturer can be found even in a one-room shop, in every medium and small city and even some prosperous rural areas there are bottled water manufacturers.

Despite the large number of small producers, this industry is dominated by the big players - Parle Bisleri, Coca-Cola, PepsiCo, Parle Agro, Mohan Meakins, SKN Breweries and so on. Parle was the first major Indian company to enter the bottled water market in the country when it introduced Bisleri in India 25 years ago.

The rise of the Indian bottled water industry began with the economic liberalisation process in 1991. The market was virtually stagnant until 1991, when the demand for bottled water was less than two million cases a year. However, since 1991-1992 it has not looked back, and the demand in 2004-05 was a staggering 82 million cases

The formal bottled water business in India can be divided broadly into three segments in terms of cost: premium natural mineral water, natural mineral water and packaged drinking water.

Premium natural mineral water includes brands such as Evian, San Pelligrino and Perrier, which are imported and priced between Rs.80 and Rs.110 a litre. Natural mineral water, with brands such as Himalayan and Catch, is priced around Rs.20 a litre. Packaged drinking water, which is nothing but treated water, is the biggest segment and includes brands such as Parle Bisleri, Coca-Cola's Kinley and PepsiCo's Aquafina. They are priced in the range of Rs.10-12 a litre.

Attracted by the huge potential that India's vast middle class offers, multinational players such as Coca-Cola and PepsiCo have been trying for the past decade to capture the Indian bottled water market.

Today they have captured a significant portion of it. However, Parle Bisleri continues to hold 40 per cent of the market share. Kinley and Aquafina are fast catching up, with Kinley holding 20-25 per cent of the market and Aquafina approximately 10 per cent. The rest, including the smaller players, have 20-25 per cent of the market share. Consumption of bottled water in India is linked to the level of prosperity in the different regions. The western region accounts for 40 per cent of the market and the eastern region just 10.

Bisleri’s share in it and Product Line

Mineral Water under the name 'Bisleri' was first introduced in Mumbai in glass bottles in two varieties - bubbly & still in 1965 by Bisleri Ltd., a company of Italian origin. This company was started by Signor Felice Bisleri who first brought the idea of selling bottled water in India.

Parle bought over Bisleri (India) Ltd. In 1969 & started bottling Mineral water in glass bottles under the brand name 'Bisleri'. Later Parle switched over to PVC non-returnable bottles & finally advanced to PET containers.

Since 1995 Mr. Ramesh J. Chauhan has started expanding Bisleri operations substantially and the turnover has multiplied more than 20 times over a period of 10 years and the average growth rate has been around 40% over this period. Presently Bisleri has 15 plants & 3 franchisees all over India. Bisleri has a presence covering the entire span of India. In the future ventures Bisleri looks to put up four more plants in 06-07. Bisleri commands a 40% (as of 2003) market share of the organized market. Overwhelming popularity of 'Bisleri' & the fact that Bisleri pioneered bottled water in India, has made it synonymous to Mineral water & a household name. When you think of bottled water, you think Bisleri.

Bisler is present in 250ml cups, 250ml bottles, 500ml, 1L, 1.5L, 2L which are the non-returnable packs & 5L, 20L which are the returnable packs.

Costs associated with Making and Delivering Bottled Water

The above picture shows the break-up of the costs involved in delivering bottled water to its final consumer. We need to have a deep understanding of this before we set out to innovate, change strategies and reduce costs to increase the worth of the company to Rs.10 billion.

Even with the state-of-the-art treatment system with reverse osmosis and membranes, the cost of treatment is a maximum of 25 paise a litre (Rs.0.25/litre). Therefore, the cost of producing 1 litre of packaged drinking water in India, without including the labour cost, is just Rs.0.25. In a nutshell, in manufacturing bottled water, the major costs are not in the production of treated and purified water but in the packaging and marketing of it.

Hence we need to concentrate our resources in such a way that it fits into the cost structure of making bottled water.

Major problems facing Parle Bisleri

Problems:

1) A problem that can’t be postponed “THIRST”. Even though the brand recall of the product is immense, people when they are thirsty usually pick up whichever brand is available. The problem here lies in the fact that though 8

out of 10 times the customer asks for Bisleri (synonymous with bottled water) he doesn’t get Bisleri in 50% of the situations nor does he ask for it and ends up accepting whatever brand he gets as his thirst cannot wait.

2) Better distribution channels of Competitors i.e. CCI & Pepsico is the main reason why these companies could break Bisleri’s hold on the bottled water market. In two years Kinley eroded the market share of Bisleri as used its superior distribution channels to make Kinley available at all places and it was also helped by a good advertising campaign

3) The major competitors of Bisleri are soft drink manufacturing companies who deliver the glass bottles in trucks and in the return journey pick up the empty glass bottles. This is not possible with Bisleri as the retail packages are given to the distributor and the truck comes back empty

4) Too similar is the positioning of the brands in the segment. Bisleri says ”Play Safe” and Kinley talks about trust and safety. The brands get lost when they try to position the value they provide.

5) The financial clout of our competitors cannot be matched as they are global companies and can outgun us in spending.

6) As our competitors have a varied product line they can afford giving a refrigerator to the retailers and we have to make do with a metal stand .

7) In the bulk market….

8) The production process

Solutions that are recommended to Parle Bisleri

1) Though the brand recall is stronger than any other brand in the market Bisleri suffers when it is not available where it is required. In such an instance the competitor’s product is taken and that adds as a direct loss to the company. To minimize such instances we need to vastly improve our distribution channels in comparison with our competitors. The ways to do that are:

- Investing more money in procurement of trucks and sales people - Tie up with dominant local players - Acquisition of smaller companies- Setting up of plants in the vicinity of places where market share is lower i.e the eastern part of India like Guwahati.

2) Tie up with plastic manufacturing companies to sell the residual plastic that remains after the water is consumed in the bottle. To source this residual plastic we need to give incentives to local municipalities to provide the residual plastic to our distributor through whom we source it back.

3) This solves the problem of empty running of trucks after delivering the retail boxes. As in such a case we can carry the residual plastic back to our factories and sell them.

4) The similar positioning of the brand can be differentiated by an ad campaign which says “paani yaani Bisleri” and would focus on the concept that when a Bisleri is asked for a Bisleri should be delivered and not any other product.

5) As our Competitors are huge global corporations we need to have able financial backing to take them on in the Indian market. This can be done by infusing money from banks and acquire borrowed funds in form of debentures.

6) We need to be a more diversified company as being in just one sector would make our revenues totally dependent on this sector. We need to start a new flavored water line as the current competition comes from a relatively unknown brand “Catch” and we should do it before our major competitors and this would give us more space in the mind of the consumer. The flavored water need to have a name in sync with the youth as once the brand comes across as a prestige item for the youth the brand will receive immense publicity through word of mouth and will be a strong brand for us. Also a varied flavor range would help us.

7) We need to also tie up with other companies to create a diversified product line. A tie up with Dabur wherein we have JV for a mineral water fruit juice would help us with product diversification and also use Dabur’s excellent Rural Distribution channel. Another important tie up would be hotels and food establishments. We could look at tying up with new hotel chains that have entered India i.e. Ista, Accor group of hotels, Pride hotels to name a few.

8) Another concept for product diversification would be “Bisleri Life” where we would be using the mountain water that is sourced from the Zanskar Range in Ladakh and market it by using different additions to create a lifestyle water

range that would have a product line that would suit skin, eyes, digestion etc. and many others. This kind of product along with our Mountain water, flavored water and bottled water would form a complete set of products that would solve our refrigerators problem (we finally have a diversified product line) and create a premium brand name for Bisleri as this line would be used for exports in Europe and North America.

9) For exports we already have a product in the North American market i.e. Maaza. Along with that we can market our brand “Bisleri Life “ as a water that is sourced from the mountains and contains various minerals. We can also market bottled water in the South Asian markets.

10) The production process

11) In the bulk market …..

Conclusion

As we see the problems and issues that face Bisleri we can say that they are intrinsic to competition and this has to be countered with in the same way. Our main motive to provide the Solutions and Recommendations was to create a diversified product and revenue lines. This will help the company cope better with competition much bigger than itself. Currently the company is worth Rs. 4 Billion. To reach the target of Rs. 10 billion the company will require innovation in every field and a unique positioning to capitalize on the brand recall. If the following things were to be

put into action a study by analysts estimates the company to be close to the Rs.9-10 billion in 3-5 years. This reinvents Bisleri and puts it on the path of being a market leader in the local market with a strong brand presence in the international market.