Section – A

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IntroductionOnly three decades ago few knew about mineral or spring water, and fewer still

thought that one day most Canadians would spend a lot of money to buy it!

Water forms an essential part of every human being. After air, water is the most

important necessity for life. Water plays a number of functions for the body. It serves

as the body’s transportation system, it acts as a lubricant, it regulates the body

temperature etc.

The eulogy for water is an unending thing. In fact, more than 2/3rd of the human body

is made of water. The importance of water for human body can be well accessed from

the fact that if the amount of water is our body is reduced by just 1-2%, we feel very

thirsty. If it’s reduced by 5%, our skin will shrink and we will have difficulty moving

our muscles and if it’s reduced by 10%, we will die.

Moreover with this commodity being a human necessity it makes best sense to do

business in. As a normal human being requires on an average needs 2-3 litres of water

everyday and world population is more than obn (growing at 2-3% annually), the

business opportunity is humongous and the potential is largely untapped.

Since ancient time people have used water from mineral spring, especially hot

springs, for bathing due to its supposed therapeutic value for rheumatism, arthritis,

skin diseases, and various other ailments. Depending on the temperature of the water,

the location, the altitude, and the climate at the spring, it can be used to cure different

ailments. This started the trend of using mineral water for drinking purpose to exploit

the therapeutic value of the water. This trend started gaining momentum in mid 1970s

and since then large quantities of bottled water from mineral springs in France and

other European countries are exported every year.

The bottled water industry is estimated to be a whopping Rs 1600 crore business. It

has grown at a rate of 38-40% annually over the past four years. Initially pitched at

the well-heeled, bottled mineral water brands like the French-manufactured Danone

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were promoted at clubs, fitness centers, cinemas, department stores, malls, ice-cream

parlors, cafes and retail sports outlets, besides restaurants, hotels and supermarkets,

with a price tag of Rs 70 for a 1 litre bottle. Other brands later began pitching for the

larger middle class and lower-middle class markets.

The safety of bottled drinking water

While the term bottled water is widely used, the term packaged water is perhaps more

accurate. Water sold in countries for consumption can come in cans, laminated boxes

and even plastic bags. However, bottled water is most commonly sold in glass or

disposable plastic bottles. Bottled water also comes in various sizes from single

servings to large carbouys holding up to 80 litres. Depending on the climate, physical

activity and culture, the drinking-water needs for individuals vary, but for high

consumers it is estimated to be about two litres per day for a 60 kg person and one

litre per day for a 10 kg child.

Drinking-water may be contaminated by a range of chemical, microbial and physical

hazards that could pose risks to health if they are present at high levels. Examples of

chemical hazards include lead, arsenic and benzene. Microbial hazards, include

bacteria, viruses and parasites, such as Vibrio cholerae, hepatitis A virus, and

Cryptosporidium partum, respectively. Physical hazards include glass chips and metal

fragments. Because of the large number of possible hazards in drinking-water, the

development of standards for drinking-water requires significant resources and

expertise, which many countries are unable to afford. Fortunately, guidance is

available at the international level.

The World Health Organization (WHO) publishes Guidelines for Drinking-water

Quality which many countries use as the basis to establish their own national

standards. The Guidelines represent a scientific assessment of the risks to health from

biological and chemical constituents of drinking-water and of the effectiveness of

associated control measures. WHO recommends that social, economic and

environmental factors be taken into account through a risk-benefit approach when

adapting the Guideline values to national standard. As the WHO Guidelines for

Drinking-water Quality are meant to be the scientific point of departure for standards

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development, including bottled water, actual standards will sometimes vary from the

Guidelines.

These facts about water added to 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 quite lucrative. In

addition with getting pure drinking water from municipal taps in cities and towns

becoming a luxury the scenario has become so lucrative in business sense that the

opportunity is being misused by a number of companies especially in our country.

The use by wider section of population has also helped growth

of this industry.

Earlier it was privileged of the affluent class and foreign tourist and highly health

conscious people but the present decade, has witnessed increasing popularity among

average consumers, increasing leaving standards, disposable income, education and

awareness among the consumers domestic and foreign tourist, sophisticated business

houses and offices has sky rocketed the sales of bottled water in recent years.

Scarcity of potable and wholesome water at railway stations, tourists spots, and role

of tourism corp. etc. has also added to the growth. There is high scarcity index of

ground water in coastal areas and higher concentration of objectionable inorganic

constituents in many parts of country. This again enhanced the need for bottled

drinking.

The growing demand for bottled water speaks volumes of the scarcity of clean

drinking water and the quality of tap water. It has become an icon of healthy lifestyle

emerging in India. It is the pet material used in bottled water that makes a big

difference in taste. Almost all has traces of plastic flavor. The interesting scenario is

that we have, on the one hand, a vast majority of population which is struggling hard

to get access to potable water and on other, the new generation concentrated in urban

areas getting accustomed to bottled water ‘culture’ even though it means they have to

pay through their nose for it. Selling ‘safety’ –i.e. pure and simple water- has now

become one of the fastest growing industries in India despite the harsh truth it is build

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on the foundation of bad governance, inequality and obvious exploitation. However

bottled water provides the distance advantages of convenient packing, consistent

quality and is ubiquitous.

Market Explosion and Public Perception

This particular industry in India has never locked back after the economic

liberalization process of 1991-92. in fact the fastest growth in the consumption of

bottled water in the world has been recorded in India according to a new study

conducted by the US based earth policy institute. It even question the rising thirst for

bottled water with consumption tripling in India and more than doubling in china over

the past five years.

The sales of bottled water have exploded globally particularly in Europe, North

America and Canada in recent years, largely as a result of positive public perception

on the safety of mineral water. The corporate control and distribution over this

important liquid asset is growing as brisk rate in India. According to Bureau of Indian

standards (BIS), there are 1200 bottling plants (out of which 600 are in the state of

Tamil Nadu) and 200 Brands of packed drinking water across the country (nearly

80% of which are local) batting over the markets which amply signifies the market is

big even by international standards. At 40% significant growth rate, the market is

expected to humble the fizzy drinks market soon. Nevertheless, in India the per capita

bottled water consumption is still quite low-less than five liters a years as compared to

the global average of 24 liters.

These are boom time for the Indian bottled water industry- more so because the

economics are sound. India is the tenth largest bottled water consumer in the world.

By taking into account the per capita water consumption of France (111 liter) and US

(45 liter) the future potential of our country in this sector is immense- there cannot be

anything more significant for the Indian economy. The consumption of smaller units

of 500 ml has increased by around 140% perceptibly. Even school children are

carrying the 500ml packs in their school bags. The 20 liter bulk water jars have found

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phenomenal acceptance in household and at workplace. Thus targeting the niche

audience (market) applied to the bottled water industry. With the growing market size,

one can imagine the employment opportunity being created with the surge in bottled

water industry.

Leading Brands, Price Range and Market Share

The bottled water market is dominated by major player such as coca-cola, PepsiCo,

Parle Agro, K. K. Beverages, Manikchand, Tata- Mount Everest although we have a

large number of small players. Parle was the pioneer among the major player when it

first launched in India,35 years ago.

Distribution vs. promotion

Parle’s bisleri has become a famous generic name like Xerox and Dalda. This

undisputed market leader has been looking to different but distribution is the key in

this low margin and high volume market. And since bottled water stated out as a

prestige product in India, companies offered retail margin of 20 to 40 % against 8 t0

10% on soft drinks. So promotional spends have become low, No wonder, the heavy

weight advertise, pepsi has not pushing advertising pedal for its water brand,

Aquafina. Time has come for companies to indulge in brand building activity by

squeezing retailer and distributor margins spend the money for advertising.

Market Structure

The Market Segmentation of Bottled Water in India

Segment Share (%)

North 25

East 10

West 40

South 25

Source: Indiastar.com

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In above table we show the market segmentation of this water across different regions

of the country assume that the consumption of bottled water indicates the property of

consumers in respective region.

The west region occupies the first place in the market while the south and the north

jointly occupy the second position. The market of east region is low. However, the

bulk of the bottling plants are concentrated in the southern region which is starved of

water, yet , a place like Chennai alone account for major part of total revenue.

Lucrative Business

What is amazing is that people are prepared to pay Rs. 10 for a liter of water-

especially when the cost of material input (0.25 paisa per liter excluding labors cost)

pales into insignificance before the price of the product. In nutshell, in manufacturing

bottled water, the major costs are not in the production of treated and purified water

but in the packing and marketing of it. Hence, the cost of packing can be as high as 15

to 35% of the price of the product. The cost of the bottle along cap and cartoon is the

single biggest cost between Rs. 2.50 and Rs. 3.75 for a one –little bottle. For water

sold in big plastic jars (20-50 liters), which are also reused, or in pouches, this cost is

much lower. This is precisely why company sell water at even Re. 1 a liter in a 20-25

liter jar and stills makes profits. Labor and establishment and marketing cost are

highly variable and depend on the location and size of the companies. Informal

sources indicate that the gross profits of this industry can be as much as between 20-

205%. The reason that companies do not have to bear the cost of the main row

material-water-has made this industry highly profitable.

Current Global Trends

Recent trend in bottle water industry include new product development, widespread

marketing and packaging efforts, and the emergence of new industries tapping into

bottle water, all aiming to gain markets further. The most conspicuous trend in the

bottled water industry is the development and flooding of a seemingly never ending

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array of bottle water product. Among them are: bottle mineral water, spring water,

sparking water, well water, purified water, distilled water, vitamin infused water, mint

flavored water, fruit-flavored water, hydrating water and now even super oxygenated

water and cosmeceutcal water. One Australian company even extracts water from

apples and oranges by freezing fruit juice and using a ’pressure chilling’ process to

separate the fruit from the water. Another significant trend is product marketing and

packing. Realizing the consumer cite taste, quality and purity as the top reasons for

drinking bottled water, bottles market and design bottlers to display their purity.

‘Straight from nature to you’ is indicative of untouched, pure natural water marketing.

Another popular ad slogan says that their bottle water is “so pure, [that they] promise

nothing. “ Other manufactures seek to carve out a new level in the bottled water

industry introducing high-end products. These bottles seek distinctions by marketing

their water origins, fortification or even bottle shapes, size and styles. Examples of

these include: bottle water that now comes in bullet shaped glass, icicle-shaped

plastic, see through labels, sports ball-sized water bottles and the ever-charging

unique cylindrical containers. Another packing trend in the bottled water industry is

multi-packs. As current bottled water consumption grows, more consumers are

turning to multi-packs to save time and money.

Overview

The cut-throat completion among the market players in packaged water industries has

come to stay in India. The share of the farm may dwindle if they don’t make any

concentrate effort to change its growth strategy as per the need of the hour.

Distribution has become critical for this industry due to the high volume and low

margin effort. The price may more or less remain strictly under this business as farms

are afraid of losing their customer to rival. The home segment and exploring of

country market the best avenues available for the farm to maximize the profit. Time

has come for the bottle water industries in the country to be innovative in their

flavors, the packaging design and promotion to attach highly conscientious customers.

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WHY PEOPLE DRINK BOTTLED WATER

Alternative to other beverages

Tre ndy

Luxurious

Convenience

Worries about tap water

“Bottled water is purer.”

“Bottled water is just safer.”

Differently regulated

Hype, myth, and propaganda

Perception of difference

“Bottled water tastes better.”

Placebo effect

Caters to different “tastes” (preferences)

Bottled water is better than tap water

3 out of 4 cases, it is tap water

Source:

http://www.epa.gov/

http://www.cfsan.fda.gov/~dms/botwatr.html

(FDA/CFSAN website)

http://www.nrdc.org/water/drinking/

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SELECTED MACHINERY SPECIFICATIONS

1. Raw water storage tank.

2. Raw water feeding pump.

3. Multi graded sand filter.

4. Activated carbon filter.

5. Antiscalant dosing system.

6. Ultra violate disinfection system.

7. High pressure pump.

8. Reverse osmosis element.

9. Pressure vessel for element.

10. Electric control panel.

11. Micron filtration system.

12. Instruments & instrument panel.

13. Micron filtration for minerals controlling system.

14. Treated water transfer pump.

15. Treated water storage tank.

16. Fine polishing micron filtration system.

17. Ultra violet disinfection system.

18. Ozone generating set.

19. Ozone reacting set.

20. Ozone circulating pump.

21. R.O. membrane cleaning system.

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Research MethodologyResearch Objective

Main Objective

o In depth study of Bottled water segment in beverages industry.

Secondary Objective

o To find out over all market condition of bottled water segment.

o To find out opportunity in bottled water market.

o To find out future challenges for bottled water market.

o To study the Political, Economical, Social and Technological factor

affecting bottled water.

o To compare the market competition among different player.

o To find out future growth rate of bottled water market.

o To compare Indian bottled water market with Global market.

o To study the reason behind growth of the bottled water market.

Information Need:-

Related to bottled water market

Product history.

Related to substitute product.

Application of product.

Global position of the market.

Information about Brand portfolio in India.

Macro environmental factor.

Government policy related to bottled water market.

Size and growth rate of the market and economy.

Market position of player.

Value chain of major companies.

Opportunity and threats.

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Research Design

It is a Descriptive Research design because our project includes points like

description of market characteristics or function rests totally on secondary data.

Data Collection and Source:-

Based on Secondary Data

o Books, Magazine, News Articles, Websites, Search Engine and

Reference Report.

Limitation

In market we have so many local brands but we have considered only major

brand of the market.

The project is totally based on secondary data and there was nothing like

primary data.

Time constraint.

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Section - B

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Define Product

What is bottled water?

Drinking water: - water suitable for drinking.

Bottled water: - Drinking water (often spring water) that is put into bottles and

offered for sale.

Different types of bottled water: -

As per Encyclopedia Britannica, mineral water in defined as water that contains a

large quality of dissolved minerals or gases. The mineral water can be categorized

into mineral water and artificial mineral water.

Natural mineral water is obtained from natural springs & has a high content of

calcium carbonate, magnesium sulfate, potassium & sodium sulfate. It may also

contain gases like carbon dioxide or hydrogen sulfide. While mineral water produced

artificially by adding salts to distilled water or aerating it with carbon dioxide is called

artificial mineral water.

Mineral water is just one from of aerated water. It is water with high mineral & gas

content. Some of the minerals are Epsom salt, magnesia, iron, silica, boron, &

fluorine. The most common gasses found in mineral water are carbon dioxide &

hydrogen sulfide. It is mostly rainwater that has soaked into the ground & dissolved

the mineral matter.

While according to American & European Regional Codex Standard, a sample of

water is said to be natural mineral water only if: it is obtained directly from natural or

drilled sources from underground water – bearing strata. It is collected under

conditions, which guarantee the original natural bacteriological purity. It is bottled at

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the point of emergence of the source with particular hygienic precautions. It is not

subjected to any chemical treatment.

The bottled water Standard like FDA define the several different types of bottled

water based on specific characteristics of the product. Bottled water products meeting

the Standard of Identity may be labeled as bottled water or drinking water, or one or

more of the following terms:

Spring Water: - Bottled water derived from an underground formation from which

water flows naturally to the surface of the earth. Spring water must be collected only

at the spring or through a borehole tapping the underground formation feeding the

spring. Spring water collected with the use of an external force must be from the same

underground stratum as the spring and must have all the physical properties before

treatment, and be of the same composition and quality as the water that flows

naturally to the surface of the earth.

Purified Water: - Water that has been produced by distillation, deionization, reverse

osmosis or other suitable processes while meeting the definition of purified water in

the may be labeled as purified bottled water. Other suitable product names for bottled

water treated by one of the above processes may include "distilled water" if it is

produced by distillation, deionized water" if it is produced by deionization or "reverse

osmosis water" if the process used is reverse osmosis. Alternatively, "drinking water"

can be used with the blank being filled in with one of the terms defined in this

paragraph (e.g., "purified drinking water" or "distilled drinking water").

Mineral Water: - Bottled water containing not less than 250 parts per million total

dissolved solids may be labeled as mineral water. Mineral water is distinguished from

other types of bottled water by its constant level and relative proportions of mineral

and trace elements at the point of emergence from the source. No minerals can be

added to this product.

Sparkling Bottled Water: - Water that after treatment, and possible replacement

with carbon dioxide, contains the same amount of carbon dioxide that it had as it

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emerged from the source. Sparkling bottled waters may be labeled as "sparkling

drinking water," "sparkling mineral water," "sparkling spring water," etc.

Artesian Water/Artesian Well Water: - Bottled water from a well that taps a

confined aquifer (a water-bearing underground layer of rock or sand) in which the

water level stands at some height above the top of the aquifer.

Well Water: - Bottled water from a hole bored, drilled or otherwise constructed in

the ground, which taps the water aquifer.

Municipal/Tap Water: - We know it's the type of water piped right into your

home. While tap water isn't regulated it must meet the strict standards of the

Environmental Protection Agency (EPA). Municipal tap water is generally of

excellent quality, however, many people prefer the taste and enjoy the convenience of

bottled water, which, in most cases, undergoes additional processing and often retains

the pleasant characteristics of its natural source.

Bottled water different from Tap water: -

Bottled water is produced and distributed as a packaged food product and made

specifically for drinking. As a packaged food product, bottled water must adhere to

Good Manufacturing Practices (GMPs) required of all regulated food products as well

as specific GMPs unique to bottled water production and packaging. GMPs require

that each container of bottled water is produced in a sanitary environment and

packaged in sanitary, safety sealed containers. Bottled water is also subject to

misbranding and food adulteration provisions, which help ensure that consumers

receive safe, high quality bottled water and protects consumers from substandard

products.

In addition, members of the IBWA abide by the IBWA Model Code, which includes a

voluntary system called HACCP (Hazard Analysis and Critical Control Points).

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Taste is another reason consumers choose bottled water. Chlorine is most often used

to disinfect tap water and can leave an aftertaste. Some bottlers use ozonation, a form

of supercharged oxygen and/or ultraviolet light as the final disinfecting agent, neither

of which leaves an aftertaste.

Bottled water provides consumers with consistent safety, high quality, good taste and

convenient portability. To help ensure that bottled water is safe and of the highest

quality possible, all IBWA members use one or more of the following steps found in a

multi-barrier approach: source protection and monitoring, reverse osmosis,

distillation, filtration, ozonation and disinfection.

Bottled Water

Widely available in most countries bottled water is a relatively cheap and easy source

of safe drinking water. However, bottled water is only as safe as the source - you must

make sure that the seal on the bottle is unbroken as it is not unknown for locals to

refill empty bottles with tap water and try to sell them as new. There are recorded

instances of contaminated bottled water contributing to cholera epidemics.

Carbonated Water is acidic enough (due to the dissolved carbon dioxide) to

kill contaminating bacteria. While not typically expensive, bottled water has

the disadvantage of being an additional expense, and is not always available.

Another downside to bottled water is that the plastic bottles are carried into the

mountains and none are ever carried out, thus producing a tremendous and

completely unnecessary waste disposal problem.

Boiling is the most certain way of killing all microorganisms. The process of

heating water to a boil (212 F or 100 C) makes it hot enough long enough to

disinfect it, even at elevations as high as Everest Base Camp. You only need

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to boil the water for a minute, even at high altitude. The disadvantage of

boiling water is that it requires time and equipment to heat the water.

Chemical Purification adding chemicals to the drinking water kills

bacteria, microorganisms and viruses. This type of purification involves

adding a few drops or tablets to the water, shaking it and then letting it sit for a

certain period of time (usually ½ hour). There are 2 chemicals typically used

for chemical purification: Iodine and Chlorine.

Iodine is available in many forms - in either tablets or crystals form, or as a

tincture - which makes it convenient to find, but can be confusing in knowing

ratios to use. Iodine has been shown to be very effective in inactivating

Giardia, but does not always work on killing Cryptosporidium. It is also a

very lightweight option, and can double as a necessary addition to your 1st

Aid Kit. Be aware that some people are allergic to iodine and cannot use it as

a form of water purification. Persons with thyroid problems or on lithium,

women over fifty, and pregnant women should consult their physician prior to

using iodine for purification. Also, some people who are allergic to shellfish

are allergic to iodine.

Chlorine can be used for persons with iodine allergies or restrictions.

Chlorine is probably best used in an emergency situation. It is typically used in

larger quantities than iodine in order to purify the water, which often results in

an objectionable taste – even worse than the iodine taste. Chlorine is not

always effective against viruses. And it can be toxic in the event of an

overdose, so you need to be careful when diluting the solution.

Another disadvantage to chemical purification is that the killing effectiveness is

dependant on concentration of the chemical, temperature of the water, and contact

time. Cloudy water often requires higher concentrations of chemical to disinfect. The

colder the water, the less effective the chemical is as a purifying agent, so the water

needs to sit longer after treatment before drinking. Also, chemical purification often

adds a less favorable flavor to the water. Be aware that if you use flavor crystals (i.e.

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Lemonade or Power Ade mix), this should be added after the recommended contact

time for purification but using them definitely helps neutralize the taste.

Source

The water used is from protected well, an approved source which meets the Indian

standard IS:10500. The source is situated in an unpolluted area and well protected

from external contamination.

Purification

The water is processed with multi-stage purification processes such as -

Sand Filter, Activated Carbon Filter, Ultraviolet Disinfection, Ultra Filtration,

Reverse Osmosis, Ozonation.

Purification Processes  

Sand Filter

 

Activated Carbon Filter (ACF)

 

Eliminates load of total suspended solids in the raw water.

  Activated carbon is prepared by slowly heating coal or coconut shell. This filter removes most of the organic

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contamination and pesticide residuals from the water. It also controls taste and odour of water.

Ultraviolet Disinfection (UV)   Ultra Filtration

 

Water is exposed to UV light of wavelength 245 nanometers (nm). A dosage of 16000 microwatt/sq.cm. at 40°C for effective disinfection.

  Ultra filtration is a low pressure membrane process that removes dissolved organic macro molecules, viruses, Pyrogen enzymes etc.

 

Reverse Osmosis   Ozonation

 

A high pressure membrane process to eliminate dissolved impurities like unwanted salts and retain minerals which are essential to human body. This done by carefully selecting the membrane by a technology developed by DIL.

  Ozonation is the strongest oxidizer and disinfection agent which acts on broad spectrum of microbiological organisms. Oxyrich is disinfected by 0.3 ppm of ozone. Ozone is 30000 times more effective than chlorine. Use of chlorine is eco unfriendly and produces THMs (tri-halomethanes) in

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water, which can cause cancer.

Filtration

A water filter pumps water through a microscopic filter that is rated for a certain-size

organism. There are a number of devices on the market that filter out microorganisms.

The standard size rating is the micron (the period at the end of this sentence is about

600 microns). Depending on the micron rating of the filter, smaller organisms (like

viruses) can pass through. Be cautious when selecting a filter. You should know what

potential organisms you need to treat for. You don’t want to go to an area where a

virus like hepatitis it is present in the water (a problem in some developing countries)

with a filter that will handle only a larger organism like Giardia.

There is a difference between a water filter and a water purifier. Filters do not filter

out viruses, but there are water purifiers, like the PUR Scout, that pass the water

through both a filter and an iodine compound that kills any smaller organisms that

have passed through the filter. These purifiers kill all microorganisms down to 0.004

microns; however, even filters with purifiers added, have been shown to provide

incomplete disinfection of contaminated water. Also these filters with purifiers should

not be used by people who are allergic to iodine.

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Define Substitute Product and criteria for substitution

The real substitute of the bottled water is water pouches, coconut water and water

purifier and some far substitute like Fruit juice, Carbonated Soft Drinks. But talking

very specifically and precisely we can differentiate in two category Far substitute and

near substitute are as per below.

Close Substitute:

Pouches water

Coconut water

Vending machines water

Water purifier

Far substitute:

Cold coffee

Tea

Alcoholic drinks

Milk and Buttermilk

Fruit juice

Carbonated soft drink

From all information we review that not only bottled water market grow but also other

substitute product market also grow in the market.

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Criteria for Substitution:Criteria of substitution as per our view are describe as per under.

Availability

Basic need of end user

Affordability

Seasons or climate condition

Mind set of people

Likes and perception

Above all are considered as a substitute criteria and all are define below.

Availability

This product need proper distribution channel because customer not loyal here

customer purchase product as per its own availability and in rural area people get

pouches easily so their market share is high in rural area.

Basic need of end user

End user basic need relative to bottled water is satisfy its thirst and customers satisfy

its need through fruit juice, Pouch water or carbonated soft drinks also.

Affordability

It is based on disposable income of the customer or family. When persons do not

afford bottled water then they divert for pouch water or any other low price substitute.

And also Indian people are more conscious about price.

Season or climate condition

In India generally people preferred hot drinks in winter and choose cold drinks and

juice in summer so it is totally based on the climate condition so the need of the

people is change as per climate changes.

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Mind set of people

Generally in India people are preferred tea or also offer tea to relatives so they not

easily choose bottled water at the time of thirst, and other side in foreign country

people preferred fruit juice or beer.

Likes and perception

This market is based on people perception. For example after know about pesticide in

bottled water people not go for bottled water but divert any other fruit juice or

coconut water.

A vending machine is a machine that dispenses purified water into customer's own

containers, again obviating the costs and environmental issues involved in

manufacturing, transporting, and disposing of, plastic bottles. When offered in low-

income areas, this practice makes purified water more affordable to local population.

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Short History of Bottled Water

Man’s legendary quest for fresh water has led today to the convenience of bottle water

to meet the fast-paced life of modern peoples. Ours is the blue planet, and the

hallmark of life on Earth is water. But where did this colorless, odorless liquid first

come from?

10000 BC: “Bottled water” is born as mankind transports water in primitive vessels

and skins from natural spring sources to their dwellings.

218 BC: Hannibal rests his troops and slakes their thirst at source Perrier.

58 BC: Aqueduct delivered spring water refreshes Nero.

1002: Leif Erickson restocks his longboat with New World natural spring water.

1215: Signers of the Magna Carta toast to liberty with delicious water from local

springs.

1805: Napoleon keeps his spring water close at hand.

1845: Poland spring founded when summer visitors to the Maine resort wanted to

return home with the famed spring water.

1863: Perrier first bottled by decree of Napoleon ill for “the good of France.”

(Source: - http://www.nestle-watersna.com

http://www.finewaters.com)

S.V.I.M. Kadi 25

Recent discoveries in astrophysics suggest that water is not native to Earth but rather

were imported from the edges of our solar system as ice trapped in comets. Scientists

think this water was first delivered here more than four billion years ago. During the

meteor shower that gave the Moon most of its craters, Earth received five hundred

times more "hits" than its moon did; since the planet has a greater critical mass than

its satellite, Earth was also able to hold on to much of the water from the ice.

Eventually, water became one of the most important sub stances on Earth but for

civilizations to advance, it needed to be controlled. This process began about ten

thousand years ago with the development of agriculture, which required capturing,

storing, and distributing water.

The health benefits of water sources formed a less superstitious basis for appreciation

as Western civilization moved away from belief in gods and goddesses. Some sources

revered by pagans, such as Lourdes, became places of pilgrimage for health purposes

and retained some sense of mysticism.

With personal hygiene becoming a concern in late eighteenth century Europe, visits to

mineral springs, to drink or bathe in the curative waters, became fashionable. The

trend was set by the wealthy, who could afford to "take the waters".

Some of these destinations gained fame as "water hospitals" among them Contrex in

France and Fiuggi in Italy. Since the early eighteenth century, water from both these

springs was thought to be beneficial to kidney stones. By the nineteenth century,

numerous spa resorts were attracting the infirm and the idle vacationer. Many of these

resorts and springs live on today as familiar European brand names: Evian, San

Pellegrino, Perrier, Vittel, Vöslauer, Spa, Borsec, Chaudfontaine, Harrogate, and

many more.

Many well-known curative waters have been distributed throughout Europe as luxury

drinks since ancient Roman times. At first, the waters were typically free; the only

cost was shipping. But the owners of the now-famous spas discovered they could earn

revenue by selling the water for off-site use. This mineral water was sold in stoneware

jars, porcelain demi-jars, and, later, glass containers and bottles.

S.V.I.M. Kadi 26

Commercial exploitation of water sources began in France. Evian first opened a

thermal bath on the private estate of the king of Sardinia in 1824. The king authorized

sales of the water two years later, and a company was formed in 1829 to sell the

water. It was first bottled in earthenware; Evian did not begin bottling in glass until

1920.

Other European countries soon followed the French in selling their waters. England

introduced what’s thought to be its first bottled water, Malvern, at the Great

Exhibition of 1851 in London. Germany’s Apollinaris received a red triangle award

"an indication of outstanding quality"at a British trade show in 1892 and later

registered the symbol as its trademark. San Pellegrino packed 35,343 bottles during

1899, the Italian water’s first year of sales; by 1908 it was being exported throughout

the world, even to remote places like Peru, China, and Australia.1

The bottling of natural mineral waters reached its height in the late nineteenth

century; the rising popularity of "soda waters" then began to elbow mineral water out

of the market. The latter was at this time sold primarily as a curative and a luxury

drink for the wealthy.

Clever marketing strategies were applied to reinvigorate the natural bottled water

market. Evian again took the lead in the 1950s by selling its water with the powerful

claim, "to help lactating mothers and [provide] important minerals for infants."

Targeting a new generation of consumers showed great foresight, as this demographic

turned out to be the baby boomers, who took Evian to the top of the bottled mineral

water market.

1 http://www.nestle-watersna.com, http://www.finewaters.com

S.V.I.M. Kadi 27

Product Life cycle (estimation

1990 to 2015*)

The stages through which individual products develop over time is called commonly

known as the "Product Life Cycle".

The classic product life cycle has four stages: introduction; growth; maturity and

decline

Table – 1

The Exponential Increase In Demand Bottled Water:1990-20152

Year Million Cases

1990-911991-921992-931993-941994-951995-961996-971997-981998-991999-20002000-012001-022002-032003-042004-052005-062006-072007-082008-092009-102014-15

2.22.63.54.76.58.511.515.520263344.555.668.158297112.85129.85146.8*164.45*265*

* Estimated Projects ( Prediction ) Source:indiastat.com

2 Advertising express May 2008, - pg- 55

S.V.I.M. Kadi 28

0

50

100

150

200

250

300

year

millio

n c

ases

(Source:- Advertising express May 2008, - pg- 55.)

Introduction Stage:

Here 1990 is select as a base year and from 1990 sales of Bottled water increase year

by year but not that much level up to 2004-05 so this stage covers under introduction

stage of bottled water industry. And after increase awareness among people and also

know about side effect of non purified water people diverse from tap water to bottled

water and this change increase sales of bottled water in market. In this stage firm

focus on branding and patent for maintain right to produce.

Growth Stage:

After 2005-06 bottled water sales increase in market and it shows growing stage of

the industry, because people are now use bottle water for status and for health safety.

Now in 2008 bottled water industry growing at a rate of 38% so it sales increase faster

as compared to past year so we can say that industry came under growth stage.

Maintain existing features and also add new things in product. Here broader audience

available for industry product.

S.V.I.M. Kadi 29

Application of the Product Application for the PAST

Always water your plants during the early morning hours or

in the evening, when temperatures are cooler, to minimize

evaporation.

Capture rainwater to water your plants.

The leaves of plants and trees do not need to be watered.

You can therefore focus all the water on the roots of the

plants and trees to ensure that they absorb all of the water

you are giving them.3

When you clean your fish tank, use the water you've drained

on your plants. The water is rich in nitrogen and phosphorus,

providing you with a free and effective fertilizer.

This also goes for water you boiled your pasta in for

example.

The leaves of plants and trees do not need to be watered.

You can therefore focus all the water on the roots of the plants and trees to

ensure that they absorb all of the water you are giving them.

Put your potted plants in a bucket or a sink full of water. Leave them for a few

minutes to allow the water to fully soak in and push out air trapped in the soil.

Digging a small trench around the trees in your yard will allow the water to

soak in instead of running off.

If you live in a dry area, or an area that has dry periods during the summer,

plant drought tolerant species that will survive with no or very little watering

3 http://www.wateryear2003.org

S.V.I.M. Kadi 30

Application for the PRESENT

Different varieties of lawn grass have differing water

requirements. Consult your local nursery for varieties

which are appropriate to your area.

When mowing the lawn, don't cut the grass shorter

than 2 cm. If you do, the grass won't have enough

leaf area to protect itself from the burning effects of

the sun.

Lawn needs more water than a garden so when designing your landscape,

reduce the area covered by lawns as much as possible.

Application for the FUTURE

Spread mulch around your plants (75mm thick)

to reduce evaporation and prevent weeds. Mulch is a cheap

and easy way to prevent up to 73% evaporation loss. The

best mulch is a well-rotted compost which will also improve

the soil structure.

Weeds compete for water and nutrients in the

garden. Once they are removed good mulch will help to keep

weeds away.

Frequent watering makes your plants shallow rooted and more dependent on

you for survival. Less watering will toughen the grass and your plants and

encourage its roots to spread deeper.

Look at the dials on the water meter when you are sure there is no water being

used in the home or garden. If any of the dials are moving, you may well have

a leak.

Sources:- http://www.wateryear2003.org

S.V.I.M. Kadi 31

Section - C

S.V.I.M. Kadi 32

Global Position of bottled water

Bottled Water Consumption Jumps

Bottled water represents the fastest growing segment of the global beverage market

with a market share of about 38%. World bottled water market is expected to reach

$65.9bn by 2012, stimulated by rising population, consumer spending patterns,

lifestyle trends and growing levels of health consciousness, among others.

The market is expected to grow rapidly in the coming years due to growing consumer

concerns about fitness, water quality and health. As stated by the recent report

published by Global Industry Analysts, global bottled water market is dominated by

Europe and the US, which together account for about 55% of the market value

estimated in the year 2008.

Bottled water will continue to fare well in the global beverage marketplace as a

healthy alternative to carbonated soft drinks. Gains in bottled water market will also

come from flavored varieties and convenient packaged formats, especially single-

serve packs.

Sparkling water market is dominated by Europe, which accounts for more than 75%

of the world market estimated in 2008. Western Europe comprises some of the

world's largest per capita bottled water consumer markets, which include Germany,

France, Spain and Italy. The largest proportion of bottled water consumers can be

found in Germany, as 88.2% of its adult population drinks bottled water. 4

The non-sparkling water market constitutes the bulk of bottled water shipments,

accounting for between 80-85% of the market in volume and value terms. Non-

sparkling bottled water is also expected to offer the highest growth opportunity,

outgrowing the sparkling bottled water market by three to four times. Market for non-

sparkling water in the US is projected to reach $15.1bn by 2012.

4 www.ibwa.org

S.V.I.M. Kadi 33

The major challenge for most companies is product innovation and differentiation as

water is still just water. Containers are an important part of bottled water, as they

constitute nearly 47% of cost. Even look, weight and price of the product are as

significant as the water itself.

For instance, Colorado-based Biota sells bottled water in biodegradable bottles that

are produced using corn in order to attract consumers who are ecologically conscious.

Some companies try to attract children by selling bottled water in attractive bottles

with vivid designs and colours.

Key players dominating the global Bottled Water market include Aqua Gold

International Inc, Boreal Water Collection Inc, China Water & Drinks Inc, Group

Danone, Danone Naya Waters Inc, Isbre Holding Corp, Nestle SA, PepsiCo, Quilmes

Industrials Sa-Adr, Saint Elie, San Miguel Corporation and The Coca-Cola Company.

GLOBAL BOTTLED WATER MARKET

Leading Countries' Consumption and Compound Annual Growth Rates

2002 – 2007

2007 Millions of Gallons CAGR*

Rank Countries 2002 2007 2002/07

1 United States 5,795.6 8,823.0 8.8%

2 Mexico 3,898.6 5,885.2 8.6%

3 China 2,138.4 4,787.8 17.5%

4 Brazil 2,541.8 3,621.1 7.3%

5 Italy 2,558.2 3,100.9 3.9%

6 Germany 2,291.5 2,743.2 3.7%

7 Indonesia 1,622.5 2,400.6 8.2%

8 France 2,225.6 2,283.2 0.5%

9 Thailand 1,277.0 1,533.1 3.7%

10 Spain 1,191.4 1,284.0 1.5%

Top 10 Subtotal 25,540.7 36,462.2 7.4%

All Others 9,054.2 13,407.3 8.2%

WORLD TOTAL 34,594.9 49,869.6 7.6%

* Compound annual growth rate

Source: Beverage Marketing Corporation

S.V.I.M. Kadi 34

GLOBAL BOTTLED WATER MARKET

Per Capita Consumption by Leading Countries

2002 – 2007

2007 Gallons Per Capita

Rank Countries 2002 2007

1 United Arab Emirates 35.2 68.6

2 Mexico 37.7 54.1

3 Italy 44.2 53.3

4 Belgium-Luxembourg 32.7 39.5

5 France 37.1 35.8

6 Germany 27.8 33.3

7 Spain 29.7 31.7

8 Lebanon 24.9 29.3

9 United States 20.1 29.3

10 Hungary 13.5 28.5

11 Switzerland 24.2 28.2

12 Slovenia 18.8 25.2

13 Austria 20.9 25.0

14 Czech Republic 21.1 24.6

15 Croatia 14.9 24.3

16 Saudi Arabia 23.8 24.1

17 Cyprus 21.4 24.0

18 Thailand 20.1 23.6

19 Israel 12.4 23.2

20 Portugal 19.9 22.4

GLOBAL AVERAGE 5.6 7.6

Source: Beverage Marketing Corporation

S.V.I.M. Kadi 35

Europe and North America both contributed more than 60% of global market sales of

bottled water it shows more awareness of bottled water in market and Asia is after this

two area Asia cover 26% from global sales.

Bottled water—a general term referring to natural mineral water, spring water, and

purified water supplied to consumers in bottles—is the world’s fastest-growing

commercial beverage. Global consumption of bottled water more than doubled

between 1997 and 2005, reaching a total of 164.5 billion liters, or 25.5 liters per

person. While Europe and North America still dominate the bottled water market,

consumption in Asia and South America has increased dramatically over the past five

years, expanding at 14 percent and 8 percent a year respectively.

The United States is the world’s largest consumer of bottled water, with Americans

drinking 28.7 billion liters in 2005. But consumption per person is a different story: in

2005 each Italian, on average, drank more bottled water than anyone else in the world

—192 liters, compared with 99 liters for Americans. Among the top 10 countries,

Brazil, China, and India have doubled or even tripled consumption between 2000 and

2005, though per capita intake in China and India is still far below the global average.

Altogether, almost three quarters of the world’s bottled water is consumed in the top

10 countries.

S.V.I.M. Kadi 36

Worldwide, people buy bottled water in order to have safe drinking water, especially

consumers in developing countries who face unreliable municipal water supplies,

water scarcity, and continual water contamination. In most industrial countries,

however, where municipal water is better regulated, people drink bottled water also

for better taste, for convenience, and as a substitute for other beverages. In the United

States, calorie-free bottled water has attracted consumers concerned about obesity.

Urbanization, improved living standards, office working environments, and

aggressive marketing strategies have helped boost the global sales of bottled water.

Home and office delivery of bottled water has become a popular service and supplies

nearly 28 percent of the water consumed.

The difference in cost between bottled and tap water is staggering: the bottled version

costs from 240 times to more than 10,000 times as much. The Pacific Institute, a

California-based think tank, found that bottled water sold in most industrial countries

costs $500–1,000 per cubic meter, compared with 50¢ per cubic meter of California’s

high-quality tap water. Most of what consumers pay goes into production, packaging,

transportation, advertising, retailing, marketing, and profits—not the water itself. In

2005, selling bottled water in the United States generated more than $10 billion in

revenue.

Bottled water is regulated as a food product in the United States and Canada, while

the European Union has two directives: one on natural mineral water and another on

drinking water that includes bottled spring or purified water. Regulation codes for

bottled water generally cover the composition, contaminants, processing

requirements, and labeling. The Codex Alimentarius—an international food code

initiated by the World Health Organization and the Food and Agriculture

Organization— can be adopted by countries that lack national regulations.

S.V.I.M. Kadi 37

United State

Bottled water emerged as the second largest commercial beverage category by

volume in the United States in 2003, and, despite its significant stature, it continued to

grow at a significant pace in 2007. The category is growing even more forcefully on a

global scale but in the U.S., volume is unparalleled.

In 2007, total U.S. category volume surpassed 8.8 billion gallons, a 6.9% advance

over 2006’s volume level. That translates to over 29 gallons per person, which means

U.S. residents drink more bottled water annually than any other beverage, other than

carbonated soft drinks (CSDs).5

U.S. BOTTLED WATER MARKET

Volume and Producer Revenues

2000 - 2008(P)

Millions of Annual Millions of Annual

Year Gallons % Change Dollars % Change

2000 4,725.1 -- $6,113.0 --

2001 5,185.3 9.7% $6,880.6 12.6%

2002 5,795.7 11.8% $7,901.4 14.8%

2003 6,269.8 8.2% $8,526.4 7.9%

2004 6,806.7 8.6% $9,169.5 7.5%

2005 7,538.9 10.8% $10,007.4 9.1%

2006 8,253.5 9.5% $10,857.8 8.5%

2007 8,823.0 6.9% $11,705.9 7.8%

2008(P) 9,418.0 6.7% $12,573.5 7.4%

(P) Preliminary

Source: Beverage Marketing Corporation

While CSDs still have volume and average intake levels more than twice as high as

bottled water, the soft drink market has been struggling recently, because of

5 Beverage Marketing Corporation

S.V.I.M. Kadi 38

competition bottled water. Per capita consumption of bottled water has been growing

by at least one gallon annually, thereby more than doubling in a decade.

U.S. BOTTLED WATER

MARKET

Per Capita Consumption

1997 – 2007

Gallons Annual

Year Per Capita % Change

1997 13.5 --

1998 14.7 8.3%

1999 16.2 10.2%

2000 16.7 3.5%

2001 18.2 8.6%

2002 20.1 10.6%

2003 21.6 7.2%

2004 23.2 7.5%

2005 25.4 9.7%

2006 27.6 8.4%

2007 29.3 6.4%

Source: Beverage Marketing Corporation

The industry enjoyed a nine percent growth rate from 1996 to 2000 in the United

States, which made the U.S. the world's largest market and a product that was

growing faster than any other beverage in that time period. Now bottled water is

reaching the mature stage of the product life cycle and a few large firms dominate the

industry.

Drinking bottled water, then, is not a benign practice; plainly, it wastes money and

causes environmental damage. It seems possible to suggest that succumbing is

allowing oneself to be manipulated in the most basic way. Bottled water, after all, is a

huge business. One-billion bottles of water are consumed in the United States a week,

and it is estimated that 38 million bottles are thrown into landfills annually.

S.V.I.M. Kadi 39

The consumption of bottled water is expanding exponentially both in the United

States and worldwide. This consumer preference is placing new stresses on

groundwater supplies and on associated stream systems. The United States leads the

world in total bottled water consumption, although it still lags behind Europe in per

capita consumption. In 2002, Americans consumed more than 6 billion gallons of

bottled water, or about 21 gallons per person. Since 1992, the annual percentage

increases have ranged from 8.2 to 18.4 percent. In the larger context of groundwater

consumption, the percentage allocated to bottled water is small, but the impacts are

often highly concentrated and substantial. The United States pumps about 77 billion

gallons of fresh groundwater per day.6

The above graph shows that all beverages growing on an average 6 to 7 % but bottled

water segment growing at the rate of 87% it shows market potentiality of bottled

water.

6 American beverages Association

S.V.I.M. Kadi 40

ASIA

; 9.6% of total industry volume)/2007 (17.5%)

Indonesia is the 7th market in the world (9.1billion liters; 5.5% of total industry

S.V.I.M. Kadi 41

Thailand is the 9th market in the world (5.7 Thailand is the 9 th market in the

world (5.7 billion liters; 3.1% of total industry volume billion liters; 3.1% of

total industry volume

India is the 10th market in the world (3.4 billion India is the 10th market in the

world (3.4 billion liters; 1.8% of total industry volume liters; 1.8% of total

industry volume

Korea is the 13th market in the world (2.8 billion Korea is the 13th market in

the world (2.8 billion liters; 1.5% of total industry volume) liters; 1.5% of total

industry volume)

Japan is the 16th market in the world (2.5 billion Japan is the 16 th market in the

world (2.5 billion liters; 1.3% of total industry volume) 7

7 Beverages Marketing Corporation

S.V.I.M. Kadi 42

China

Market Highlights

China is the world's third-largest consumer of bottled water, with sales

expected to surpass 15 billion litres by 2008, exceeding a value of $4.9 billion.

Customers

The large disparity in incomes between urban and rural Chinese means that

most Western-style consumerism is concentrated in China's cities. The rural

population cannot typically afford consumer products such as bottled water.

Brand, price and taste are the factors that most influence urban Chinese

consumers' choice of bottled water.

MARKET OVERVIEW

China's water resources, which stand at 2200 cubic metres per person,

represent only about one quarter of comparable countries' resources.

Furthermore, the distribution of China's water resources is uneven, with south

China having an abundance of water, while the north and west regions

experience regular droughts. Furthermore, China's use of water is highly

inefficient; China consumes 7-15 times more water to produce one unit of

gross domestic product (GDP) than developed economies. For example, in the

United States, one tonne of water results in about $38 worth of GDP, while in

China one tonne of water translates to only $3-4 of GDP.

China's robust and unchecked economic growth is one of the main reasons the

country faces severe water pollution and, consequently, shortages of safe

drinking water. About 700 million Chinese drink water contaminated with

human and animal waste, and/or chemicals such as fluorine, arsenic, sodium

sulfate and bitter salt. The Chinese government reports that water from 53% of

S.V.I.M. Kadi 43

mainstream rivers, 50% of lakes and 35% of ground water is not fit for human

consumption due to pollution.

According to Euro monitor, sales of bottled water by volume are expected to

surpass 15 billion litres by 2008. The value of all bottled water sales is

expected to rise from $3.7 billion in 2003 to more than $4.9 billion by 2008.

China's bottled water import market grew to $13.6 million in 2005, up from

$4.4 million 2003, and consisted mostly of unsweetened mineral water (52%),

and sweetened waters - including aerated and minerals waters (46%).

Between 1999 and 2004, the compound annual growth rate (CAGR) for

bottled water consumption in China was 20.9%, the second-highest rate in the

world (India has a 25% rate). Euro monitor forecasts that the market for

bottled water will continue to experience strong CAGR of 13.5% through

2008.

Despite strong growth in volume sales of bottled water, there is substantial

downward pressure on price due to intense competition. The average cost of a

domestic brand bottle of water in China is about $0.25, while Euro monitor

reports that profit margins on a 24-pack case ranges from only $0.03 to $0.08.

Comparatively, a bottle of Evian costs approximately $2 in China, and is

aimed at an affluent market. Packaging and marketing may well be the key to

differentiating brands, which would allow bottled water producers to increase

prices.

Bottled water accounts for 39% of the soft drinks produced in the Chinese

market. Other major categories are carbonated soft drinks (30%), ready-to-

drink tea (15%) and fruit juice and fruit drinks (10%).

There is significant room for growth in bottled water consumption in China.

On a per-capita basis, the Chinese population consumed only 7 L of bottled

water in 2003. Comparatively, each Italian consumed 203 L of bottled water

while those in the United States consumed 82 L; the typical Canadian

consumed 46 L of bottled water in 2003. Sales of bottled water are expected to

increase by 90% between 2003 and 2008, due to the combined impact of lower

prices and concerns over polluted water.

The consumption of bottled water in China differs significantly based on

geographic region and the urban-rural divide. Table identifies the size and

CAGR of the bottled water market in each of China's six regions. The

S.V.I.M. Kadi 44

northwest, southwest and mid-China regions are expected to have the

strongest growth in bottled water consumption through 2008; the urban centres

of Xi'an, Lanzhou, Chengdu and Chongqing will drive most of this growth.

Region CAGR (2003-08)

East China 12.0%

North and Northeast China 12.0%

Mid-China 16.0%

South China 12.0%

Southwest China 16.0%

Northwest China 16.0%

OPPORTUNITIES

Increasingly, urban families are shifting towards the purchase of bottled water

over having to boil tap water for consumption. According to Euro monitor this

has resulted in an increased demand for a variety of pack sizes such as 18.9

litre, 11.35 litre, six litre, 1.5 litre and 0.75 litre. Potential opportunity may

exist as domestic manufacturers scramble to meet the demand for larger sizes.

Canadian companies are more likely to find success targeting the urban

Chinese population. Urban Chinese have a greater level of affluence and,

consequently, can better afford bottled water than rural Chinese. They also

have a higher level of exposure to Western consumer products.

S.V.I.M. Kadi 45

KEY PLAYERS

Regional suppliers dominate distribution in the highly fragmented Chinese

bottled water market. Important regional bottled water manufacturers include

Zhejians Yangshengtang Foods Co. (makers of Peasant's spring), Shenzhen

C'est Bon Food & Beverage Co. (C'estbon) and Guangzhou Watson's Food &

Beverage Co. (Watson's).

Only three brands are available nationally, of which Wahaha (owned in part

by French conglomerate Groupe Danone) is the largest with 19% market

share. The two other national brands are the domestically owned Peasant's

Springs, with a 10% market share, and Robust, which is also partly controlled

by Group Danone and hold an 8% share.

While China ranks as Canada's tenth-largest export market for bottled water,

there is ample opportunity to increase exports. Canadian exports of bottled

water to China are growing rapidly, but are still small in value terms, growing

from $35 121 in 2003 to $118 968 in 2005. Canada's top bottled water exports

in 2005 were natural and other unsweetened waters ($50 586), followed by

unsweetened mineral and aerated waters ($48 756), and sweetened waters -

including mineral and aerated waters ($19 626).8

8 www.bottledwater.org

S.V.I.M. Kadi 46

South Africa

The South African National Bottled Water Association (Sanbwa) believes that

changing lifestyle trends rather than South Africa ’s economic boom of the past two

years are driving the more than 20% year on year growth of the local bottled water

industry.

Research by independent specialist food and beverage research house, BMI, shows

that the South African bottled water market grew by an estimated 33.0% during 2005

and an additional 27.6% in 2006 - following on a consistent annual growth trend in

excess of 20% since 2001.

Levels of disposable income in South Africa are rising now, the growth trend in the

bottled water industry started eight years ago and the rate of growth has been

consistent. “Which means that people buying bottled water because they have more

money then before.” They’re buying it because they believe it contributes to their

wellbeing – and, if you want to drink water rather than any other beverage, it’s more

convenient to have a bottle of water with you than have to look for a tap.

“Also, although tap water is perfectly safe, bottled water can have a more appealing

taste. So it’s not healthy in a boring way – it’s fun. And these days, people want

health to be fun and not all hard work.”In other words, bottled water is about choice

rather than economics.”

The new regulations ensure that water is bottled to internationally accepted quality

and safety specifications. Sanbwa’s specifications for its member producers are even

more stringent. Members represent more than 80% of all the bottled water produced

in South Africa, so when consumers see the Sanbwa logo on bottles they have the

confidence of knowing they’re making a clear choice for quality.

S.V.I.M. Kadi 47

Europe

Rising health concerns in Europe have created opportunities within the bottled

water market, which traditionally has lagged behind the soft drink sector in

terms of popularity.

As consumers become increasingly health conscious, they are switching from higher

calorie carbonated soft drinks to bottled water. In addition, the European bottled water

market benefits from the general reluctance in the population to drink tap water.

New analysis from Frost & Sullivan (financialservices.frost.com), European Bottled

Water Industry: Investment Analysis, finds that the market earned €24.52 billion in

2006 and is expected to grow at a compound annual growth rate of 2.5 percent in

Western Europe and 17.7 percent in Eastern Europe during 2007-2010.

An increasing awareness of obesity-related health risks is causing a shift away from

carbonated soft drinks toward healthier alternatives such as bottled or flavored water,

driving the European bottled water market. Being a life product, the bottled water

market is controlled by stringent laws and regulations and is considered very safe for

consumption.

Overall, the Eastern European market is likely to outpace the Western market in

growth due to its larger untapped potential. While flavored/enhanced water appears to

have the brightest prospects, still water continues to account for the biggest share of

market volume. The home and office delivery (HOD) segment also has great potential

for growth, as it is a largely unexplored market.

Bottled water companies will also have to combat the campaigns mounted by

municipal utility companies, which accuse bottled water companies of bottling the

same water that is freely available via the utilities for a price. The bottled water

companies need to initiate public awareness campaigns and publish statistics to

counter this point.

S.V.I.M. Kadi 48

There are also concerns regarding pollution created by the disposal of non-

biodegradable packaging material. Companies have to demonstrate corporate social

responsibility by using environmentally safe materials.

In Europe bottled water industry grows rapidly in spain this industry grow at the rate

of 7 annually and all other organization also growing rapidly. So here opportunity for

grabs new market.

S.V.I.M. Kadi 49

LATIN AMERICA

Bottled Water Consumption

From 2000-2005 the compounded annual growth rate for bottled water was 9.6%

higher than any other beverage category.

However over the last five years Latin American Bottled Water sales increased

approximately 14% per year. South America bottled water sales have achieved

consistent growth in recent years, despite economic difficulties which affected many

countries at the start of the decade. This is attributed this to not just the perception of

bottled water as a basic foodstuff but also a growing awareness of health and wellness

issues. The region is led by Mexico, which boasted sales of more than 14bn liters in

2005, giving it a 45% share from consumption of over 130 liters per person. Brazil

follows with a 25% share from a volume of 7.6bn liters. Per the below graph the

S.V.I.M. Kadi 50

United States and Mexico, were the largest national markets in 2004. Five year

growth rates through 2005 for the world’s leading consumers include 16.5% for

China, 23.4% for India, 12.4% for Brazil, 8.6% for Mexico Note: Fiber Water has

Intellectual Property coverage in every country below except Indonesia.

AUSTRALIA

Australia has experienced a 20% growth in bottled water sales from last year with

over 1000 brands of water available in the country.

While clean safe drinking water is vital for human health, Australians are becoming

increasingly thirsty for bottled water products. And with the current big push from

beverage companies of this ‘new’ product, the market is expected to keep growing to

a worth of over $460 million per year.

Bottled water is an unjustified luxury that, except for essential safety or medical

reasons, is simply a fashion statement roaming free of environmental responsibility.

The life cycle of a plastic bottle goes through various stages - producing the package,

water sourcing, transport of a heavy product, merchandising, sale and eventually

disposal. There are many serious implications at each of these stages.

The Australian Drinking Water Guidelines which provide the framework for those

who manage and deliver Australia’s water resources are far more stringent than the

Australia New Zealand Food Standards Code that regulates bottled water. A recent

analysis of bottled water published in The Australian, found that the best selling

bottled water was no cleaner than the cheapest brand and none of the bottled water

tested was any better than tap water from Melbourne, Sydney and Adelaide (which is

regarded as having the murkiest tap water). In fact, an estimated 25% of bottled water

is found to actually be just tap water in a bottle.9

About the Association

9 http://www.bottledwater.org.au/scripts/cgiip.exe/WService=ASP0003/ccms.r?PageId=5001

S.V.I.M. Kadi 51

Who is ABWA

One of the largest and fastest growing International Association is Asia and The

Middle East. The ABWA has gone through many changes in its short life as the

dynamics of the group have changed. Founded in September 1992, it was initially

named the "Far East Chapter" which was later changed to the "Asia Pacific Chapter"

and then to the Asia Chapter. With the formation of the new International Council of

Bottled Water Associations taking over the role and position of the International

Bottled Water Association which is now confined to the United States of America

territory only, the Asia Chapter has now become independent and is officially called

the Asia Middle East Bottled Water Association (ABWA) since May 2000. ABWA

has its own logo, its own training body and a common standard for regulations and

inspections through the application of the Model Code. The Model Code is mandatory

through mandatory annual inspections for all bottler association members of ICBWA

and its International Chapter members. Each member's factory must also have a

Certified Plant Operator (CPO). ABWA is a founder member of ICBWA.10

Permanent Secretariat

A Permanent Secretariat was formed and operational since October 1993 based in

Jakarta. The activities of the Secretariat is, among others, to keep and maintain good

communications with members, act as a source of information and provide technical

assistance when required either direct or through appointed Technical Consultants,

and to keep an on-line link with Headquarters, update data of all members, recruit

new members, distribute materials on technical matters/Plant Operator Manuals/Plant

Inspection Handbook, negotiate cost and liaise with officially appointed inspection

bodies for the Mandatory Inspection Program, and the Certified Plant Operator

examination time-table, schedule inspection visits to members' individual plants,

organize workshops/training programs/conventions, certification programs, and other

events beneficial for members. The Secretariat also publishes the Asia Middle East

Bottled Water magazine twice a year, monthly (or more) e-newsletters, monthly

technical bulletins and other regulatory or market information.

10 www.ibwa.org

S.V.I.M. Kadi 52

Annual Mandatory Inspections

Pre-Inspections and Annual Mandatory Inspections are done through third parties

contracted by ABWA. For Asia (except for Indonesia) and the Middle East, this

function is assigned to Johnson Diversey Company (JDC). Specifically for Indonesia,

ABWA has appointed P.T. Suhita Jaya to perform this role with an emphasize on

training, inspecting and certifying refill-stations. As a result of the prolonged

monetary crisis in Indonesia since 1998 and the incapability of the government to

install proper municipal water supply infrastructure, refill-station business

mushroomed and has reached a number of more than 7000 units, compared to about

300 branded bottled water manufacturing facilities, throughout the 17,000 island of

Indonesia. Both organizations have been approved as authorized inspectors by the

International Council of Bottled Water Associations (ICBWA).

ABWA’s objectives

To assist its members to prepare legislative and regulatory steps and actions

whenever they are non-existing in their countries, review existing regulations

which may need improvement and changes to meet international standards and

regulations such as Codex Alimentarius.

To assist its members to prepare for sale the highest and finest quality of

packaged bottled water which will be in the best interest of the industry and

the welfare of the general public.

To promote through education, government relations and public relations, the

use of bottled water as healthy drinking water and as an alternate source for

sugared drinks or other beverages.

To establish a continuing educational program and technical assistance to

industry members, their officers and employees in quality control and the

production of the highest possible quality of bottled water.

To facilitate the exchange of technical, scientific and government relations

information amongst industry members.

S.V.I.M. Kadi 53

To correctly implement the Model Code through mandatory annual

inspections/audits and Certified Plant Operator programs.

To monitor the correct application of the logo of the Association as the quality

certification logo on products of members within the territory.

To socialize the standards of the Association and to advise the public of

qualifying bottler members having passed the standards of the Association

through its mandatory annual inspections. 11

INTERNATIONAL BOTTLED

WATER ASSOCIATION

The IBWA Model Bottled Water Regulation, known as the “Model Code,” was first

published in 1982. At that time, the U.S. Food and Drug Administration’s regulations

for bottled water were limited in scope. IBWA developed a set of standards that could

be used as minimum standards to which association members would subscribe and to

encourage state agencies to adopt it as a model for their own bottled water

regulations. IBWA has continued to advance the Model Code in the 1980s, 1990s, and

up to the present day.

In November 13, 1995, FDA published a standard of identity and quality for bottled

water at 21 C.F.R. §165.110. The Model Code was revised to adopt the provisions

that FDA had promulgated, but it was still considered a document that could be used

to raise the standards for bottled water and distinguish IBWA bottlers from others in

the industry. This was done partly by adopting industry and regulatory requirements

that were sometimes more stringent than FDA, primarily in the area of good

manufacturing practices (GMPs). In 2000, IBWA adopted the Hazard Analysis of

11 www.bottledwaterindia,org

S.V.I.M. Kadi 54

Critical Control Points (HACCP) system into the Model Code.12 This was a

significant advance for the industry since HACCP was not mandated for bottled water

at either the federal or state levels of government. The association felt it was

important to adopt HACCP.

The IBWA Model Code has adopted many of the state requirements for bottled water.

However, there are some instances where an individual state requirement may not be

included in the Model Code, such as source and finished product monitoring

requirements for certain substances, and bulk water hauling regulations. If a bottler

sells in a particular state, they must ensure they comply with the state bottled water

regulations. IBWA bottler members are encouraged to use the contact list of state

regulatory agencies.

"Bottled Water" means water that is intended for human consumption and that is

sealed in bottles or other containers with no added ingredients except that it may

optionally contain safe and suitable antimicrobial agents. Fluoride may be optionally

added within the limitations established in 21 CFR Section 165.110(b)(4)(ii). The

common or usual name of the resultant product must reflect these additions. Bottled

water may be used as an ingredient in beverages (e.g., diluted juices, flavored bottled

waters). It does not include those food ingredients that are declared in ingredient

labeling as “water”, “carbonated water,” “disinfected water," "filtered water," "seltzer

water," "soda water," "sparkling water," and "tonic water." The processing and

bottling of bottled water shall comply with applicable regulations in 21 CFR Part 129.

"Mineral Water" means water containing not less than 250 parts per million (ppm)

total dissolved solids (TDS), coming from a source tapped at one or more boreholes

or springs, originating from a geologically and physically protected underground

water source. Mineral water shall be distinguished from other types of water by its

constant level and relative proportions of minerals and trace elements at the point of

emergence from the source, due account being taken of the cycles of natural

fluctuations. No minerals may be added to this water.

12 www.ibwa.org

S.V.I.M. Kadi 55

Rules

All bottled water products shall meet the chemical, physical, and

microbiological standard of quality prescribed by this Code of Practice

attached as Appendix A. All bottled water products shall be free of coliform

bacteria, including E. coli.

Bulk water tankers, storage tanks, hoses, pumps and connections used for

loading, transporting and unloading of bulk water shall be constructed of

materials that are FDA food-grade, smooth, non-absorbent and easily cleaned

such as stainless steel (300 series).

Tankers, hoses, pumps, and other appurtenances shall be cleaned, sanitized

and inspected on a routine basis.

For microbiological contaminants (e.g., total coliform) analyze daily a

representative sample from a batch or segment of a continuous production for

each type of bottled water produced by the plant. Such analyses shall be

performed daily by qualified plant personnel and at least weekly by an

approved laboratory.

If the TDS content of mineral water is below 500 ppm, or if it is greater than

1,500 ppm, the statement "low mineral content" or the statement "high mineral

content," respectively, shall appear on the principal display panel following

the statement of identity in type size at least one-half the size of the statement

of identity but in no case of less than one-sixteenth of an inch. If the TDS of

mineral water is between 500 and 1,500 ppm, no additional statement need

appear.13

13 www.bottledwater.com

S.V.I.M. Kadi 56

Global environmental affect

“Even in areas where tap water is safe to drink, demand for bottled water is increasing

—producing unnecessary garbage and consuming vast quantities of energy,” reports

Earth Policy Institute researcher Emily Arnold. Although in much of the world,

including Europe and the U.S., more regulations govern the quality of tap water than

bottled water, bottled water can cost up to 10,000 times more. At up to $10 per gallon,

bottled water costs more than gasoline in the United States.

“There is no question that clean, affordable drinking water is essential to the health of

our global community,” Arnold asserts, “But bottled water is not the answer in the

developed world, nor does it solve problems for the 1.1 billion people who lack a

secure water supply. Improving and expanding existing water treatment and sanitation

systems are more likely to provide safe and sustainable sources of water over the long

term.” Members of the United Nations have agreed to halve the proportion of people

who lack reliable and lasting access to safe drinking water by the year 2015. To meet

this goal, they would have to double the $15 billion spent every year on water supply

and sanitation. While this amount may seem large, it pales in comparison to the

estimated $100 billion spent each year on bottled water.

Once it has been emptied, the bottle must be dumped. According to the Container

Recycling Institute, 86 percent of plastic water bottles used in the United States

become garbage or litter. Incinerating used bottles produces toxic byproducts such as

chlorine gas and ash containing heavy metals tied to a host of human and animal

health problems. Buried water bottles can take up to 1,000 years to biodegrade.

Worldwide, some 2.7 million tons of plastic are used to bottle water each year. Of the

bottles deposited for recycling in 2004, the U.S. exported roughly 40 percent to

destinations as far away as China, requiring yet more fossil fuel.

Meanwhile, communities where the water originates risk their sources running dry.

More than fifty Indian villages have complained of water shortages after bottlers

began extracting water for sale under the Coca-Cola Corporation’s Dasani label.

Similar problems have been reported in Texas and in the Great Lakes region of North

S.V.I.M. Kadi 57

America, where farmers, fishers, and others who depend on water for their livelihoods

are suffering from concentrated water extraction as water tables drop quickly.

The environmental impacts of bottled water also need to be considered. Excessive

withdrawal of natural mineral water or spring water to produce bottled water has

threatened local streams and groundwater aquifers. And producing, bottling,

packaging, storing, and shipping bottled water uses significant amounts of energy. In

addition, millions of tons of oil-derived plastics— mostly polyethylene terephthalate

(PET) are used to make the water bottles.

PET bottles have comparatively lower environmental impacts than glass or aluminum

by requiring less energy to recycle or remanufacture, and they do not release chlorine

into the atmosphere when incinerated, which PVC does. But without proper recycling,

massive amounts of PET bottles in the waste stream pose serious challenges to land

uses as well as to water and air quality around landfills.

S.V.I.M. Kadi 58

Section – D

S.V.I.M. Kadi 59

Comprehensive study of Indian bottle

water market

India to Face Severe Water Crisis in The Future

The per capita water availability in India is projected to decline to about 1,140 cubic

meters per year in 2050 from 1820 cubic meters per year recorded in 2001 according

to the the Intergovernmental Panel on Climate Change (IPCC).

"India will face a severe water crisis in 20 years if the government doesn't change its

ways and clashes are already taking place because the resource is so scarce." This was

the warning by the World Bank way back in 2005. "Estimates reveal that by 2020,

India's demand for water will exceed all sources of supply." 14.

All these reports point to just one thing for us now. That we should be on serving

water and be judicious in its use. If water is wasted today then its our future

generation which will suffer because of it. So everyone needs to make a point from

now to save water in anyway they can.

If we cannot do that then the future is very clear. Water will be one of the most

expensive commodities and everyone will have to buy water shelling out huge amount

of money for the same. The implications could be worse then these if action is not

taken now.

Water infrastructure projects should also speeden up in the country through public-

private partnership. This is of immense importance in a country where rural

population has very little access to safe drinking water. What these infrastructure

projects will also ensure is employment generation and in the current global crisis the

14 World Bank report

S.V.I.M. Kadi 60

country need to stand up and generate local employment through these opportunities

and challenges.

With vast population base, growing middle class population and strong

macroeconomic environment, the Indian food & drinks market has emerged as the

rapidly growing segment in the Indian retail industry. Rapid transformation in the

lifestyle of Indians, particularly those living in Urban India, has resulted in a dramatic

increase in the demand for processed or health food, packaged and ready-to-eat food

products and water specially packaged in bottle.

India is developing nation and whose growth last five year increase highly. The

growing demand for bottled water speaks volumes of the scarcity of clean drinking

water and the quality of tap water. It has become an icon of healthy lifestyle emerging

in India. It is of the pet material used in bottled water that makes a big difference in

taste. Almost all has traces of plastic flavor. The interesting scenario is that we have,

on the one hand, a vast majority of population which is struggling hard to get access

to potable water and on other, the new generation concentrated in urban areas getting

accustomed to bottled water ‘culture’ even though it means they have to pay through

their nose for it. Selling ‘safety’ –i.e. pure and simple water- has now become one of

the fastest growing industries in India despite the harsh truth it is build on the

foundation of bad governance, inequality and blatant exploitation. However bottled

water provides the distance advantages of convenient packing, consistent quality and

is ubiquitous.

The fastest growth in the consumption of bottled water in the world has been recorded

in India according to a new study conducted by the US based earth policy institute. It

even question the rising thirst for bottled water with consumption tripling in India and

more than doubling in china over the past five years.15

The sales of bottled water have exploded globally particularly in Europe, North

America and India in recent years, largely as a result of positive public perception on

the safety of mineral water. The corporate control and distribution over this important

liquid asset is growing as brisk rate in India. The packaged water business in the

15 www.bottledwaterindia.web

S.V.I.M. Kadi 61

country is estimated to be a whopping RS 1600 Cr and is growing at an immense rate

of 40% annually. According to Bureau of Indian standards (BIS), there are 1200

bottling plants (out of which 600 are in the state of Tamil Nadu) and 200 Brands of

packed drinking water across the country (nearly 80% of which are local) batting over

the markets which amply signifies the market is big even by international standards.

At this significant growth rate, the market is expected to humble the fizzy drinks

market soon. Nevertheless, in India the per capita bottled water consumption is still

quite low-less than five liters a years as compared to the global average of 24 liters.

Indian Scenario:

IN 1967, Bisleri set up a bottling plant for manufacturing and marketing its mineral

water but that time the concept of mineral water was failed. The brand was later on

sold off to Parle group acquired the Bisleri of Italy for launching soda water but later

launched bottled water also. The launch at that time was a big flop as concept of

buying water that too the Indian public did not accept form. The market remained

dormant for quite long (for a period of 20 years or so). The market through out this

period was formed only by the premium products that too available through 5-star

hotels.

In early 1990s with onset of liberalization policy by the Indian government, coming in

of cola majors, sell off of local soft drink brands of Campa, Thums Up, Gold Spot etc.

by parle to coke and other factors led Bisleri to test waters again. Bisleri re-launched

its bottled water in 1994. With exposure of media and exposure to international life

styles, deteriorating levels of portable water, increases in a number of water borne

classes, increases in awareness about health and hygiene and other related factors led

to acceptability of concept of mineral water. The market has not looked back ever

since then and has grown leaps and bounds to such an extent that a number of genuine

as well as fly-by-night operations have entered it to milch it.

Bottled water slaking consumers thirst.

S.V.I.M. Kadi 62

The Indian bottle water industry has grown phenomenally over the past decade. A

major part of the demand stems from out of home consumption by people on the

move, because the quality of drinking water available otherwise is suspect. Of course,

some also consume bottled water (or high price mineral water in some instance) as a

style statement. While it has its positive aspect, the bottle water industry is often

questioned for its over-extraction of the ground water, Its very high cost of delivery

and massive generation of solid waste in the from of non-biodegradable plastic

bottles. is this industry really slaking in consumer’s thirst or is it being too expensive

and wasteful?

The Big Boom

The bottle water industry has un-doubted been one of the fastest growing business

sectors in India. The way it has grown since the early 1990s is indeed astounding.

And the high growth rate is expected to continue into future. Starting from a small

base, the growth was exponential up to early years of current century. There after,

there was a decline in the pace of growth, and we now witness a comparatively linear

growth, but nonetheless fairly rapid.

The bottle water industry is reported to have growth nine-fold over the past decade

from around 15 million cases in 1997-98 to an estimated 130 million cases in2007-08

(1case=48 liters)this traction to a compounded annual growth rate 24% per annum. In

same year, the growth rate has been as high as 40%. The market size is further

projected to increase to 265 million cases by the year 2014-15 this works out of a

projected growth rate of nearly 11% a year. While one has crossed the exponential

growth phase experienced during the industry’s nascent period, there is lot of

untapped potential and the industry would continue to experience double digit growth

rates for several years to come.16

In terms of value, the Indian bottled water segment is estimated currently at Rs.3000cr

per annum and expected to double within the next seven years. The international

16 Advertising Express. May, 2008. pg 55-58.

S.V.I.M. Kadi 63

players currently see India as the destination with a lot of growth possibility. India is

already the tenth largest bottled water consumer in the world.

A major part of the demand for bottled water stems from out of home consumption by

people on the move, because the quality and safety of drinking water available

otherwise is suspected the fear of contracting water-borne infection prompts many to

go in for bottled water during journey and when one is away from home. Of course,

some also consume bottled water (or high price mineral water in some instance) as a

style statement.

In part the industry pews its existence to the poor quality of portable Water supplied

by the municipal authorities/water supply boards and further to the inadequate

hygienic standard prevalent in most public eating place, where the water served of

often contaminated. The demand has been further fueled due to increasing income and

changing lifestyle of the urban middle and upper classes of the population. It is also

triggered by advertising and wide –spread distribution of the product.

Bottled water companies earn extraordinary profits

Up to 40% of bottled water comes from the same source as tap water, but is sold back

to consumers at hundreds of times the cost, says the website of the North American

"Think Out side the Bottle" campaign.    Not only is the Coca-Cola but there

thousands of brands in India's $445 million packaged water industry. "Whatever

figures you come across in the bottled water business would be underestimated,"

says Chandra Bhushan, associate director of the New Delhi-based Center for Science

and Environment that campaigns to protect ground water resources. He said

companies earn extraordinary profits by selling water at 10 rupees (24 US cents) or

more per liter after a production cost of 25paise, or 0.25 rupee per liter. The water is

drawn mostly from public sources.    

Not just bottlers are involved. In south India, thousands of fuel trucks converted to be

water carriers sell ground water to households and establishments at about $10 for

5,000 liters. More than 13,000 tankers carry water drawn from farmland surrounding

S.V.I.M. Kadi 64

Chennai, according a social activist R Srinivasan. He estimates a $148 million tanker

industry is cashing in on Chennai's acute water scarcity. The story is replicated

across India, including in New Delhi. 

Proliferation of brand

Bisleri India’s first bottled water brand, was lunched by parle beverages way back in

1967. in continues to be among and top three brands sold in India even today, and is

often used as generic name for referring to bottled water.

We have come a long way since 1967.the demanded for bottled water was extremely

low during the initial years, or rather during the 1990s that the industry really begun

to take off and hundreds of manufacture big and small entered the fray. PepsiCo

lunched Aquafina in 1999; when the industry’s growth curve was at its steepest. Other

multinational such as coca-cola (with its kinley brand) and Nescafe (with pure life)

are also competing for slice of this lucrative and fast-growing market.

The leading packaged drinking water brands in India today include Aquafina, Bisleri,

Ganga, Hello Himalaya, Kinley, Oxirich, Royal Challenge Yes, besides many

regional brands. Parle’s bisleri, coca-cola’s kinley and PepsiCo’s Aquafina are top

three brands and together command the major marker share among the player in the

organize sector the given exhibit present a college showing some prominent brands in

India market.

The bottled water business in India can be categorized into three groups based on

price: premium natural mineral water, natural mineral water and packaged drinking

water. The industry is quite fragmented, with over 1800 bottling plants all over India.

There are more than 200 brands, nearly 80% of which are regional. The small scale

player sell non-branded product in the mofussil market. The regional players operate

plants replete with well/bore wells, osmosis techniques and UV radiation units.

Today bottled water sold in prestigious location such as luxury hotels, reports,

restaurants and air ports. It also available at railway station, in train, at bus station,

and in innumerable small outlets.

S.V.I.M. Kadi 65

Bottled water is sold in small container – the most popular being the 1 liter bottle. It is

also sold in bottles of 2 liter, 1.5 liter and half a liter. It is sold in bulk to institutional

and to caterers in 12, 20, 25 liter package. The institutional segment account for

annual market size of 700-1000cr.

Bisleri has recently launched the “natural mountain water” brand and the company is

quite optimistic about its market penetration. It is also reported the several Indian and

global giants such as consumer goods business of wipro ltd, coca-cola, nestle, and

France’s denote have been in the race for acquiring bisleri. Coca-cola, which acquired

Thumps Up, Limca, Gold Sport, Citra, Rim-Zim and Maaza from Parle, is also in the

fray for Bisleri given its anxiety to build a strong portfolio of non carbonated drinks.

With the entry of big players and possible corporate takeover, the water industry is

slated to post a healthy growth rate. Wipro brought unza holdings ltd. The Singapore-

based is costumer goods market. Coca-cola fully acquired us vitamin water maker

glaceau and its full range of water brands. While tata tea recently bought stake in

Mount Everest mineral water’s Himalaya brand and sold its 30% equity stake in glace

to coca-cola.

According to industry estimates, natural mineral water sell at a premium to bottled

water and command a 9% share of the processed water maker in India. Mount Everest

holds a 75% share of this market. The premium imported players in natural mineral

water are “Evian” from France, San Pellegrino and Perrier.

Driving of growth

The industry’s extraordinary growth is due to the improper municipal water supplies,

debilitating water borne disease such as malaria, and evolved health consciousness of

the people as well as the tremendous tourist traffic. Chennai is one of the main

markets and account for a significant part of India’s packaged water consumption.

According to the industry estimates, 700 thousand liters of water are sold in this city

everyday. Interestingly, the demand for water is the some right round the year. Apart

from domestic and commercial use of packaged water, the Indian railway offers a

S.V.I.M. Kadi 66

huge market. Bottled water brand are here to stay and are going to be on a first growth

track with the entry of the large liquor companies. The UB group has established

around 29 plants all over the country for rolling out the kingfisher brand of packaged

water. Also, SAB miller has launched royal challenge and Hayward’s 5000 brands of

packaged water through more than 40 plants all over India.

Moreover, as result of rising aspirations among consumer on aspects such as quality,

style and taste, and with changing lifestyle, many have graduate to bottled water. Ina

major sift, all these factor including the ease of carrying, and water being served cold,

have become issues for drawing customers’ attention and building brands. Consuming

premium bottled water is now a prestige symbol and is related to the extent of

property in different region. The western region account for 40% of the market and

the eastern region just 10%.the cost of entry and exit is low in industry; one does not

require much equipment to make bottled water.

There are stringent standard for drinking water in many countries, and there are

various gradation as well. India lags far behind in this respect. Since many small-scale

suppliers have entered the business, there serious concern about the safety of the

bottled water is available in the market. It is mandatory that every bottling water plant

obtain a certification of meeting BIS standard before commencing commercial

production. The government withdrew the licenses of eight bottled water units in

2003 since their products were found to contain pesticide-residual, significantly in

excess of the permissible limits. According to the European economic commission

report the maximum residue limit for total pesticides is 0.0005 mg per liter, and

0.0001 mg per liter for single pesticide. India has to yet come out with a compressive

policy on pesticide residue and vector control in drinking water.

Since the most of the bottling plants in the country depend on ground water, one is

often faced with protests from the communities that are dependent on the groundwater

in the vicinity of the bottling plant. Another development is that in some in stance,

farmers have entered the water market, thereby posing a serious thereat to the ground

water levels in agriculturally productive area. When some farmer begins selling their

ground water, it results in excessive extraction, lading to decline in water tables,

thereby affecting agriculture in the surrounding as well. In some part Karnataka, the

S.V.I.M. Kadi 67

farmer have switched from cultivating traditional crops to less-water requiring crops,

for cashing in by selling in surplus ground water.

Inherent Challenges

Around 600 of the 1800 water bottling plants in India are concentrated in Tamil Nadu

alone. Since the state is water starved, this is constraint for the industry. It would be

commendable if the bottling companies can find alternative sources to meet this water

requirement- such as rain water harvesting; or develop a means of recharging the

ground water extracted by them. The water industry draws enormous quantities of

ground water, but a mere 30 paisa per 1000 liter of water, as cess to the government.

Water thus works out to be a super-low cost input by any industry standard. As such,

the water resource ministry has recently recommended that the bottled water and

beverages industry which uses water as basic raw material should pay a far higher

cess than other industries. Further, the cess should bring the cost of ground water

extraction on par with the cost of recycling waste water. Experts opine that the water

bottling business is definitely justified in paying a much higher cess, considering the

enormous damage that the causes to ground water resources.

The confederation of Indian industry (CII) suggested that any industry should be

allowed to extract ground water only if it is sets up an aquifer recharge plant. This

should be monitor by periodic scientific water audits. It should be necessary for large

ground water utilizing industries to undertake treatment and recycling of that waste

water. This would encourage better water cleaning technologies and usage of treated

waste water efficiently as an alternative sources. Public-private-partnership for

recycling ground water, instead of injecting the waste water underground is called for.

The bottled water industry uses PET (polyethylene terephalate) bottles, which are

discarded after single use and thereby add to the solid waste. Plastics being non-bio-

degradable increase consumption of bottled water leads to increased challenge of

waste disposal.

S.V.I.M. Kadi 68

The global water market size is currently estimated at around $350bn per annum. Yet

expert says the industry is “young” and that there is tremendous potential for further

growth. The market potential has attracted many new entrants and has led to fierce

competition. In response the market stalwarts are coming up with new variant such as

flavored vitaminized and herbal water.

India’s bottled water market is very small even when compared to that is country such

as Indonesia, Malaysia and Singapore, where the industry is already worth rs.15000-

20000 cr. At barely 5 liter a year, the per capita consumption of mineral water in India

is even lower- a mere 0.5 with the compared to 111 liter in Europe and 45 liter in the

USA. However, the total annual bottled a water consumption has risen repeatly in

recent time. Distribution is the crucial element for the growth of the industry both for

consumer and institutional sales.

Water is both social as well as economic good providing access to say drinking water

to its citizens is the responsibility of the state. The High-tech water purifier and

bottled water can not reached the majority of Indian population. When the vast

majority does not have ready and adequate access to even raw water for household

needs, it also stands out as an ethical and moral question as to how far we can

encourage the bottled water industry. As some element of it stand out as money

frustration of conspicuous consumption, at the cost of low cost water for the masses

and for the agriculturists.

Affordable and safe portable water for the masses in the need of the hour. By

achieving better cost efficiencies in production, packaging and distribution even

bottled water can be priced far lower than it is today. For example, bottled water sold

to institutional buyer reusable 25 liters canisters, is priced at just at Rs. 1 per liter as

against Rs. 10 for a liter of the same water sold in a PET bottle. In Chennai, a

company called TEAM sells water in plastic pouches at very low price even with

existing system, the cost composition suggest that there is significant scope of

reduction of price if the inventory holding cost can be reduced, i.e. the trader margins

can be reduced drastically, if the inventory can turn over much faster. A reverse

distribution system for collecting and recycling the used bottles can reduce the

S.V.I.M. Kadi 69

problem of solid waste industry achieves a healthy growth without depleting the

ground water resources and causing environmental damage?

Major Players in Indian bottle water

Parle's Bisleri

Coca Cola with its brand Kinley

PepsiCo with its brand AquaFina

Manikchand with its brand Oxyrich

K.K.Beverages with its brand Kingfisher

India had the world's third largest GDP - $4.02 trillion (PPP) in 2006-07 - which is

touched to reach $27 trillion by 2050, becoming the third largest economy after China

and the USA. Given the scenario, boom times are ahead for packaged water (or

treated water).17

Bottled water or the packaged water category, estimated to be over Rs 1,600 crore

(which according to the Bureau of Indian Standards are more than 1,800 in number),

is "witnessing an unprecedented amount of action."

In other words, domestic companies Parle, United Breweries, Tatas, DS Foods and

multinationals PepsiCo and Coca-Cola, the world's largest aerated drinks maker, are

all "battling for leadership" in the rapidly growing packaged water market in India. As

things stand, food and beverages (not to speak of tobacco) account for the largest

consumption categories (40%) in India, which has emerged as one of the fastest

growing economies in the world with about 8% annual GDP growth.

Bisleri (the current market leader) was the first-of-its-kind packaged water brand in

the country when it was launched in 1967. It has now made a foray into packaged

natural spring water, a category which has been witnessing exponential growth, in

double digit figures, over the past couple of years. Dr Krishna also noted that India

17 Indian economy review 2007-08

S.V.I.M. Kadi 70

was the first market outside the US to have PepsiCo's Aquafina launched in 1999

when the market was just beginning to grow.

This summer, Coca-Cola's $4.1 bn global acquisition of the US-based vitamin water

brand Glaceau (formally known as Energy Brands Inc) to expand its non-carbonated

beverage line made headlines, even as the Tata group which agreed to sell its 30%

stake to Coke by the year end, had cash registers ringing with its acquisition of

mineral water brand, Himalayan. In June this year, Tata Tea acquired the Mount

Everest Mineral Water Company that manufactures the Himalayan brand of spring

water ( a 44% stake for Rs 210 crore), making it the largest acquisition of a packaged

water firm in the domestic market.

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 - tripling between 1999

and 2004 - from about 1.5 billion litres to five billion litres.

The rise of the Indian bottled water industry commenced with the economic

liberalization process in 1991. “The market was virtually stagnant until 1991, when

the demand for bottled water was less than two million cases a year. Since 1991-1992,

it has not looked back, and the demand in 2004-05 was a staggering 82 million cases."

Bottled water is sold in a variety of packages: pouches and glasses, 330 ml bottles,

500 ml bottles, one and 5-litre bottles and even 20-50-litre bulk water packs. The

bottled water business is 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 such imported brands as Evian, San

Pellegrino and Perrier, which are priced between Rs 80 and Rs110 a litre. Natural

mineral water brands like Himalayan and the indigenous Catch brand owned by DS

Foods Ltd are priced around Rs 20 a litre. Packaged drinking water is the biggest

segment and includes brands such as Parle Bisleri, Coca-Cola's Kinley and PepsiCo's

Aquafina which are priced in the range of Rs10-12 a liter.

S.V.I.M. Kadi 71

Player Market share

Parle- Bisleri 40%

Coca cola- Kinley 24%

PepsiCo- Aquafina 11%

Other 25%

As per market estimates, Parle's Bisleri has held on to its 40% market share even as

Kinley and Aquafina "are fast catching up". Aquafina has approximately 10%. The

rest, including the smaller players, have 20-25% of the market share.

Coca-Cola India which has captured 20 -25 % share of the packaged mineral water

category with its brand Kinley, is all set to enter the flavored and sparkling water

segment that was, till recently, the domain of Catch.

With the opening up of the non-carbonated beverages market, Dr Krishna predicts

that the flavored water market is going to witness the largest influx of capital. Gearing

up for the market, Bisleri plans to introduce its range of flavored waters shortly.

PepsiCo is also considering the possibility of introducing flavored water in the Indian

market given the consumer's increasing discomfort with carbonated drinks.

As regards the retail industry, Double-digit growth was expected of the current retail

sector, which was in the region of $300 billion. Organized Indian retail sales were set

to grow at 38% CAGR (Compound Annual Growth Rate) and reach $35 billion

alongside $130 billion investment in infrastructure by the year 2010. Supermarkets

have increased their share of the food and grocery trade in the last five years. The

annual growth of department stores is 24% which is faster than overall retail. There

has also been an explosion of shopping malls - as many as 150 new shopping malls

will be set up by 2008.

Indian middle class was "characterized by disposable incomes set to increase at an

average of 8.5% per annum till 2015. The consumption splurge and additional

purchasing power were due to the increase in working women and wealth creating

industries, e.g. software/ telecom/ BP

S.V.I.M. Kadi 72

In another important development, the big retailers have begun to target the hidden

consumption power in the rural areas.

With an "enabling credit environment, increasing comfort in borrowing (increase in

credit cards, personal loans) and easy availability of finance (low EMIs) private

consumption was growing at 10% and spending on discretionary items (non basic)

increasing at an average of 9%; food, beverages and tobacco constituted the largest

consumption categories (40%).

To take advantage of this new brand consciousness, more and more elite and premium

brands have been entering or getting set to enter the Indian market

The all-India market for packaged water is about 145 million growing at rate of 40%

per annum although now only 5% of total beverage market, branded bottled, water is

the fastest growing beverage industry Over 500 brands prevalent in the water segment

The out break of water-bome disease, erratic municipal supplier and health

consciousness have all contributed to the growth of industry. Total market size of the

bottled water is Rs.2000crore, of this around Rs.1700crore is in the hand of

organization sector and the rest is with unorganized sector.

After fighting a pitched battle for market share in the carbonated drinks sector,

PepsiCo India and Coca Cola India are now shifting their attention to packaged water

business in India.

For starters, PepsiCo India is revamping its packaging and communication strategy to

promote its brand Aquafina, while Coca-Cola is beefing up its operations to pump up

volumes.

Meanwhile, Amul is reconsidering its foray into the packaged water business in

Gujarat On the company’s strategy, Homi Battiwala, vice-president (emerging

categories) PepsiCo India said, “We are introducing ‘Aquafina’ (500 ml) in a brand

S.V.I.M. Kadi 73

new pack with translucent labels. To announce the news, we are launching a mass

media campaign titled ‘Go’.”

“Created by JWT India, PepsiCo’s new ad campaign highlights the ‘convenience

factor’ in its communications. PepsiCo’s arch rival Coca-Cola is also harping on the

convenience factor of Kinley to woo new consumers.

“According to a spokesperson from Coca-Cola India, “Kinley finds a special appeal

amongst consumers who have an on the ‘Go lifestyle’, looking for hygienic and

trustworthy drinking water while being on the move.”

A few months ago, Coca-Cola India has introduced its premium mineral-enriched

product ‘Schweppes Water’ in 45 select locations across Mumbai. On the other hand,

PepsiCo India is planning to launch its own enhanced water products under the brand

name ‘Aquafina’.

According to industry sources, PepsiCo is planning to introduce its global enhanced

water brands in India-to reach out to a wider target audience. Currently, Pepsi's global

brands in the enhanced water category include, Sobe, Aquafina Alive and Propel. 18

When contacted Battiwala said, “We are investigating the opportunities for enhanced

water brands in India.”

However, he was reluctant to reveal further details on the company’s new launches.

As for Coke’s foray into the enhanced water sector in India, the company

spokesperson said, “In keeping with consumer preferences and needs, Coca-Cola in

India is continuously evaluating all its offerings within its product portfolio. However

currently there are no plans to launch Glaceau in India.” Competition seems to be

really hotting up in the cool packaged water business in India.

India18 Review of PepsiCo

S.V.I.M. Kadi 74

India is one of the biggest and most attractive water markets in the world. The boom

time for Indian bottled water industry is to continue- 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.

Most multi-national (MNC) companies view India as the next big market with a lot of

potential and growth possibility. Several MNCs are waiting in the wings to expand a $

287 billion global water market into India. There is a huge market being exploited by

the packaged water industry, and it's growing at 40% per annum.

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. There are investments worthy mid-cap companies in this segment.

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 ground water realities

Industry sources estimate that the total Indian water market is worth more than $1

billion - consisting of approximately one-third for water provisioning, one-third for

municipal water treatment and one-third for industrial water treatment. The overall

water market is growing at 15-20 percent per annum.

S.V.I.M. Kadi 75

In just 50 years a water-rich nation has been reduced to a water-insecure one. By

2025, the per capita availability of water is likely to slip below the critical mark of

1,000 cubic meters. And with 82% of our villages overdrawing groundwater to meet

their needs and cities ferrying water from peri-urban areas, the country is close to

exhausting its groundwater reserves.

India has 16 percent of the world's population, 2.5 percent of the land mass and 4

percent of the world's water resources. These limited water resources are depleting

rapidly while the demands on them are increasing. Drinking water supplies in many

parts of India are intermittent. Transmission and distribution networks for water are

generally old and badly maintained, and as a result, are deteriorating.

Corporate control over water and water distribution in India is growing rapidly: the

packaged water business is worth $250 million, and it's growing at a huge 40-50%

annually. Around 1,200 bottling plants and 100 brands of packaged water across the

country are battling over the market, overdrawing groundwater, and robbing local

communities of their water resources and livelihoods.

Genie is out of the bottle

India is the tenth largest bottled water consumer in the world. Today it is one of

India's fastest growing industrial sectors. The rise of the Indian bottled water industry

began with the economic liberalization 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 per capita bottled water consumption in the country is still quite low - less than

five liters a year as compared to the global average of 24 liters. 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 liters to five billion liters. 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.

S.V.I.M. Kadi 76

Indeed, the bottled water industry is one of the most thriving sectors in India.

According to another section of market observers, the market is growing at a

whopping rate of about 55 percent annually. Though exact figures are not available,

the market is growing for sure. Even though it accounts for only 5 percent of the total

beverage market in India, branded bottled water is the fastest growing industry in the

beverage sector.

Bottled water is still not perceived as a product for masses though; the scene is

changing slowly thanks to low pricing and aggressive marketing strategies adopted by

new entrants. Some surveys show that truck drivers on highways form a major chunk

of bottled water drinkers. Penetration in rural areas is another significant factor that is

likely to play a key role in the development of the bottled water trade.

Bottled water is sold in a variety of packages: pouches and glasses, 330 ml bottles,

500 ml bottles, one-liter bottles and even 20- to 50-litre bulk water packs. 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. 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.

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. However, the bottling plants are concentrated in the southern

region - of the approximately 1,200 bottling water plants in India, 600 are in Tamil

Nadu. This is a major problem because southern India, especially Tamil Nadu, is

water starved.

The majority of the bottling plants - whether they produce bottled water or soft drinks

- are dependent on groundwater. They create huge water stress in the areas where they

operate because groundwater is also the main source - in most places the only source -

of drinking water in India. This has created huge conflict between the community and

the bottling plants.

S.V.I.M. Kadi 77

The branded bottles

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. While the single largest share in the mineral water market might still

belong to an Indian brand -- Parle's $52 million Bisleri brand has a 40 percent share --

multi-national corporations are not far behind. Nestle and Danone are vying to

purchase Bisleri, and Pepsi's Aquafina and Coke's Kinley brands have been extremely

successful in edging out many of the small and medium players to buy-outs and

exclusive licensing deals.

Kinley and Aquafina are fast catching up, with Kinley holding 20-25 per cent of the

market and Aquafina approximately 11 per cent. The rest, including the smaller

players, have 20-25 per cent of the market share. News reports indicate that other

MNCs like Unilever are also eying the market.

Currently, Kinley is being manufactured in 15 bottling plants across the country and

according to Coca-Cola India President Alex von Behr, Coke had invested nearly $1

billion in India between entering the market in 1993 and December 2001. Behr says

that Coke expects a significant portion of our turnover to be accounted by pure water

business.

Almost all major national and international brands have taken a plunge. Parle's Bisleri

that virtually monopolized the bottled water market is now vying with Nestle, Coca

Cola, PepsiCo, Manikchand, UB and Britannia. According to a national-level study,

there are close to 200 bottled water brands in India. Nearly 80 per cent of these are

local brands.

Premium natural mineral water includes brands such as Evian, San Pelligrino and

Perrier, which are imported and priced between $2 - 2.5 a litre. Natural mineral water,

with brands such as Himalayan and Catch, is priced around 40 cents a liter.

The Indian bottled water market, which has more than 250 brands, is expected to

undergo a major consolidation phase, and the need for standards and regulations is of

S.V.I.M. Kadi 78

great importance, according to Ita Thaher, Secretary General of the Asian Bottle

Water Association (ABWA). She said that the Indian bottled water market is valued at

more than $250 million and is growing at a rate of 60 per cent.

The major growth in packaged water, however, was in the bulk water segment.

According to estimates, bulk water packs of 20 liters, targeted at the institutional and

home segments, grew at a rate of 30-40% in 2002 alone. Bisleri re-invented its 20-

litre jumbo home pack, fitted with a spout, to acquire a more 'consumer-friendly'

image.

According to industry estimates, the main consumers of packaged water are no longer

restricted to the upper class but include middle class and lower-middle class families

as well. The 'rural' market is currently dominated by tourists and travelers; packaged

water is now beginning to be seen as an essential appendage to any form of travel.

S.V.I.M. Kadi 79

Cost Of one liter bottled water

Cap Cost Rs.0.25

Bottled Cost Rs.1.50 to 2.50

Label Cost Rs.0.15 to 0.25

Other Cost: - Treatment Cost- Rs.0.10 to 0.25, Carton Cost- Rs.0.50, Transportation cost- Rs.0.10 to 0.25, Others [tape and cases] - Rs.0.25,

Total Cost [Excluding Labour, marketing and tax] - Rs.2.85 to 4.25, Selling Cost - Rs.10.0 to 12.0

(Source: - http://www.hinduonnet.com/fline/fl2307/stories/20060421006702300.htm)

Bottle water packages: -

Variety of packages: - Bottled water is sold in a variety of packages: pouches and

glasses, 330 ml bottles, 500 ml bottles, one- litre bottles and even 20- to 50-litre bulk

water packs. 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. 

S.V.I.M. Kadi 80

The government apathy: In April 2002, the government of India announced a new

water policy based on privatization. The social activists allege that this policy was

shaped entirely by the World Bank recipes for the water sector.

In comparison to global standards India's bottled water segment is largely

unregulated. Safe water is rated with a different yardstick in different countries. In

India, the aspect has been overlooked for long. Indian consumers tend to believe that

any bottled water is safe water. This may not be the case.

Several small players have entered the trade in India to capitalize on the craze, with

no check on them. Some serious doubts have been raised about the safety of so-called

bottled water available. There has hardly been an involvement of any statutory body

in defining specific standards. The Bureau of Indian Standards (BIS) has just recently

got involved in the process.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has

proposed expediting setting up of Water Regulatory Authority, urging the Planning

Commission to build a strong case for its creation to the government. The Chamber's

proposal which will be submitted to the Deputy Chairman, Planning Commission, Dr.

Montek Singh Ahluwalia by its President, Anil K. Agarwal, stresses that water is

crucial and hardly any good job is being done in this area. As only a third of country

are under irrigation with assured canal water or ground water supplies. Maintenance

of irrigation system is poor which is partly because water tariff are very low and do

not cover the costs of tariff and maintenance, said the Chamber proposal.

Turbulent future

India faces a turbulent water future. Unless water management practices are changed -

and changed soon - India will face a severe water crisis within the next two decades

and will have neither the cash to build new infrastructure nor the water needed by its

growing economy and rising population.

S.V.I.M. Kadi 81

World Bank draft report, `India's Water Economy: Bracing for a Turbulent Future,'

says by 2020, India's demand for water will exceed all sources of supply unless the

country's management practices are changed, and soon.

Climate change projections show that India's water problems are only likely to

worsen. With more rain expected to fall in fewer days and the rapid melting of

glaciers - especially in the western Himalayas - India will need to gear up to tackle the

increasing incidence of both droughts and floods.

India can still store only relatively small quantities of its fickle rainfall. Whereas arid

rich countries (such as the United States and Australia) have built over 5,000 cubic

meters of water storage per capita, and China can store about 1,000 cubic meters per

capita, India's dams can store only 200 cubic meters per person. Moreover, India can

store only about 30 days of rainfall, compared to 900 days in major river basins in

arid areas of developed countries.

A water thirsty country

According to a document recently published by the Delhi office of the international

NGO, Water Aid, even if this target is reached within a decade, as the UN seeks to do,

"29% of the rural population, or 244 million people, and 23% of the urban population,

or 90 million people, would still lack access to adequate safe, sustainable water".

Another estimate shows almost the same figure. The projected increase in population

by the year 2025 indicates that the per capita availability of water is likely to slip

below the critical mark of 1,000 cubic meters. Though projections vary India's

population by 2050 will in all probability balance between the low variant of 1,345

million people and the high variant of 1,581 million people.

The fact that most of this population growth will be accounted for by urban areas will

add to the existing water crisis in the cities. By 2050, 48% to 61% of India's

population will be living in urban areas.

S.V.I.M. Kadi 82

Even if the middle variant of 55% is taken into consideration, 800 million out of the

projected total population of 1,450 million will be in urban areas, adding an

unprecedented 500 million people to the present urban population of 309 million.

While rural water demand is assessed on an allocation of 40 liters per capita per day

(lpcd), the corresponding urban demand is against a norm of 135 lpcd. A population

shift means additional demand on already shrinking urban water resources.

Massive investments needed

Estimates reveal that by 2020, India's demand for water will exceed all sources of

supply. Notwithstanding the catastrophic consequences of indiscriminate pumping of

groundwater, government actions - including the provision of free power - have

exacerbated rather than addressed the problem.

In just 50 years a water-rich nation has been reduced to a water-insecure one. By

2025, the per capita availability of water is likely to slip below the critical mark of

1,000 cubic meters.

There is clearly an urgent need for action. First, India needs a lot more water

infrastructure. Compared to other semi-arid countries, India can store relatively small

quantities of its fickle rainfall. Whereas India's dams can store only 200cu.m.of water

per person, other middle-income countries like China, South Africa, and Mexico can

store about 1000cu.m Per-capita. New infrastructure needs to be built especially in

underserved areas such as the water-rich northeast of the country where investments

can transform water from a curse to a blessing. The country needs to invest in water

infrastructure at all levels - from large multipurpose water projects to small

community watershed management and rainwater harvesting projects.

The government is increasingly dependent on aid for water infrastructure projects

from institutions like the World Bank. As liberalization and free markets are the

guiding principles of these agencies, they are pushing full cost recovery and reduced

public control. This is shifting the flashpoint for water conflicts from agrarian basins

S.V.I.M. Kadi 83

and rural areas to the cities, where the battle is on for the control and management of

municipal water supplies.

MNC manufacturers of water and wastewater treatment equipment either have a

presence in India or have ensured that their products are easily available in India now.

Canadian companies are eyeing the Indian water market keenly. Canada's companies

have expertise in disinfection, non-chemical treatment, membrane technology and

clean environment technologies. They are also strong in lake water management and

municipal water supply systems. The Netherlands has technical leadership in

activated carbon treatment technology, membrane technology and wastewater

treatment.

According to industry sources, PepsiCo is planning to introduce its global enhanced

water brands in India-to reach out to a wider target audience. Currently, Pepsi's global

brands in the enhanced water category include, Sobe, Aquafina Alive and Propel.

The packaged drinking water market in India is huge and growing. On account of the

dominant presence of unorganized regional players in the market, estimates for the

actual size of this segment vary. However, it is believed that the domestic bottled

water industry is around Rs.1500 to Rs.1800 crore in size and growing at the rate of

around 40% per annum. This is way ahead of the growth rate of 7.6% reported for

global market as a whole in 2006. The domestic demand has increased from 2 million

cases in 1990 to an estimated 68 million cases by 2006. In fact, India is estimated to

be the 10th largest bottled water consumer in the world. Market experts disclose that

there are more than 1,800 water brands in India, of which most are local and regional

brands that are often classified under the unorganized sector. The key brands in the

organized sector include Bisleri (Parle), Kinley (Coca-Cola), Oxyrich (Manikchand),

Aquafina (Pepsi Foods), etc.

S.V.I.M. Kadi 84

1) PEPSICO

Pepsi has AquaFina brand of mineral water in the market. The company entered into

bottled water business in September '99 the company has targeted its product towards

youth segment and has so far focuses only on one size of the PET bottle, that too

750ml. Though the company is present only in selected market as of now, it has plans

of increasing share in the market by expanding its PET bottles portfolio as well as

distribution reach.

2) COCA-COLA

The company has entered in the business in May'00 through its brand, Kinley. The

Kinley brand is already being used for its soda water. The company has tied up with

Kothari Beverages, of Yes brand of mineral water, for manufacturing coke's brand at

Yes facilities.

3) BISLERI

The brand is a product of Parle International and presently is the market leader with

more than 38% market share. The company pioneered the concept of bottled water in

the Indian market as early as 1967. The company is also credited with SKUs of

500ml, 1.2lts, 1.5its and 2 Liters in the Indian market..

Other players in the market with strong regional presence are: Brilliant, Yes, Hello,

Purette, Fountain, Himalayan, Golden Eagle, Prime, Pure Natural Aqua, Ganga,

Florida, Metro etc.

4) HIMALAYAN

Mount Everest Mineral Water Limited is a public limited company incorporated in

1991 with its plant at Dhaula Kuan in Sirmour District of Himachal Pradesh. The

company's plant is utilized to bottle natural mineral water under the brand name

HIMALAYAN together with inhouse facility to manufacture food grade PET Bottles

and tamper proof caps. Himalayan natural mineral water is available in six pack sizes

namely, 2 ltr, 1.5 ltr, 1 ltr, 750 ml, 500 ml, and 200 ml.

S.V.I.M. Kadi 85

The water is sourced from a large pristine and protected acquifer, which flows well

below the earth’s surface. The water is collected in the catchment area and travels

through rocks, clay and soil, thereby collecting the minerals available therein. The

process of traveling from the catchment area, reaching the acquifer and then being

bottled takes a period of over 20 years. The acquifer has a recharge capacity of 1

billion litres every year.

The Tata group, through Tata Tea, have acquired 31.73% holding in the Company

partly by purchase of shares from the investors, who had bought the shares from Dr.

Balsara in 2001, and partly by preferential allotment.Tata Tea, being the single largest

shareholder of the company, and with the management being firmly with the Tata

group, the company is now A TATA Enterprise.

Different company Ranking

Ranking of the samples (Bottles)

Sr.

No.

Name of

sample

pH

(6.5-7.50)Rank TDS<500mg/L Rank

Chlorides

<200 mg/LRank

sum of

Ranks

Final

Ranks

1 Bisleri 7.2 3 34.66 3 22.23 5 11 I

2 Kinley 7.6 6 28.9 2 18.56 3 11 I

3 Yes 7.8 7 55.4 5 14.65 1 13 III

4 McDowells 7 1 68.78 7 56.62 10 18 VI

5 Bailley 6.9 2 76.54 8 42.39 6 16 V

6 Gallons 7.4 5 146.78 9 56.21 9 23 V

7 Oxyrich 7.2 3 24.49 1 45.89 7 11 I

8 Oxyfina 7.3 4 47.87 6 16.48 2 12 II

9 Aquafine 7.6 6 35.67 4 21.53 4 14 IV

10 Cheers 8 8 268.56 10 54.22 8 28 VII

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.

S.V.I.M. Kadi 86

Brand wise information

Aquafina

Aquafina

Type Water Beverage

Manufacturer PepsiCo, Inc.

Country of origin United States

Introduced 1994

Water Analysis

*(Mg/l=milligrams per liter)

*(PP/l=pints per liter)

Aquafina is a brand of bottled water. It was first distributed in Wichita, Kansas in

1994, and was distributed across the United States, Canada, Turkey, Saudi Arabia,

Vietnam, Pakistan and India. As of 2003, it had become the United States' top-selling

bottled water brand in measured retail channels. Aquafina is sold in 12-fluid ounce,

500-milliliter (16.9 fl oz), 20-ounce, 24-ounce, 1-liter, and 1.5-liter bottles. Aquafina

uses PepsiCo's own seven-step purification system, which it calls HydRO-7, which

includes charcoal filtration, reverse osmosis, and ozonation. PepsiCo states in

marketing material that this system removes substances that may be in other brands of

bottled water. As of July 27, 2007, PepsiCo put a disclaimer stating the water comes

from a "public source" on each bottle. Aquafina uses the term "Purified Drinking

S.V.I.M. Kadi

700 Anderson Hill Rd

Purchase, NY 10577

Tel: 914 253 2000

Website: www.aquafina.com

President/CEO: Steve Reinemund

(chairman)

87

Water" on its label. In Canada the current 1.5 L bottle of water displays

"Demineralized Treated Water". Michelle Naughton, a Pepsi-Cola North America

spokeswoman said, "If this helps clarify the fact that the water originates from public

sources, then it's a reasonable thing to do." 19

Innovations: Aquafina is available in 20-ounce, 24-ounce, 1-liter and 1.5 liter PET

bottles. Aquafina also produced a non-caloric carbonated product, Aquafina

Sparkling, in two flavors, Citrus Twist and Berry Burst. Aquafina Flavor Splash is a

sweetened beverage using various flavors and Splenda(r).

Distribution: Available throughout the United States and selected countries

overseas.

Alliances: Carolina Panthers, Arizona Diamondbacks, PGA (Professional Golfer's

Association), and official bottled water of Atlantic Coast Conference.

PepsiCo produces several other products under the Aquafina label:

Aquafina Sparkling, carbonated flavored water, available in Berry Blast

(Raspberry), and Citrus Twist

Aquafina FlavorSplash, flavored water (without carbonation), and artificially

sweetened with Sucralose, available in Grape, Citrus Blend, Wild Berry, and

Raspberry.

Aquafina Alive, a low calorie, vitamin-enhanced water beverage, available in

Berry Pomegranate, Peach Mango and Orange Lime.

Aquafina plus+, a low calorie (120 calories per 591mL bottle), vitamin

supplement water beverage available in "Blackberry Grape", "Pomegranate

Cherry","Passionfruit Citrus" and "Orange Tangerine".

Hyderabad: Pepsi today entered a new business segment with the launch of Aquafina

Bulk Water. Venturing into the new business, Pepsi unveiled its premium-quality

19 www.aquafina.com

S.V.I.M. Kadi 88

international bottled water brand Aquafina in 25-litre packs in Hyderabad. Aquafina,

the largest-selling bottled water brand in the US, is being launched in large packs for

the discerning direct-to-home consumer for the first time anywhere in the world.

In line with Pepsi's total commitment to the highest quality standards, Aquafina 25-

litre meets stringent international and national standards for water purity benchmarked

against the new norms for packaged water effective January 2004, says a company

press release.

The Aquafina 25-litre pack uses the most advanced state-of-the-art purification

system in the country. The stringent purification process namely Chlorination, Sand

Filtration, Activated carbon purifier, 5 Micron Polisher, Ultraviolet, Reverse Osmosis,

1 Micron Polisher and Ozonation. Reverse Osmosis (RO), using the best of membrane

technologies, is at the heart of the Aquafina purification process.

Aquafina is also set to establish a unique 'Gold Standard' direct-to-home (DTH)

model in India. Pepsi brings world-class service to the consumer's doorstep with

AquaMan - a deliveryman trained to deliver and provide efficient and hygienic

service to consumers.

PepsiCo is one of the world's largest makers and sellers of waters, sports drinks, juice

and soft drinks. The acquisition of V Water in the UK will create significant

opportunities, and PepsiCo is committed to investing in the V Water brand and

building an exciting future for the company.

PepsiCo (NYSE: PEP) is one of the world's largest food and beverage companies,

with 2007 annual revenues of more than $39 billion. The company employs

approximately 185,000 people worldwide, and its products are sold in approximately

200 countries. Its principal businesses include: Frito-Lay snacks, Pepsi-Cola

beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. The PepsiCo

portfolio includes 18 brands that generate $1 billion or more each in annual retail

sales. PepsiCo's commitment to sustainable growth, defined as Performance with

Purpose, is focused on generating healthy financial returns while giving back to

communities the company serves. This includes meeting consumer needs for a

spectrum of convenient foods and beverages, reducing the company's impact on the

S.V.I.M. Kadi 89

environment through water, energy and packaging initiatives, and supporting its

employees through a diverse and inclusive culture that recruits and retains world-class

talent.

S.V.I.M. Kadi 90

BISLERI

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.

Bisleri Mountain Water:

Bisleri Natural Mountain emanates from a natural spring, located in Uttaranchal and

Himachal nestled in the vast Shivalik Mountain ranges. Lauded as today's 'fountain of

youth', Bisleri Natural Mountain Water resonates with the energy and vibrancy

capable of taking you back to nature. Bisleri Natural Water is bottled in its two plants

in Uttaranchal and Himachal Pradesh

This product is bottled drinking water at its best. Bisleri with added minerals has a

TDS count (total dissolved solids count) of approximately 100. It contains minerals

such as magnesium sulphate and potassium bicarbonate which are essential minerals

for healthy living. They not only maintain the pH balance of the body but also help in

keeping you fit and energetic at all times.

Bisleri with added minerals is also put through multiple stages of purification to

ensure the elimination of all forms of bacteria. This makes the water you drink

completely safe to consume. Bisleri with added minerals is available in 250ml cups,

S.V.I.M. Kadi 91

250ml bottles, 500ml bottles, 1 litre bottles, 1.5 litre bottles, 2 litre bottles and 5 and

20 litre cans.

As a soft drinks company, we had Thums Up, Gold Spot and Limca (cola, orange

drink and lemonade) but no soft drink company was complete without a soda. So we

merely used the name and launched Bisleri soda with two variants -- carbonated and

non-carbonated mineral water.

But three decades ago, what could we say about a category that had no market? We

didn't know our target group. Then, since bottled water is colourless, tasteless and

odourless, it was not an easy product to advertise.

Thus, the earlier brand building efforts focused on Bisleri being healthy with adequate

minerals. The Italian name added a dash of class to it. The first print ad campaign

captured the international essence and showed a butler with a bow tie, holding two

bottles of Bisleri.

The punchline was, "Bisleri is veri veri extraordinari" (the spelling of the punchline

was designed to capture the consumer's attention). The campaign was successful and

we were being noticed as someone who catered to the need for safe, healthy drinking

water.

However, the real boost to mineral water came in the early-to-mid-1980s when we

switched to PVC packaging and later to PET bottles. The PET packaging did not just

ensure better transparency -- we could now show sparkling clear water to the

consumers. It also meant better life for the water.

Meanwhile, Bisleri soda was doing well but we had to discontinue production as we

sold our soft drink brands to Coca-Cola in 1993. But my interest was in building

brands and not in bottling soft drinks. That's when I started to concentrate on

developing the Bisleri water brand.

Initially, though bottled water was something only foreigners and non-resident

Indians consumed, we still had to increase the distribution, which meant the dealer

S.V.I.M. Kadi 92

margins reduced. And because of limited sales, the dealer margin had to be kept high

to compensate low sales. Now we had to push sales.

But to reach out to the masses, we had to make the category more affordable. The

introduction of a comfortable-to-carry 500-ml bottle for just Rs 5 in 1995 not only

answered that need, but also meant doing away with carrying the excess water or

throwing it away if you were to buy a one-litre bottle.

The idea was a success and gave the company a growth of 400 per cent. We also

introduced the 1.2 litre bottle in 2000, which was aimed at those who share their

water. This also gave us the advantage of higher margins that a crate (12 bottles)

generated.

With other brands joining the fray, things were hotting up -- the bottled-water market

was estimated at Rs 300 crore (Rs 3 billion) and was growing at 50 per cent a year.

Bisleri had captured 40 per cent of the market.

We realised it was time to move to the next level -- the bulk segment. Several

commercial establishments had no access to piped water. We tapped into this segment

by introducing the 12-litre container, followed by the 20-litre can. The bulk segment

also helped bring down the price per litre from Rs 10-12 a litre to about Rs 3 a litre.

At present, the bulk segment constitutes 60 to 70 per cent of our sales and we intend

to increase it to 80 per cent in the next two years. With water scarcity in several cities,

even households are demanding bottled water now.

The home pack was made more user-friendly by introducing pouring spouts and jars

with dispensers. At the same time, we were constantly looking for new ways to tap

the market. We noticed that during wedding receptions, the older guests (above 50

years of age) generally stayed away from ice cream, soft drinks and so on.

Hence, we introduced free sampling of Bisleri at the tables where the elderly guests

would sit. Soon customers were ordering bottled water on special occasions.

Currently, the consumption of bottled water is far in excess of soft drinks on such

occasions.

S.V.I.M. Kadi 93

The other major challenge was distribution. I still have the mindset of a soft drink

seller. Soft drink sales are in glass bottles and the distribution model is built around

picking up empty bottles and getting them back to the factory. That's not the case with

the retail bottled water packs (below 2 litre). But a product that's not available where

it's needed, is useless.

The number of outlets where Bisleri is available has increased from 50,000 in 1995 to

2,00,000 at present. But that is not enough -- we need to keep looking for different

avenues. Take stationery shops and chemists, for instance. They don't keep soft drinks

but sell Bisleri. That is the kind of exclusivity we look for to get ahead of the

distribution network that soft drink companies talk of.20

Filteration

Every drop of Bisleri water is purified as per international standards to ensure that

your Bisleri experience always remains pure and satisfying for longer. The following

is a brief understanding of the water treatment process.

CHLORINATION: Kills micro organisms. Remove organic matter.

ARKAL FILTER: Removes suspended matter and turbidity.

CARBON FILTER: Removes residual chlorine & odours

REVERSE OSMOSIS: Removes organic material. Controls total dissolved solids in

the water.

ADDITION OF MINERALS: For the purpose of maintaining a balanced mineral

content

MICRON FILTRATION: Additional safety measures to guarantee purity.

OZONATION: Ensures water remains bacteria free for longer life.

It is our commitment to offer every Indian pure & clean drinking water. Bisleri Water

is put through multiple stages of purification, ozonised & finally packed for

consumption. . Rigorous R&D & stringent quality controls has made us a market

leader in the bottled water segment. Strict hygiene conditions are maintained in all

plants.

20 www.bilseri.com

S.V.I.M. Kadi 94

To maintain strict quality controls in every unit, we not only purchase caps from

approved vendors, we also manufacture our own bottles, in-house. To be at par with

International standards, we have recently procured the latest state-of-the-art

machinery which has not only helped us improve packaging quality but has also

reduced raw material wastage and doubled production capacity.

NEWS

Bisleri has been the first to introduce mineral water to India. For over 30 years, Bisleri

remains the poineers in the bottled water industry with its ever-evolving innovations

and product offerings.

From investing crores into the natural water business to completely revamping the

packaging, Bisleri has always been in the news. Please use the links on the left to read

articles from various publications and view video snippets from news channels.

Bisleri is committed to meeting the needs of its customers across the country. To

effectively service the end consumer Bisleri has been working to continuously

establish fresh bottling and distribution capacities.

S.V.I.M. Kadi 95

Himalayan Natural Spring Water

Langtang National Park

Dhunche 6, Rasuwa, Nepal

Tel: +91 22 26281238

Fax: + 91 22 26371005

Website:

www.himalayanspringwater.com

Email:

minakshirana300@hotmail.com

President/CEO: Mr. K. N. Rana

Water Analysis

*(Mg/l=milligrams per liter)

*(PP/l=pints per liter)

Bicarbonates: 25.8 PPM

Calcium Ion: 1.3 PPM

Fluoride: ND PPM

Magnesium: 0.42 PPM

Potassium: 0.7 PPM

Silica: 3.0 PPM

Sulfates: 0.2 PPM

Sodium: 0.83 PPM

Total Dissolved Solids: 14 PPM *(except TDS which are parts per million)

S.V.I.M. Kadi 96

Company History: Himalayan Natural Spring Water Company (P) Ltd. is a

private limited company established under the company act 2021 in the Company

Registrar's office in the year 2004. This company's production plant is at the foot hills

of the Majestic Langtang Himalayan Range, Langtang Valley at a height of 2,500

meters above sea level. The factory is also confined within the Langtang National

Park where the government of Nepal has controlled access. The best equipments and

technology available are used for the collection of water from the source at a height of

3,000 meters to the production plant. The 13,000 square meter production plant

consists of a state-of-the-art-machinery from renowned machinery manufacturers

including pet bottle manufacturer M/s ASB Nissei, Japan and bottling line from M/s

Ave Industries S.P.A. Italy.

The source and the surrounding:

The rain and the snow falls in the Majestic Langtang Himalayan Ranges at an average

height of 7,000 meters high where there is absolutely no pollution since the beginning

of the planet, turns into icy rocks and glaciers. So every drop of Himalayan Natural

Spring Water is from the rain and the snow falls high in the Himalayan Ranges which

slowly melts and finds it's way filtering through 4,000 meters of Himalayan bedrock.

This wonder of nature was created since the beginning of time as it flows through the

natural purifying filters for more than two decades. The water is insulated from any

external influences by dense layers of protective clay and oozes out as springs at a

height of 3,000 meters in the Langtang National Park within the conversation areas

strictly controlled access and therefore free from environmental pollution.21

Innovations: This is the only type of unique industry which is located at a height of

2,500 meters in order to reach the source and avoid any type of pollution. This

pristine Himalayan natural spring water is packaged in pet bottles in 6 sizes 350 ml,

500 ml, 900 ml, 1 liter, 1.5 liters and 2 liters. This water has already been tested in

USA, Japan, South Korea, Malaysia and India and the concerned governments have

given permission for the sale of water in the respected countries. Interested buyers can

21 www.himalayanspringwater.com

S.V.I.M. Kadi 97

directly contact us and we will inform you the nearest possible distributor to provide

the water. We are seeking for like minded people to join us in this project as

distributors for the world market. As mentioned earlier, this pristine spring water has

been approved by the governments of Japan Food Analysis Center and the FDA from

USA, South Korea, Malaysia and India. Hence we are confident and optimistic that

this pristine water will be approved in all countries and we will be able to serve this

nature's gift all over the world. Himalayan Natural Spring Water is seeking for

importers, distributors, partners, joint ventures, markets all over the globe.

S.V.I.M. Kadi 98

Aava Water

1620 Broadway, Suite B

Santa Monica, CA 90404

Tel: (310)849-4468

Fax: (310)510-6857

Website: www.aavawater.com

Email: dariu@aavah2o.com

President/CEO: Behram Mehta

Water Analysis

*(Mg/l=milligrams per liter)

*(PP/l=pints per liter)

Calcium Ion: 19.64 Mg/l

Fluoride: 0.87 Mg/l

Magnesium: 6.40 Mg/l

Sodium: 31.66 Mg/l

Company History: Move over Alps and Himalayas. The worlds oldest mountain, the

Aravallis has surprised the world over with its natural mineral water known as Aava

Water.

Innovations: * 2007 Global Bottled Water Congress Mexico City Award for best

bottle design. Accreditations including: * HACCP * BIS * ISO 9001:2000 * ISO

14001:2004 (Environmental friendly practices)

Distribution: * Currently growing at 400% per annum in South East Asia. * Opening

USA operations 2008 * A confined aquifer capacity of 4.1 billion liters and daily

recharge rate of 3 million liters per day.22

22 www.aavawater.com

S.V.I.M. Kadi 99

Kinley

Asia wideBrand Name: Kinley

Drink Type: Water

Kinley: Kinley is a high quality bottled

water processed with added minerals

popular among adults who seek a better

quality of life and a healthy lifestyle.

Available in the following flavor:

Unflavored.

Available in the following locations:

Afghanistan, India, Maldives and

Pakistan.

World wide Brand Name: Coca-Cola

Drink Type: Soft Drink

Coca-Cola: Coca-Cola is the most popular and biggest-selling soft drink in history, as

well as the best-known product in the world. Created in Atlanta, Georgia, by Dr. John

S. Pemberton, Coca-Cola was first offered as a fountain beverage by mixing Coca-

Cola syrup with carbonated water. Coca-Cola was introduced in 1886, patented in

1887, registered as a trademark in 1893 and by 1895 it was being sold in every state

and territory in the United States. In 1899, The Coca-Cola Company began franchised

bottling operations in the United States. Coca-Cola might owe its origins to the United

States, but its popularity has made it truly universal. Today, you can find Coca-Cola

in virtually every part of the world.

S.V.I.M. Kadi 100

Available in the following flavors: Cola, Cola Green Tea, Cola Lemon, Cola Lemon

Lime, Cola Lime, Cola Orange and Cola Raspberry.

Coca-Cola Quality System

The Coca-Cola Quality System (TCCQS) is our branded quality management system.

Developed by a global, cross-functional team and endorsed by senior management of

The Coca-Cola Company along with our top bottling partners, it is the framework

around which the Coca-Cola system coordinates and guides its activities, drives

continuous improvement and relentlessly strives for quality in everything we do.

This third evolution of TCCQS supports the four principles of our corporate

citizenship framework -- providing quality in the marketplace, enriching the

workplace, strengthening the community and preserving the environment. The quality

system reflects our integrated approach to managing quality, the environment, and

health and safety.

In the United States, bottled water and tap water are regulated by two different

agencies; the FDA regulates bottled water and the U.S. Environmental Protection

Agency (EPA) regulates tap water. Most of the water used to make DASANI® comes

from water utilities which must meet EPA regulations. 23

The FDA regulates food products, including bottled water. Food manufacturers are

responsible for producing safe, wholesome and truthfully labeled food products. The

FDA has established numerous regulations for bottled water including Good

Manufacturing Practices, quality standards, and definitions of the types of bottled

water. By law, FDA bottled water quality standards must be at least as stringent and

protective of health standards as EPA tap water standards.

To demonstrate compliance with FDA's bottled water standards, The Coca-Cola

Company periodically analyzes DASANI to ensure that our consumers are receiving

safe and purified water of the highest quality.

23 www.cocacola.com

S.V.I.M. Kadi 101

Manikchand

Brand Name : Oxyrich

About Manikchand

Dhariwal Industries Ltd - Food & Beverages

division has one of the most modern and comprehensive packaged drinking water

facilities spread across India. The facilities are fully integrated with in house facilities

for manufacturing of Preforms, Closures/Caps and Bottle Blowing. The labels and

cartons are also made in the group companies to ensure total control on quality and

processes.

In a short time we have established ourselves across the length and breadth of India.

Our plants are spread over the western, southern and northern regions.

We are continuously expanding our existing facilities and setting up newer plants at

various locations. Our bottling capacities are not only the most modern but also

amongst the largest too. We have existing capacity to bottle over 3.6 crore liters a

year (360 lakh bottles of 1 liter each).

A philosophy, a pinnacle of success

The Manikchand Group is not just a multi product dynamic corporate with a global

presence. It is not just a trendsetter in every sphere it is present in. It is not just

another name for innovation.

What Manikchand really stands for is a philosophy that filters down to every aspect of

its operations. A philosophy that reflects in every product, every endeavor, every act.

The philosophy is strikingly simple, embrace excellence every day. 

A true Indian FMCG, Manikchand’s ever-expanding product portfolio consists of Pan

Masala, Tobacco Products, Mouth Freshners, Electrical Switches, Offset Printing,

Flexible Packing, Real Estate and Construction, Wind Farms, Packaged Drinking

S.V.I.M. Kadi 102

Water, Tea and Match Boxes. The Group’s infrastructure is spread across Pune,

Mumbai, Bangalore, Hyderabad, Vadodara and Tinsukia in Assam. Over and above

we have an extensive nationwide network of franchisees, distributors and consignee

agents.

Across products, across locations, across markets, spread over 50 countries, there is

only one name that embodies Oonche Log, Oonchi Pasand - Manikchand.

The Pinnacle of glory

Manikchand Group was established over six decades ago with the singular vision of

achieving absolute leadership through continuous excellence and steadfast

commitment. Today, with a business that encompasses 12 industries, and presence

across three continents, the Group has manifested this vision, and is poised to soar

even higher.

Our business ventures include the revolutionary to the trendsetting; the innovative to

the ingenious. The Group has leadership position across the industries with one of the

widest and varied port folios in the industry.

The Manikchand Galaxy – our range of products and service : 

Tobacco,Pan Masala and Mouth Freshners

Electric Switches          

Flexible Packaging

Packaged Drinking Water

Real estate & Constructions

Wind Farms

Offset Printing

Flour Mills

S.V.I.M. Kadi 103

Oxyrich Products  

  200 ml

  500 ml

  1 ltr

  1.5 ltrs

  2 ltrs

Water at its purest - yet another quality product from Manikchand. Taral is one of the

purest packaged drinking waters, being processed with multi-stage purification

processes which include:

Sand Filter

Activated Carbon Filter (ACF)

Ultraviolet Disinfection (UV)

Ultra Filtration

Reverse Osmosis

Ozonisation

S.V.I.M. Kadi

20 ltrs 

104

Evolution

After carrying out a detailed survey of Bottled Water in India, it was

realized that the Bottled Water market in India was growing at a

phenomenal pace; as consumer awareness for pure and safe drinking

water was increasing day by day and an Indian on the move was

becoming more health conscious than ever before.

Kothari Beverages, another venture of Kothari Group which

manufactures Bottled water under the brand name Yes, was introduced in the year

1994 to cater to the growing need of Indian consumer. The state of art manufacturing

facility at Nadiad (Gujrat) is the India's largest and fully automatic bottled water

manufacturing plant.

1994 Yes was first launched in two major states of western India - Gujrat and

Rajasthan which was catered from our Nadiad factory. It was an instant success

capturing more than 60% of the market share in just a couple of months.

1995 Second plant was commissioned in Northern India at Kanpur, in the state of

Uttar Pradesh in April 1995.

1996 This year witnessed the third plant being commissioned in Southern India at

Bangalore as well as fourth plant at another Northern Indian state - Himachal Pradesh.

1997 In April 1997, we successfully made our fifth bottled water plant operational in

commercial capital of India - at Mumbai.

1997 By this time, Yes bottled water had already gained a national presence and

created its image as one of the leading bottled mineral water brands of India.

S.V.I.M. Kadi 105

To carry the wave of success forward, Kothari Beverages is now poised for rapid

expansion programme. It has already set-up three franchisee owned manufacturing

units at Kathmandu in the neighbouring country of Nepal, Raipur in Madhya Pradesh

(Central India) and also at Jaipur in Rajasthan and has plans to commission five more

manufacturing facilities at Hyderabad, (Ahdhra Pradesh), Tamilnadu, West Bengal,

Assam and Goa by the year 2000 with a combined production capacity to process 1.0

million ltrs of water per day.

Backward Integration

Further, Kothari Beverages while growing in a rapid and  dynamic manner, has also

started backward integration by setting up it's own facility for manufacturing of PET

bottles for bottled water for total in-house consumption.

Diversification

While Kothari Beverages has already created a strong brand in the bottled water

market and also has nurtured  a wide distribution network, it has also started

diversifying   into synergetic consumer products and eatables. Yes has already

successfully launched a wide range of Yes brand Namkeens in Northern India.

Kothari Beverages, is on it's way to become a leading company in the Foods and

Beverages industry in the next millenium.

Yes bottled water comes in a variety of packings.

Glasses Glasses meet the single time need of an individual and are suitable for one

time consumption

Pouches Yes water pouches are similar to glass packing except that these packing are

flexible and the transportation of poches can be done with ease.

Bottles Bottles are suitable for use by family or a group of people. Just right for a

traveller, picnic day and casual get-togethers. Of course the high quality PET bottles

are reusable as well

S.V.I.M. Kadi 106

Bubble top and Matka

This is just the right combo for large regular use. The bubble top is available

in larger quantities of upto 20 liters and the same can be fitted over any

standard water cooling machine.

We also have a special simple water unit called matka. It is similar to a conventional

pitcher with high quality and low cost. This is targetted at common household or

office use.

Packing Size

Pet Bottles 0.5 Ltr 1.0 Ltr 1.5 Ltr

2.0 Ltr

HIPS/PET Glasses 125 ml 200 ml

250 ml

Pouches 200 ml

300 ml

Polycarbonate Bottles 18.0 Ltr

20.0 Ltr

Matka Used with Bubble top

S.V.I.M. Kadi 107

11The bottled water controversy

It is strange that in our country only a scam or a startling negative research finding

seems to gain media and public attention. Poor quality bottled water has been allowed

to be marketed for more than a decade; some 200 brands have mushroomed in the last

five years.

Retail trade, on the railway platform or by the Railways, very often promoted and

marketed the poorest quality bottled water, because many manufacturers were happy

to mark the MRP as Rs 12 or 15, for a one litre bottle, while they sold them to the

retailers at Rs 3 or 4 per litre.

Hence retailers and even some government institutions made the maximum profit and

pushed these low quality brands. Bottled water was often packed in PVC bottles,

known to be injurious to health, and even pouches, in which it is still being sold in

many parts of the country.

It is only two years ago that the health ministry and Bureau of Indian Standards

decided to specify standards for water, and made it mandatory for manufacturers to

mark the BIS certificate number on the labels.

Sadly, even now, brands without BIS certification are being sold on bus stands and in

rural markets. What is worse is the rampant sale of water in pouches in South India

and Gujarat.

If only the consumer could see the dirty rubber pipes from which municipal water is

filled into these pouches, he surely would revolt. The fact that under the very nose of

the government and BIS, water in pouches continues to be sold is most disturbing.

At the time the BIS was being formulated, a few companies marketing international

brands had argued that while they would fully conform to the BIS standards in

quality, as the international brands they marketed had higher quality standards, they

should be exempt from marking the BIS certification number on the bottles, since

they felt brands having higher quality standards should lay claim to this by marking

their labels as 'Pure'.

S.V.I.M. Kadi 108

It must be understood that international companies cannot dilute their brand image or

equity by selling the same brand they market globally at inferior quality standards

here. It would be interesting to establish how many companies market the same

international brand in India.

Aquafina, a Pepsi brand, is probably the largest selling bottled water brand in the US.

In India, exactly the same exacting quality standards had to be adhered to, and the

first batch from each factory was approved by Pepsi headquarters before the Aquafina

brand was allowed to be produced and marketed in India.

Another very important criteria that the BIS or the Ministry of Health must lay down

for selling packaged water, is the minimum equipment required in each factory, the

metal to be used for pipes, and the minimum standards for filling equipment.

This will ensure quality. It is also essential that the quality of packaging material used

be specified, whether it is bottles, cups or pouches. Currently good brands use PET,

and not PVC; this is a must.

BIS is currently evaluating changing the standards of bottled water, this should read

packaged water. It would be beneficial if they engaged in dialogue with international

and national companies, and arrived at the standards used in most developed

countries.

Health authorities in these countries would never allow marketing of water, which is

not totally safe, as this could lead to lawsuits. Purified Water will have quality

standards, different from Natural Spring Water, and the advertising claims must

clearly differentiate between the two.

The main question the government has to respond to is the number of laboratories

with honest scientists it has, to check that packaged water meets the quality standards

for water and the packaging material used.

If the Government cannot enforce these standards and prevent many of the 200 brands

which are sub-standard or allow water sold in cups, or pouches, and cannot ensure

minimum quality equipment to be used in the factories, what is the use of just having

standards and fooling the public?

S.V.I.M. Kadi 109

Companies with brand equity and standards to protect and promote, will invest

heavily to guarantee quality, others who sell by giving high retail margins, will get

away by either taking care of local inspectors, or local laboratories, using their

financial advantage to pervert the 'system'.

The Bottled Water controversy should be put to rest, international quality standards

adopted, and quality brands allowed to claim superiority of quality in their 

advertisements, labels etc.

All claims, as always, must stand scrutiny and be substantiated, and if wrong claims

are made, punishment should follow, however, depriving the consumer of knowledge

of what he is buying is being unfair to him.

Let us quickly close the controversy, get new standards introduced, but most of all, it

is the government that must ensure that only such brands that meet  standards  and

have the minimum factory equipment to meet standards are allowed to be sold; those

producing sub-standard water, or spurious branded water must be heavily penalized.24

24 Review of PepsiCo Chairman, Business Standard

S.V.I.M. Kadi 110

Controversy between for Trade mark “Himalaya”

Bisleri International would like to clarify its stand to the members of the press and the

public at large against the charges levelled by Tata's Mount Everest Mineral Water

Ltd., (ME) on the breach of copyright for use of the Himalayan brand name. Bisleri

International believes that the word Himalaya is a generic name and cannot be used as

a registered trademark.

 

On 17th June, 2008 Mount Everest Mineral Water filed a case in Delhi High Court

for an interim injunction to prevent Bisleri from using the word "Himalaya,

Himalayan". It was a bizarre case, where they had no objection for Bisleri using the

existing label, where it says "from the Himalayas" in one line as against the new label,

yet to start (still under printing) where "from the Himalayas" is written in two lines. It

is strange because there is a distinction being sought between Himalaya, Himalayan

and Himalayas.

 

Mr. Ramesh Chauhan, Chairman and Managing Director, Bisleri International has

questioned the authenticity of the claims saying, "Bisleri had launched its mountain

water 'from the Himalayas' in December 2006. We question the delay in filing an

objection to the authorities. And the second point that comes to my mind is the

company trying to hide its marketing failures, which is the real reason behind the

legal move.

While no final order has been issued, Bisleri and Mt. Everest have come to an interim

arrangement, where Bisleri continues to use the present packaging and label that says

"from the Himalayas" as a descriptive word. As part of the provisional arrangement,

Bisleri has agreed to suspend using the domain www.bislerihimalayan.com. There is

no question of Bisleri trying to or wanting to use the word Himalayan as a Trademark

because Bisleri is the Trademark and is far more recognized and has a tremendous

market value.

 

In December 2007, Bisleri introduced the new packaging of their mountain water

from the plant in Uttaranchal, in the Himalayas. In the month of April 2008, Mt.

Everest Mineral Water Ltd., launched its new packaging of Himalayan in Mumbai

market.

S.V.I.M. Kadi 111

Pesticide in Bottled water

The European Economic Commission directs that the maximum residue limit for total

pesticides is 0.0005 mg per litre, and 0.0001 mg per litre for a single pesticide. These

pesticides include organ chlorines, organ phosphorous, chlorpyrifos, malathion and

DDT, which can cause serious physical impairment ranging from damage to the

central nervous system to various cancers and congenital malformations.

A significant recommendation of the parliamentary committee was the need to

introduce norms to monitor the quality of ordinary drinking water. Such monitoring

would also serve to highlight major sources of contamination of ordinary drinking

water, which is what most people in the country drink.

S.V.I.M. Kadi 112

PEST

S.V.I.M. Kadi 113

PEST Analysis

A scan of the external macro-environment in which the firm operates can be

expressed in terms of the following factors:

Political

Economic

Social

Technological

The acronym PEST (or sometimes rearranged as "STEP") is used to describe a

framework for the analysis of these macroenvironmental factors. A PEST analysis fits

into an overall environmental scan as shown in the following diagram:

    Environmental Scan

          /   \

External Analysis     Internal Analysis    

/                       \  

Macroenvironment  Microenvironment     

|

  P.E.S.T.      

S.V.I.M. Kadi 114

Political Factor: -

Political factors include government regulations and legal issues and define both

formal and informal rules under which the firm must operate. Some examples include:

Norms and Regulation

BIS: Bureau of Indian standards is a premier organization engaged in setting

standards for various products and services. According to BIS, experience chemists

and microbiologists are a must to carry out the tests as per the ISI specification.

ISI: Indian Standard Institution is the former name of BIS but till date ISI is the

MARK given by this organization.

PFA: Governed under Prevention of Food Adulteration Act 1954, this agency

safeguards the interests of the consumers through constant check on the food and

beverage sector.25

FDA A regulated packaged food product

Bottle water adheres to federal and state regulation and standards. At the federal level,

bottle water is regulated as a packaged food product, governed by the U.S. Food and

drug administration. At the state level, bottled water is regulated in various ways,

typically through state environmental, Food or agricultural agencies. IBWA industry

standards are in several cases stricter than both federal and state regulations.

It is compulsory for all the manufacturers who intend to set up the processing unit, to

obtain the ISI mark from Bureau of India Standards.

Unless the inspection is done by the staff, tests carried out in an independent lab and

official confirmation and license number is obtained, unit can’t commence

commercial production.

25 http://www.cfsan.fda.gov/~dms/botwatr.html

S.V.I.M. Kadi 115

Indian bottled water is governed under 2 categories:

1. Packaged Natural Mineral Water [ Under IS: 13428:1998, Amendment 1-5

upto15th October 2004]

2. Packaged drinking water [ Under IS : 14543: 2004 ]26

Implication:- The Govt. has also got into the action by imposing stringent

legislations regarding wastewater treatment. There is also a compulsory requirement

of Environment Clearances from Pollution Control Boards at the Centre and the

states. The recent Supreme Court directive to move polluting units out of Delhi is also

likely to act as an impetus to future sales of water treatment equipment. Also at the

same time, many existing treatment plants would need to be replaced or upgraded to

meet with more stringent standards. This norms directly affect to quality of the water

when norms was liberal at that time people not got quality product but now due to

political interferences all player produce quality product and also norms increase

entry barrier in the industry.

Tax Policy:- Reduction in Excise duty from 16 per cent to 8 per cent.

(Source:Budget: 2008-09)

The Rs 1,600-crore packaged bottled water industry may grow at over 25 per cent

from 2008 after reduction in Excise duty on packaged drinking water will encourage

more regional players to enter the business, thereby fuelling growth in industry

currently dominated by few players like Coca-Cola’s Kinley, Pepsi’s Aquafina and

Bisleri, apart from regional brands.  

This may also result in a reduction in the prices of branded packaged waters by 10-15

per cent from next year. In order to promote clean and hygienic packaged water, the

26 www.bottledwater.web

S.V.I.M. Kadi 116

food processing industry wants VAT to be in the range of 0-4 per cent. The proposal

is meant to encourage regional companies to start bottled water and packaging plants. 

According to an industry estimate, there are over 600 known regional branded water

companies in the country and another 800 firms wish to enter this market at the

regional level. 

 

“Since packaged drinking water fulfills the basic needs of the consumer outside the

house and is an essential item of consumption, the duty should be drastically cut,” CB

Gupta, advisor, Federation of Indian Chamber of Commerce and Industry (Ficci),

said.   

“If the duty is brought down, the Rs 1,600-crore packaged drinking water industry is

expected to go up by 25-50 per cent,” said Samir Barde, director, Confederation of

Indian Food Trade and Industry (Food wing of Ficci). 

Consequence: - By way of taxation, if it will reduce then what happen. There may be

reduction in prices of packaged water. Nowadays, people threaten from psychological

pricing that today people worth bottled water at Rs. 12 and more so, that reduction of

tax will result into 10-15% reduction in price of bottle i.e. people not habitual for

psychological pricing and they are very price conscience.

Also, due to reduction in taxes it helps to bottled water to enter in the growing

industry which results into increase in employment opportunity. Around 800 another

player wishes to enter in regional level.

S.V.I.M. Kadi 117

Environmental Regulations

The Minister for Human Resource Development and Science and Technology, Dr.

Murli Manohar Joshi underlined the need for stringent measures to check

contamination of bottled water.

Expressing concern over the reports of pesticides in bottled water, in a letter to the

Prime Minister, Shri Atal Bihari Vajpayee, Dr. Joshi pointed out that scientists and

experts belonging to his Department have found considerable merit in the findings of

the Centre for Science and Environment (CSE).

The NGO sample survey conducted this year had revealed pesticide residues at

undesirable levels in bottled drinking water and suggested that BIS standards are not

sensitive enough to reveal the level of these residues.

The current standards prescribed by the Bureau of Indian Standards (BIS) for

packaged drinking water and natural mineral water covered under the relevant

Prevention of Food and Adulteration Act are obviously inadequate, he stressed. These

standards are only qualitative and not precise the pesticide residues should be below

detectable limits, when tested in accordance with the relevant methods.

The anti-bottled water arguments made are that, unlike tap water, bottled water uses

up oil and other fossil fuels to be produced and shipped, fills up landfills, represents

wasted money, and does not go through nearly as rigorous filtering and cleansing

processes. However, supporters of bottled water are quick to counter that bottled

water is not simply tap water in a bottle and the oil used is minimal in comparison to

that of general transportation or other packaged foods and beverages. In addition,

bottled water is regulated by the Governed under Prevention of Food Adulteration Act

1954, which requires bottled water to comply with bottled water-specific standards, as

well as regulations required of all food products.

S.V.I.M. Kadi 118

It also takes water to make a bottle. If a container holds 1 litre it requires 3 to 5 litres

of water in its manufacturing process (the higher estimate includes power plant

cooling water). By one estimate the total amount of water used to produce and deliver

one litre bottle of imported water may be as high as 6.74 litres.

In terms of groundwater impact, both withdrawals for the public supply and private

bottled water stock have significantly less impact nationally than irrigation, (the

heaviest user of groundwater at 68 percent), industrial, and farming uses. Only 19

percent of groundwater withdrawals in 2000 were used for public-supply purposes.

Implication:- 40% of bottled water is really just re-packaged tap water.

It takes two minutes to drink a bottle of water, but it takes thousands of years for

that piece of plastic garbage to go away. This will result into environment impact.

Government pressure is to make the product more eco-friendly and also NGO

work for reduce pollution.

Product Labeling Requirement

The labeling of the product should have following provisions & the features

Label should have

customer brand name the name of the product category name and address of the manufacturer net weight or volume the batch number the name of source or place of origin of the product the date of packaging the date of expiry direction for storage treatment for disinfection the license or certification from the concerned authority

Source:- www.ibwa.com )

Implication:- Via this political rules all players provide total detail of product to the customer, because of increase in health consciousness among people. When it is strict then player not cheat with the customer.

S.V.I.M. Kadi 119

Wage legislation- Minimum Wage & Overtime

(Source:-Minimum wage act 1948)

S.V.I.M. Kadi 120

The Payment of Wages Act, 1936

The Payment of Wages Act, 1936 was enacted to regulate payment of wages to

workers employed in Industries and to ensure a speedy and effective remedy to them

against illegal deductions and/or unjustified delay caused in paying wages to them.

The existing wage ceiling under Payment of Wages Act, 1936, was fixed at Rs. 1600/-

pm in 1982. With a view to enhance the wage ceiling to Rs. 6500/- p.m. for

applicability of the Act, to empower the Central Government to further increase the

ceiling in future by way of notification and to enhance the penal provisions etc., the

Payment of Wages (Amendment) Act, 2005, which was passed by both Houses of

Parliament, has been notified on 6.9.2005 as an Act 41 of 2005 by the Ministry of

Law & Justice. Subsequently, the Ministry of Labour & Employment has issued the

Notification No. SO 1577(E) to make the Payment of Wages (Amendment) Act, 2005

effective from the 9th November 2005.27

Industry standard

The bottled water industry also employs additional measures to help ensure the safety

and quality of its product, beginning with the source, all the way to packaging. Bottler

members of the IBWA must adhere to the IBWA model code, which requires

members to undergo annual, unannounced plant inspections. These inspections are

conducted by an independent third-party organization and assess compliance with all

applicable federal and state regulations and industry requirements. The IBWA model

code, in several cases, is more stringent than state and federal regulations and has

been adopted by more than a dozen states as their standard for bottled water

regulation. (Source: www.bottledwater.org )

Industrial safety Regulation

The World Health Organization (WHO) publishes Guidelines for Drinking-water

Quality which many countries use as the basis to establish their own national

standards. The Guidelines represent a scientific assessment of the risks to health from

biological and chemical constituents of drinking-water and of the effectiveness of

27 www.govtofindia.com

S.V.I.M. Kadi 121

associated control measures. WHO recommends that social, economic and

environmental factors be taken into account through a risk-benefit approach when

adapting the Guideline values to national standards. As the WHO Guidelines for

Drinking-water Quality are meant to be the scientific point of departure for standards

development, including bottled water, actual standards will sometimes vary from the

Guidelines. It should also be noted that water used for making edible ice should be

subject to the same drinking-water standard and include specific sanitary requirements

for equipment for making and storing ice. For water in carbouys, similar sanitary

requirements for dispensing devices need to be observed.

Overview:- Political factor reduce entry barrier in this industry because here

government reduce Excise duty from 16% to 8% and increase profitability of the firm.

Other side norm are not follow that much strictly so many unorganized player also

came in bottled water industry without follow strict and perfect rules of the water

purification. But other side some safety, environmental rules, industry norms and

minimum wage pay scale are followed. so overall it favorable for this industry.

S.V.I.M. Kadi 122

Economic Factors: -

Economic factors affect the purchasing power of potential customers and the firm's

cost of capital. The following are examples of factors in the macro economy:

Economic Growth

Growth in %

2.2

6.8 6.67.6

8.17.2

5.6

3.64.2

1.1

5.3

7

0123456789

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08Year

Pe

rc

en

tag

e

Income %

Consumption %

(Source:- www.indiabudget.nic.in )

Growth is of interest not for its own sake but for the improvement in public welfare

that it brings about. Economic growth, and in particular the growth in per capita

income, is a broad Quantitative indicator of the progress made in improving public

welfare. Per capita consumption is another quantitative indicator that is useful for

S.V.I.M. Kadi 123

judging welfare improvement. It is therefore appropriate to start by looking at the

changes in real (i.e. at constant prices) per capita income and consumption.

Implication:- After increasing in income people consume more as compared to the

past year so it increase consumption of bottled water and people also spend money

after their welfare, it increase the rate of spending money on behalf of their primary

need. After increase income people lifestyle also change and it affect consumption of

bottled water.

Economic measures1. Sustaining and achieving GDP of 8-9 % in next 5 years.2. Allowing foreign direct investment in more sectors so as to maintain the

growth rate. 3. Giving prime importance to infrastructure development and attract FDI in this

sector. 4. Improving educational & healthcare facilities. 5. Simplifying procedures and relaxing entry barriers for business coming from

outside the nation. 6. Poverty decline.

(source:- Economic Survey 2007-08)

Implication:- After declining the poverty line people spend more money on behalf of their primary need and go to status need that is bottled water for example. Also when poverty line decline that means people becomes literate and they do not compromise with health and safety.

S.V.I.M. Kadi 124

GDP (purchasing power parity)

 Country Name

ValueRate

United States

13,8601%

China 7,043 10%

Japan 4,417 1.30%

India 2,965 7.6%

Germany 2,833 1.7%

United Kingdom

2,1471.9%

Russia 2,076 7.5%

France 2,067 1.9%

(Source: - http://www.indexmundi.com )

The economic impact of bottled water consumption is especially relevant in

developing countries, where tap water is often of poor quality and where, even if the

quality of tap water may be acceptable, it is often difficult to obtain reliable data on

the quality of tap water.

The liberalization process in India started 5 years back, with consistent reforms during this phase, the Indian economy is expected to achieve a growth of about 9 % this financial year.

India is one of the fastest growing economies in the world and by the year 2020 it is

expected to be the third largest economy after the United States and China.

The GDP per capita (at purchasing power parity) is also expected to jump during this period from approximately USD 3100 to USD 5000. This along with the fact that a majority of the population would be in the working age group by 2020, would lead to not only a larger but also a richer consumer base, making it one of the most attractive markets in the world. The industrial growth at current prices in the financial year 2007-08 reached 10.7 %, service industry grew by 8.9% & agriculture at 5.6 %.

Consequences: - for economic growth on one hand consumer income & consumption gap becoming narrower and also government favoring about economic measures like

S.V.I.M. Kadi 125

expending to infrastructure, allowing FDI, educational & healthcare facilities, poverty decline. So, in terms of the industry the growth will increase as economic measures is favoring.

Inflation Rate

Definition of Inflation rate (consumer prices): This entry furnishes the annual

percent change in consumer prices compared with the previous year's consumer

prices.

(Source:

-http://www.indexmu

ndi.com/g/g.aspx?

v=71&c=in&l=en)

Implication:- when

inflation rate increase

then prices of the raw

material increasing

and it directly affect

market price of the product. Also in this type of situation people are not spend more

on behalf of primary goods because all primary goods price increase more as

compared to other product. And it reduce consumption of primary good.

Labor Cost

S.V.I.M. Kadi

YearInflation rate

(consumer prices) (%)

2000 6.7

2001 5.4

2002 5.4

2003 5.4

2004 3.8

2005 4.2

2006 4.2

2007 5.3

2008 5.9

126

Treatment and purification account for the next major cost. 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 labor 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.

The cost of a bottle, along with the cap and the carton, is the single biggest cost -

between Rs.2.50 and Rs.3.75 for a one-litre bottle. For water sold in big plastic jars

(20-50 litres), which are also reused, or in pouches, this cost is much lower. It is

precisely owing to this that companies sell water at even Re.1 a litre in a 20-50 litre

jar and still make profits. Labour and establishment and marketing costs are highly

variable and depend on the location and size of companies. Informal discussions with

industry members reveal that the gross profit of this industry can be as much as

between 25 and 50 per cent.

Implication:- we have already seen that labor cost is totally variable and depend on

location, in urban area labor cost is higher so ultimately increase in production cost

compared to rural area in which we get labor at low price and increase profitability.

When inflation rate increase then automatically labor charges also increases in market

it directly affect labor cost in production.

Labor Workforce

S.V.I.M. Kadi 127

Source:- http://www.indexmundi.com/g/g.aspx?

v=72&c=in&l=en

Implication:- From above table we can say that labor workforce continuously

increase so it reduce the cost of labor in industry. Also easily get workforce from the

market with experience or expert because in market competition among work force

increase and it reduce bargaining power of labor.

Exchange Rates

  U.S.Dollar Euro

S.V.I.M. Kadi

Year Labor force

2002 406000000

2003 406000000

2004 472000000

2005 482200000

2006 496400000

2007 509300000

2008 516400000

128

  Exchange Rate Change (%) Exchange Rate Change (%)

  2006-07 2007-08 2006-07 2007-08 2006-07 2007-08 2006-07 2007-08

April 44.90 42.20 1.40 -0.40 55.20 57.00 3.40 -2.20

May 45.40 40.70 1.10 -3.50 58.00 55.10 4.80 -3.30

June 46.00 40.80 1.30 0.20 58.30 54.70 0.50 -0.70

July 46.00 40.80 1.00 -0.90 59.00 55.40 1.20 1.20

August 46.50 40.80 0.10 1.00 59.60 55.60 1.00 0.40

September 46.10 40.30 -0.80 -1.20 58.80 56.00 -1.40 0.70

October 45.50 39.50 -1.30 -1.90 57.40 56.20 -2.40 0.30

November 44.90   -1.30   57.80   0.70  

December 44.60   -0.70   59.00   2.10  

January 44.30   -0.70   57.70   -2.20  

February 44.20   -0.20   57.70   0.00  

March 44.00   0.40   58.30   0.70  

Source:- RBI Review

Implication: - From 1991 new resolution had been taken that is liberalization,

privatization and globalization. Globalization works country to country business in

which exchange rate given above. if exchange rate change then it will impact on

business because all part or technology related to bottled water business imported

from foreign so exchange rate affect business investment. When exchange rate

increase than it will increase cost of technological product which is imported from

foreign.

S.V.I.M. Kadi 129

Social Factors: -Social factors include the demographic and cultural aspects of the external microenvironment. These factors affect customer needs and the size of potential markets. Some social factors include:

Demographic

Demographic and economic indicators2004 2005 2006 2007 2008

Population aged 65+: January

1st ('000)53,417.99 55,077.92 56,718.11 58,352.63 59,992.44

Population density (people

per sq km)366.52 372.24 377.93 383.60 389.23

GDP measured at purchasing power parity

(million international $)

2,096,261.84 2,354,378.01 2,668,742.52 2,996,508.06 3,305,360.18

Real GDP growth (%

growth)7.89 9.13 9.82 9.34 7.80

Annual rates of inflation (%

growth)3.77 4.25 5.80 6.37 7.93

Consumer expenditure

(US$ million)401,452.51 459,641.07 505,017.08 620,680.35 716,715.04

Annual gross income (US$

million)494,544.90 565,701.32 621,197.41 759,760.60 776,126.28

Annual disposable

income (US$ million)

468,998.16 535,823.07 588,719.14 719,282.81 734,356.59

Source World Economic Factbook

International Marketing Data and Statistics Future Demographic

Implication:- Annual disposable income increase year by year it shows high expense

for status and rich life style. So here good market for bottled water and other drinks.

And people are becoming status seeker so they use more bottled water.

S.V.I.M. Kadi 130

Health Consciousness

As the water supplies today are stretched to meet the demands of the ever increasing

population, more and more people in the urban areas are looking towards bottled

drinking water to meet some of their demands. While safety and health remain the

most important considerations they aren’t always founded on facts. Hence arise the

need for having specific standards, especially in the wake of certain water related

disasters.

WHO publishes Guidelines for Drinking Water Quality based on which countries

have their own national standards, Though stricter standards are applied for control in

Packaged Drinking Water, it is not always easy to maintain such standards because of

long periods and higher temperature of storage. Also there is no agency to detect

fraud at the level of manufacture or distribution

Keeping the above considerations in mind it is necessary to formulate policies which

do not separate it from health and develop an integrated food and Water resource

management.

About 25% of bottled water sold is simply re-processed/used municipal (city) water.

While there have been few comprehensive studies, one analysis several years ago

found that about 22 percent of brands that were tested contain, in at least one sample,

chemical contaminants at levels above strict state health limits. If consumed over a

long period of time, some of these contaminants could cause cancer or other health

problems at rates higher than those considered tolerable by the regulatory body setting

the standards.

Bottled water processed with distillation or reverse osmosis lacks fluoride ions which

are sometimes naturally present in groundwater. The drinking of distilled water may

conceivably increase the risk of tooth decay due to a lack of this element. However,

most people continue to cook with common tap water and this is thought to

potentially provide sufficient fluoride to maintain normal prophylaxis in many

S.V.I.M. Kadi 131

instances. Any other minerals in tap water such as calcium and magnesium are present

in such minuscule amounts that their absence is compensated for many thousands of

times over by other dietary sources. On the other hand, some people wish to avoid

exposure to fluoride, particularly systemic ingestion of fluoride in drinking water, and

may choose such bottled water for this feature. Bottled water is typically printed with

expiration dates. However, industry associations claim "bottled water can be used

indefinitely if stored properly."

Implication:- The market is expected to grow rapidly in the coming years due to

growing consumer concerns about fitness, water quality and health. It is the social

responsibility to produce a safe and qualitative water for customer also follow all

national and regional law for quality measure and help to the society. And when

people are more conscious about health then it directly affect the consumption level of

people.

Population Growth Rate

Definition of Population growth rate: The average annual percent change in the

population, resulting from a surplus (or deficit) of births over deaths and the balance

S.V.I.M. Kadi 132

of migrants entering and leaving a country. The rate may be positive or negative. The

growth rate is a factor in determining how great a burden would be imposed on a

country by the changing needs of its people for infrastructure (e.g., schools, hospitals,

housing, roads), resources (e.g., food, water, electricity), and jobs. Rapid population

growth can be seen as threatening by neighboring countries.

(Source: http://www.indexmundi.com/g/g.aspx?v=24&c=in&l=en)

Implication:- From the above table we can say that there is market potential for India

because it always growing rate. So in India always population increase year by year

and it directly affect total consumption of consumer goods. It will increase the

consumption of bottled water.

Emphasis on safety

S.V.I.M. Kadi

Year

Population

growth rate

(%)

2000 1.58

2001 1.55

2002 1.51

2003 1.47

2004 1.44

2005 1.4

2006 1.38

2007 1.606

2008 1.578

133

NRDC conducted a four-year review of the bottled water industry and the safety

standards that govern it, including a comparison of national bottled water rules with

national tap water rules, and independent testing of over 1,000 bottles of water. Our

conclusion is that there is no assurance that just because water comes out of a bottle it

is any cleaner or safer than water from the tap. And in fact, an estimated 25 percent or

more of bottled water is really just tap water in a bottle -- sometimes further treated,

sometimes not.

Choose to buy bottled water and are concerned about its safety, buy brands with a

known protected source and ones that make readily available testing and treatment

information that shows high water quality.

Implication:-by threat of safety norms the entry barrier will be stronger and it reduce

the competition among national player.

Lifestyle Trends

Lifestyle indicators2004 2005 2006 2007 2008

S.V.I.M. Kadi 134

Consumer expenditure on food (US$ million)

144,356.9 164,905.1 182,089.9 221,046.2 250,331.6

Internet users ('000) 35,000.00 60,000.00 89,892.80 128,876.83 167,876.93New registrations of passenger cars ('000)

1,038.29 1,106.54 1,311.12 1,606.12 1,795.39

Consumer electronics (Rs million)

143,885.79 163,804.26 191,773.64 229,424.42 282,464.52

Dog and cat food (Rs million)

824.66 947.52 1,056.60 1,198.64 1,352.62

Source

World Income Distribution Who Buys What World Consumer Spending World Consumer Lifestyles Databook

Implication:- Here consumer expenditure on necessary goods increase year by year

so it is opportunity for necessary good producer to increase market share & volume of

product. Also people are follow western culture in routine life spend more money on

behalf of consumer goods day by day it increase the consumption of bottled water

because mostly foreigner use bottled water.

Age distribution

Country

0-14 years 15-64 years 65 years and olderTotal

male Female male female male female

S.V.I.M. Kadi 135

China 168,040,006 152,826,953 439,736,737 413,454,67341,200,29746,573,816 1,261,832,482

India 175,228,164 165,190,951 324,699,562 301,821,38323,925,37123,138,386 1,014,003,817

(source:- www.censusindia.gov.in )

Implication :- choice of bottled water also depend on generation and age of people

from above graph we can say that below50 year people consume more bottled water

and in India this portion is more and increase from past few year so it increase the

demand of bottled water.

Literacy rate:-

Definition of Literacy: This entry includes a definition of literacy and Census Bureau

percentages for the total population, males, and females. There are no universal

definitions and standards of literacy. Unless otherwise specified, all rates are based on

the most common definition - the ability to read and write at a specified age. Detailing

the standards that individual countries use to assess the ability to read and write is

beyond the scope of the Factbook. Information on literacy, while not a perfect

measure of educational results, is probably the most easily available and valid for

international comparisons. Low levels of literacy, and education in general, can

impede the economic development of a country in the current rapidly changing,

technology-driven world.28

28 www.censusindia.com

S.V.I.M. Kadi

Food Choice by generation

Food \Age 18-34 35-53 54-65 65+

Pasta 81% 76% 60% 56%

Bottled water 56% 47% 37% 19%

Low fat yogurt 33% 31% 29% 22%

Calcium fortified orange juice 29% 28% 30% 34%

Cranola/ breakfast 25% 18% 9% 7%

Sport drink 20% 15% 7% 9%

brown rice 18% 21% 17% 13%

Bottled tea 15% 13% 9% 5%

136

S.V.I.M. Kadi 137

which have been losing market to both, fruit drinks/juices and packaged drinking

water.

With the growing market size, one can imagine the employment opportunities being

created with the surge in bottled water industry. It’s just not manufacturing of bottled

water any more. Professionals required in this industry are engineers with mechanical,

electrical and chemical background.

Organized packaged water industry provides unique employment opportunities to the

locals under following segments:

Geological Engineers (Water Diviners):

Mechanical / Electrical Engineers

Chemical Engineers

Chemist

Microbiologists

Researchers

Marketing & Distribution

(Source:- http://www.merinews.com/catfull.jsp?articleID=137322 )

Implication :- This factor directly affects social responsibility of the industry and also

this industry grow at the rate of 35% to 40% so here employee are safe and it increase

the level of recruitment.

CultureIndia business culture is very strict and you should seek information on India culture

in business before doing international business in the Indian culture.

Punctuality is important in India. Because of this, you will want to be at meetings on

time. The attire, which is worn for business in India, will generally be suits, which is

similar to the attire worn in Western countries. If you bring a gift for a business

associate, it should only be given after the meeting is over. India has a sizeable

Muslim population, so you should be cautious when offering gifts of alcohol. It is

S.V.I.M. Kadi 138

important to always drink bottled water in India. Much of the water in the country is

contaminated. When you eat, it is best to dine at well-known establishments. You will

want to avoid restaurants, which do not practice good hygiene. Driving in India can be

dangerous. Many people don't follow the traffic rules. If possible, always have

someone drive you around.

Another custom is to eat with your fingers but remember only of the right hand ...

Besides the main dishes, there are also countless irresistible snacks available on every

street corner, such as samosa, fritters, dosa and vada. For the more conservative

visitor, western cooking can always be found. Indeed, the best styles of cooking from

throughout the world can be experienced in the major centers in India. Tea is India’s

favorite drink, and. many of the varieties are famous the world over. It will often

come ready brewed with milk and sugar unless "tray tea”, is specified. Coffee is

increasingly popular..Nimbu Pani (lemon drink), Lassi (iced buttermilk) and coconut

water and milk straight from the nut are cool and refreshing. Soft drinks (usually

sweet) and bottled water are widely available, as, are ’Western alcoholic drinks.

Indian beer and gin are comparable with the world’s best, and are not expensive. Note

that Liquor Permits are required in Tamil Nadu and Gujarat.

Media Views and Advertising and PublicityWith growth as strong at it has been, the industry has come into the spotlight.

S.V.I.M. Kadi 139

Indian people are prefer news paper more in routine life so all bottled water supplier

focus on newspaper for giving any advertise relating to bottled water. 84% of ad

spends went to Newspapers It affect directly regional and local customer also.29

Technological Factors: -

Technological factors can lower barriers to entry, reduce minimum efficient

production levels, and influence outsourcing decisions. Some technological factors

29 AdEx Jan-jun’2005

S.V.I.M. Kadi 140

include:

Recent technological development

R&D activity

Special Advantages of IIECI Mineral Water Plant ::

Plant design on latest state of art – European technology, compact, decent

Offered total imported systems

Sealed Packed IS0-9001 MEMBRANE– HYDRAUNATICS – California,

U.S.A.

Micron Cartridge Filter Bag – AmeteK – Suzuki – Japan

Anthracite

Manufacturing stage wise inspection

After fabrication of the unit

At the time of assembling of the unit.

While fitting of sealed pack Membrane.

Inspection of fully installed and running plant for 3 days at our factory with

testing.

IIECI offers Membrane Cleaning facility at its Factory, for enhancing life of

Membrane Systems.

A Range of System sizes are available to match your bottling needs

IIECI offers complete system including Packaging / filling / Sealing line on Turnkey

basis.

Plant is designed on 10% higher capacity & T.D.S. i.e. 279 ppm, for better result in

future.

IIECI offers you 70% recovery of plant

(Source:- http:/www.b2bindia.co.in/indianione.exchange/mineral_water_plant)

S.V.I.M. Kadi 141

Implication:- Zero Maintenance: With the best design plant has absolute zero

maintenance. The replacement of consumable is also low. Further, preventive and

periodic maintenance are easy and can be done by any persons. Above all activity

shows latest technological changes in bottled water segment and it reduce the cost of

production and wastage of water in production. Also all technology produce quality

product in market and increase the level of reliability of customer among company

product.

Automation

Industrial RO system

S.V.I.M. Kadi 142

(Source:-www.ampac.com)

Technology incentive

Bottled Water Companies Use Hollow Fiber Technology to Reduce Operating

Costs

Eliminate feed water variability

Minimize cost

Maximize uptime

Bottle blowing machines today, are enhanced by new technology.

Purification  

A robust framework enables precision and adds value to a process. Equipped with the

right tools and techniques, goals are achieved and perfection attained.

The process of manufacturing packaged drinking water through internationally

employed methodologies at OXYRICH is supported by the most modern and

sophisticated infrastructure. Right from sourcing the raw water to various stages of

filtration and the final packaging, global standards are followed to ensure purity,

quality, and superiority.

Five force model

S.V.I.M. Kadi 143

Rivalry among competitors (High)

More number of unorganized player in market.

o Out of 1800 player only 20% are organized.

o 200 brands compete in market.30

In bottled water market most of the brands are unorganized

because people are price conscious and prefer easy availability

of bottled water so unorganized player increase the competition

among the player.

Growing at the rate of 38% to 40% from past two year.31

o Growing faster than GDP growth rate.

o Industry comes under growing stage.

Bottled water segment increase 30 to 40% and that’s why

players are compete internally for capturing high market share

30 http://www.naukrihub.com/india/fmcg/overview/bottled-water31 http://investorideas.com/IiI/News/080706.asp

S.V.I.M. Kadi 144

of growing industry. Also players are interested capture more

market share before industry came under maturity stage.

Less option available for product differentiation.

o Flavored water not captures that much market.

In bottled water market product differentiation is less so

everybody compete for takes their position and relative market

share of their own brand and it increase the rivalry among

competitors.

High profitable industry.

o Total cost is between 5 Rs. To 7 Rs. And sold in market at 10 to 12 Rs.

per 1 liter bottled.

In every industry all players are interested to increase

profitability of firm and in bottled water industry all ready

player get maximum return and maintain that margin all player

compete with each other.

Switching cost for customer is nearer to zero in bottled water market.

In beverages industry switching cost for customer is nearer to zero so

all players provide maximum benefits to its customer and it increase

the competition among rivalry.

Low exit barrier.

Investment in bottled water technology is not that much high so

competitors easily exit from the market and it reduce the rivalry among

competitors.

Factor Low Moderate low Medium Moderate High High

Unorganized player

S.V.I.M. Kadi 145

Growth Rate

Switching cost

Exit barrier

Margin

Product Differentiation

Domestic companies Parle, United Breweries, Tatas, DS Foods and multinationals PepsiCo

and Coca-Cola, the world's largest aerated drinks maker, are all "battling for leadership" in the

rapidly growing packaged water market in India. As things stand, food and beverages (not to

speak of tobacco) account for the largest consumption categories (40%) in India. 32

Threats from new entry ( High)

The fastest-growing and most attractive beverage category in the world.

Bottled water is most attractive industry in beverages category in the

world and that’s why other player are interested to invest in attractive

industry.

Annual growth rate more than 38%33

Indian bottled water market grow at the rate of 30 to 38 % so many

players are interested to capture market of bottled water because the

growth rate is higher as compared to GDP so the profitability is higher

as compared to other business.

Large pool of buyers but no one accounts for a significant fraction of overall

market demand.

32 www.fnbnews.com33 http://www.merinews.com

S.V.I.M. Kadi 146

In market buyers demand is more as compared to supply of bottled

water so many other players are interested to get market gap of demand

and supply and get profit from the market.

Buyer needs and requirements increase in market.

o Due to the concerns over the safety of tap water.

o An increased focus on health and fitness.

o The hectic on-the-go lifestyles of consumers.

o Attracted by the convenience, purity and portability.

Above all points are attract more number of player in market

for satisfy the need of the market and many non organized

player are enter in market for capturing untapped market.

Enhance waters offered higher margins.

In bottled water the cost of production and raw material is not high.

One liter bottled produce in 3 to 5 Rs and sell in market at more than

10 Rs so manufacturer get maximum profit in this segment.

Low investment at initial stage.

Entry Barrier

In bottled water market entry barrier is low so it increases threats from

new entry.

Brand name is not important but customer focus on easy availability.

In bottled water market customer are not that much conscious about

the brand name of the different player but customer are focus on easy

availability of bottled water so regional player are also easily enter in

market and capture regional market.

Government policy

Government also support bottled water market in India via reducing

excise duty from 16% to 8% and that’s why the threats from new entry

increase in market of bottled water.34

Degree of product differentiation

34 Budget 2008-09

S.V.I.M. Kadi 147

The major challenge for most companies is product innovation and

differentiation as water is still just water. In bottled water market

product differentiation is not that much easy or possible because

people are always interested to drink pure and non flavor water, also in

India flavored water not get success so new player are not easily came

in to market.

More number of substitute available in market.

In this beverages segment many substitute products are available in

market like Soft drinks, Tea, Coffee, Fruit Juice and Pouch water so

new player think before entering in bottled water market.

Proper distribution channel needed.

In bottled water easy availability is more important so without proper

distribution new player not capture that much market so new player not

came without proper distribution.

Factor Low Moderate low Medium Moderate High High

Market attractiveness

Life style

Buyer Requirement

Margin

Investment

Unorganized market

Govt. Policy

Product Differentiation

Substitute Product

Distribution Channel

Entry Barrier

S.V.I.M. Kadi 148

Threats of Substitute (High)

Many substitute products are available in market.

o (For ex. Purifier, vending machine, Alcoholic drink, Juice, Tank water,

Tea & Coffee, Water Pouches)

Switching cost is nearer to zero.

All customers are easily switched over substitute product of bottled

water without any extra expense so the threats of substitute product are

stronger in bottled water market.

Substitute products are available at lower price in market.

From all substitute product of bottled water many substitute available

at lower price like Tea, Pouch water etc. so it increase the threats of

substitute product.

Substitute have better performance

Substitute like Fruit Juice, Coconut Water and soft drinks have better

perform in all segments and also today all people prefer energy drink

so it increase the threats of substitute products.

Basic need of the customer.

Customer basic need is water and all substitute not satisfied this basic

need of customer so here substitute product not affect demand of

bottled water.

Factor Low Moderate low Medium Moderate High High

Switching cost

Substitute product

price

Substitute performance

No of Substitute

Need of customer

S.V.I.M. Kadi 149

Bargaining power of buyer (Moderate)

Contracting with institutes

Now many institutes buy in huge quantity and also they contract with

supplier so it increase the bargaining power of buyer.

Product Differentiation

In market manufacturer not provide any differentiation in product so

buyer bargain more in one product.

Price sensitivity

When buyers are more price sensitive than it increase bargaining

power of buyer

Purchased in low quantity.

All Buyers are purchase in low quantity like 1 liter or 2 liter so they

not bargain with manufacturer.

Importance of quality and performance.

When people are more conscious about health and safety then all are

not bargain with quality product.

Product Information.

People do not have full data of all brands so they do not compare with

other brands and bargain with dealers.

Bargaining power of buyer

Factor Low Moderate low Medium Moderate High High

Contracting with

institutions

Purchase quantity

Quality

Product Information

Price sensitivity

Product Differentiation

S.V.I.M. Kadi 150

Bargaining power of Supplier (Moderate to low)

PET Supplier

Govt has taken decision to use PET bottle only with the benefit of

recycling but due to there is a less supplier available in market, the

bargaining power of supplier is high.

Threats of buyer’s backward integration.

Players easily get raw data (water and Bottled) through backward

integration and the cost of backward integration is also low so it reduce

the bargaining power of supplier.

Bulk buying from supplier.

Manufacturer purchase bottle or raw data in a bulk quantity so it

increase the bargaining power of buyer.

Low differentiate in raw material

Supplier not differentiate raw material of bottled water so they not

attract more buyer from the market and for this reason supplier not

bargain with buyer but try to provide raw data as per buyer need.

Water Availability

There is a huge no of water supplier available in market so buyer can

bargain with supplier.

Bargaining power of supplier

Factor Low Moderate low Medium Moderate High HighBuyer backward integration

Water Availability Purchase Quantity Pet Supplier Product Differentiation

S.V.I.M. Kadi 151

Conclusion: - Market opportunity is one of the primary function before going to find

STP (segment, target and position) the prospects. To check attractiveness of the

market that has many way making it possible which include PEST analysis, five

forces and all.

Five force the model helps to determine the attractiveness of the industry & how each

factor favorable or unfavorable. The detail study of this model will gives more

insights about how to operate and survive in the market. PEST is the factors affecting

and one can say that it will be fix for a period of time.

But five forces the model indicate the factors which continuously change which

management have to considered. Management has to change according to

unfavorability of the factors and favorability of the forces. Overall five force not

favorable to the industry because in market rivalry is strong and new entry threats also

high it affect market demand.

S.V.I.M. Kadi 152

BCG Matrix

Boston Consulting Group Matrix

Player Brand Name Market share Relative market share

Parle Bisleri 40% 1.74Coca Cola Kinley 23% 0.58PepsiCo Aquafina 11% 0.28K.K.Beverages Kingfisher 10% 0.25Mount Everest + Tata

Himalayan 8% 0.20

OthersOxyrich

8% 0.20YesBaily, etc.

(Source:- http://investorideas.com/IiI/News/080706.asp )

Aquafina Himalayan Kingfisher Others

Industry Growth Rate 38%

50

25

2 1 0

S.V.I.M. Kadi 153

Star

Cash cow

Question Mark

Dog

Ind

ust

ry g

row

th r

ate

Relative market share

High Medium Low

Hig

hM

ediu

mL

ow

BisleriKinley

Question marks - Question marks are growing rapidly and thus consume large

amounts of cash, because they have low market shares they do not generate much

cash. The result is a large net cash consumption. A question mark (also known as a

"problem child") has the potential to gain market share and become a star, and

eventually a cash cow when the market growth slows. If the question mark does not

succeed in becoming the market leader, then after perhaps years of cash consumption

it will degenerate into a dog when the market growth declines. Question marks must

be analyzed carefully in order to determine whether they are worth the investment

required to grow market share. In this group relative market share of the company is

lower and market growth rate is high. This group shows market opportunity in the

market. All players who are come under this group are trying to increase their market

share

Stars - Stars generate large amounts of cash because of their strong relative market

share, but also consume large amounts of cash because of their high growth rate;

therefore the cash in each direction approximately nets out. If a star can maintain its

large market share, it will become a cash cow when the market growth rate declines.

The portfolio of a diversified company always should have stars that will become the

next cash cows and ensure future cash generation.

Cash cows - As leaders in a mature market, cash cows exhibit a return on assets that

is greater than the market growth rate, and thus generate more cash than they

consume. Such business units should be "milked", extracting the profits and investing

as little cash as possible. Cash cows provide the cash required to turn question marks

into market leaders, to cover the administrative costs of the company, to fund research

and development, to service the corporate debt, and to pay dividends to shareholders.

Because the cash cow generates a relatively stable cash flow, its value can be

determined with reasonable accuracy by calculating the present value of its cash

stream using a discounted cash flow analysis.

Dogs - Dogs have low market share and a low growth rate and thus neither generate

nor consume a large amount of cash. However, dogs are cash traps because of the

money tied up in a business that has little potential. Such businesses are candidates for

divestiture.

S.V.I.M. Kadi 154

Current Strategy of leader and challenger of the bottled water

Parle-Bisleri

Focus on untapped market. Repaid delivery of product. A replica of a simple house with a concrete roof, chimney, doors

and other paraphernalia associated with a normal house, these trucks will be taken door-to-door in some select localities to start with. The pack size targeted at the home segment would essentially be the 5-litre pack aggressively priced at Rs 25.

The idea, clearly, is to have high visibility in the home segment and enter the housewife's mindset. Bisleri is available in 40-litre, 20-litre, five-litre, two-litre, one and 500-ml pack sizes.

Bisleri's strategy seems to be focused on market expansion.35

Coca-Cola (kinley)

Focus on premium segment. Changes in marketing for capturing market share. Focus on 5 Pillar strategic framework which focuses on Portfolio,

People, Planet, Partners and Performance. The company focuses on understanding the Indian consumer, and in

using these local insights to build powerful connects for its brands. On the back of an effective advertising strategy, Coca-Cola has created a brand that stands for affordability and is inalienable to the common man.

Recommending new strategy

Strategy for Bisleri 1. Aggressive promotion of brand.2. Invest in research and development.3. Product differentiation.

Kinley Focus on product differentiation for capturing more market share. Offensive strategy to build market share.

Strategy for Aquafina and kingfisher Serve niche market to compete with regional player Grow via merger or Acquisition with regional player.

35 http://www.financialexpress.com/old/fe/daily/20001227/fst27023.html

S.V.I.M. Kadi 155

A nine cell industry attractiveness-competitive strength matrix

Competitive strength Weight

BisleriRank/score

KinleyRank/score

AquafinaRank/score

KingfisherRank/score

HimalayanRank/score

Relative Market share 0.20 10/2 6/1.6 3/1.2 3/1.2 2/0.8

Availability 0.30 7/2.1 8/2.4 5/1.8 8/2.7 7/2.1Brand Image & Reputation 0.05 10/0.5 8/0.5 6/0.4 5/0.35 8/0.4

Profitability 0.15 8/1.35 8/1.35 7/1.05 6/1.05 10/1.5

Valuable Capability 0.15 10/1.5 8/1.35 8/1.35 3/0.45 8/1.2

Heritage 0.15 10/1.5 9/1.35 8/1.2 3/0.75 7/1.05

  1.00 8.80 7.75 5.85 5.05 6.65

1= Very unattractive

10=very Attractive

Industry Attractiveness Weight Rank ScoreProjected growth rate 0.20 10 2

Market size 0.20 10 2

Competition 0.10 4 0.4

emerging opportunity and threats 0.12 6 0.72

Resource requirement 0.05 8 0.4

Seasonal influence 0.05 9 0.45

PEST factor 0.10 6 0.6

Industry profitability 0.13 8 1.04

Business Risk 0.05 5 0.25

  1.00   7.86

S.V.I.M. Kadi 156

Interpretation:-

In box 1 where industry attractiveness and the business’s ability to compete are

relatively high which require further investment for future growth. Box 2 receives

only selective investment with an objective of maintaining current position. Box 3 is

the candidate for harvesting and divesting.

In bottled water segment all players are came under box 1 because of high growth rate

of industry so industry attractiveness increase and it put all players in category of

build and attractive for resource allocation. From above diagram we see that

Himalayan has a low market share but its competitive strength it put before Aquafina

and kingfisher. So here we can say that Aquafina and kingfisher focus on Himalayan

strategy otherwise Himalayan acquire market share of the kingfisher and Aquafina.

S.V.I.M. Kadi 157

Parle bisleri is a market leader and kinley is Follower so here both players came under

most attractive position for resource allocation. Himalayan has a strong brand image

and profitability and this factor increase the competitive strength.

From alternative portfolio model we divide different player for resource allocation

and this model more useful in diversified business. From this model we select best

profitable company for giving more resource for getting more profitability.

In bottled water industry all player came under build stage so here provide maximum

resources to get maximum profit and covered market share in the market.

S.V.I.M. Kadi 158

KEY SUCCESS FACTOR

Marketing & Distribution

Branding and marketing of bottled water is as essential as water for the survival of the

human body. The traditional marketing tools include site advertisement, TV and print

media advertising and brochures. This study allocates 10% of the revenue for

advertising and promotional purposes.

Apart from the traditional marketing tools, this study suggests to focus more on other

marketing magnets that include interactive marketing, interactive marketing may

include educating the general public about the importance of water and its daily

consumption requirements for human body through the participation in seminars and

in general public gatherings (e.g. College and University gatherings).

One of the marketing options is to sponsor public events like cricket matches or

hospital campaigns, distributing free brochures about water and its daily consumption,

water requirements in different age brackets. The interactive marketing may be

designed through seminars and workshops about the daily human consumption

requirements and diseases originating from the lack of pure water.

Overall marketing strategy may change with the change of target market. A market

research study is recommended to design the different dynamics of marketing before

launching the new brand.

Marketing expense has been included in the total project cost and it has been

estimated around Rs.5 million. The entrepreneur may decide to increase or decrease

the amount of marketing expense depending upon this choice of promotion activities

and type of media used. Following table gives the breakup of the marketing expense.36

36 www.bottledwater.org

S.V.I.M. Kadi 159

In the first phase of the launch of the new brand, availability will also play the key

role in attracting the customers. It is suggested that the entrepreneur decides the

availability of the product at A-class, or B-class, or C-class retail outlets or mass

availability of the product (aggressive marketing). Since, the perception of the product

is also directly related with is availability so it is suggested that the strategy for the

availability of the product be designed according to the target market and the

perception and positioning the entrepreneur is targeting.

Pricing

The pricing strategy should be in line with the going rate market prices of the

different local brands. Since a new brand has to face a lot of competition from the

market, it is suggested that the price ceiling should not be crossed whatever price

strategy be adopted.

Packaging differentiation

Product packaging and presentation is one of the main dynamics, which control the

flow of target customers towards the product. Packaging should be inline with the

industrial norms. Packaging may also vary with the understanding of the target

market. It is suggested that the bottles of 0.5 liter and 1.5 liter capacity should be

used. Bottles should be clear. The bottle should give a reflection of light sky blue

color, which is considered a natural symbol of the water. This color also adds a tinge

of purity. The water should give a shiny and a glossy reflection. The opening of the

bottle should be large enough to accommodate outflow and inflow of water. The

bottles should be placed in special racks and strand meant for bottled water at retail

outlets, which will be having a unique color and a unique design. The color and the

design will create a positive perception for the new brand. The wrapper of the bottle is

suggested to be on four-color printing and should have the following information in

addition to the logo of the company.

o Certificate mark of the Indian Standards & Quality Control Authority

o Water Specification

S.V.I.M. Kadi 160

o Expiry Date (Best Before Date)

o A brief intro of the company with the address

o Website address of the company

o Brand Name / Trade Name

o Net volume in System International / Metric system

o Batch number or code number

Transportation

In bottled water industry people purchase those product

which is easily available in market so transportation is key

activity for bottled water industry.

Contracting with institution

All players do contract with Multiplex, Restaurant, and conference hall

and get success in capturing market for bottled water. Oxirich

contracted with ICL matches.

S.V.I.M. Kadi 161

Driving Forces

1) Impure and improper municipal water supplies

Municipal source is the main source of water supplied to the house hold.

From pass time this source becoming impure and improper. To making

food, to drink and other application of water was from the municipal

source firstly. But as time span health consciousness increase which avoids

the impure quality of municipal supplies.

2) Rising population

Rising population is in two terms that is from own country and foreign

country. Foreigner generally preferred bottled water because they are well

health conscious and after using bottled water they fill status seeker.

For own country as we had seen above population growth rate which is

increasing day by day which helps to increase the demand of the bottled

water product.

3) Education and health consciousness

As literacy rate increasing the education level increasing because of

education level increasing and the health consciousness improved among

the people. Health conscious people prefer the products which are not

hazardous to the body for example using municipal water most people

prefer bottled water which also gives feeling of status and lifestyle.

4) Scarcity of potable and wholesome water at railway and tourist places

Bottled water demand is high on the place of railway station and tourist

place. Whenever any scarcity of the potable water will occur, at this place

that will result into increase the demand of bottled water. India is the

country link with the railway and tourist places. So increase in these places

also helps in driving forces.

5) Rising aspiration among consumer on quality, style and taste with

changing lifestyle

In recent time people are adopting western culture. Quality, style and taste

with the changing life style, these are the major words which come with

the ingredients of the status symbol. As already mention quality of the

S.V.I.M. Kadi 162

product will be preferred by the people who are health conscious and think

about to live in life style.

6) Urbanization

Urbanization is growing at faster rate. Bottled water demands for 700

thousand per day in Chennai which is called urbanized market. Also we

have 1800 bottling plant across India, among them 600 plants are located

in Tamilnadu having the high demand.

7) Others

Other includes

Globalization

Application of the product

Buyer’s preference

Living Standard

Disposable Income

Availability

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Section - E

S.V.I.M. Kadi 164

Value Chain

To better understand the activities through which a firm develops a competitive

advantage and creates shareholder value, it is useful to separate the business system

into a series of value-generating activities referred to as the value chain. In his 1985

book Competitive Advantage, Michael Porter introduced a generic value chain model

that comprises a sequence of activities found to be common to a wide range of firms.

Porter identified primary and support activities as shown in the following diagram:

Porter's Generic Value Chain    

Firm Infrastructure

HR Management

Technology Development 

InboundLogistics > Operations > Outbound

Logistics >Sales

&Distribution

> Service >

MARGIN

The goal of these activities is to offer the customer a level of value that exceeds the cost of the activities, thereby resulting in a profit margin.

The primary value chain activities are:

Inbound Logistics: the receiving and warehousing of raw materials and their distribution to manufacturing as they are required.

Operations: the processes of transforming inputs into finished products and

services.

Outbound Logistics: the warehousing and distribution of finished goods.

S.V.I.M. Kadi 165

SupportingActivity

Primary Activity

Marketing & Sales: the identification of customer needs and the generation of

sales.

Service: the support of customers after the products and services are sold to

them.

These primary activities are supported by:

The infrastructure of the firm: organizational structure, control systems,

company culture, etc.

Human resource management: employee recruiting, hiring, training,

development, and compensation.

Technology development: technologies to support value-creating activities.

Procurement: purchasing inputs such as materials, supplies, and equipment.

The firm's margin or profit then depends on its effectiveness in performing these

activities efficiently, so that the amount of the customer is willing to pay for the

products exceeds the cost of the activities in the value chain. It is in these activities

that a firm has the opportunity to generate superior value. A competitive advantage

may be achieved by reconfiguring the value chain to provide lower cost or better

differentiation.

Value chain for bottled water industry

In bottled water industry value chain play important role because this market is totally

monopolistic so here manufacturer maximize their profit through reducing cost or

deliver value added service at same cost for getting maximum market share and

margin on product.

S.V.I.M. Kadi 166

Value Chain Model

Activity

Activity

S.V.I.M. Kadi 167

Labeling Material Supplier

Water Sources Well, Municipality, spring

Bottle component Supplier

Cap Supplier

Warehousing ofRaw material

Value added activity through pretreatment

Bottle & Water

Operation or Purification

Ultraviolet LightFiltration and Ozonation

Value added activity through including

mineral and Packaging

Cap &Label Material

FillingCappingLabeling & Coding

Dispatch of Goods

Warehousing of Finished product

Transportation

Distributor

RetailerCustomer

Supplier of Raw material (Inbound logistic)

In bottled water industry raw material provider are more and nearer to production unit

so here reduce the cost of transportation of raw material and manufacturer get raw

material easily and in continuous flow. Also consider some key point in development

of inbound logistic are as under.

Criteria for selecting supplier

Just in time inventory (manage flow not stock)

Continuous improvement

Required qualitative raw material

Near and easy availability

Stable competitive price

Water sources

Natural water sources: protected from surface inrusion and other

environmental influences.

i. Approved protected, Monitored Natural water sources: The

water for most bottled water comes from approved, protected and

monitored natural sources such as spring or artesian wells originating from

within the earth. These groundwater sources are inspected, tested and

certified to be of sanitary quality and free from surface water influence.

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Potable Public Water Sources which are then reprocessed using a

variety of purification methods.

i. Approved Sources: Public water supply: Bottled water may

also originate from treated municipal supplies. The bottle water companies

utilizing public water supplies most often use processing methods to

further enhance the quality of the water. Place your cursor over the tabs

above to learn more about these processes.37

After getting water, bottle components, cap of the bottle and label material from the

supplier manufacturer store water in tank and other components in warehouse than do

some value added activity for increasing the quality of water like.

Pretreatment

a. Carbon Filtration: Activated carbon filters are

used to remove undesirable tastes and odors by absorbing substances that

may be present such as chlorine and organic compound, which essentially

“stick” to the surface of the filter.

b. Water is considered “hard” if it contains

significant quantities of dissolved calcium or magnesium in the water are

removed.

c. Deionization: Deionization removes dissolves

metal ions and gases, which may be found naturally in the sources water.

Deionization removes those specific ions from water.

d. All bottles purified and make clean and safe

bottle for filling purified water for maintain quality of the water for longer

period of time.

Purification: Bottled water from a public source is often purified by reverse

osmosis, distillation of the two.

e. Reverse Osmosis: Using this process, water is

forced under pressure through membranes or semi-permeable separations,

37 www.ibwa.org

S.V.I.M. Kadi 169

which remove nearly all dissolved minerals.

f. Distillation: this is the process in which the

water is first vaporized by heating it to its boiling point (BP=100ºC). Since

dissolved minerals have boiling points above 100ºC , the water vapor, now

free of dissolved minerals and other substances, is then condensed back to

water. 38

After doing all value added activity manufacturer again store water in safe and

protected water tank for maintain quality of raw material.

OperationAfter completion of inbound logistic manufacturer do operation activity. Here all

player produce semi finished or finished goods through latest technology for reducing

cost of wastage and low capacity utilization.

Final Processing

Ultraviolet Light: Ultraviolet light provides a reliable, efficient and

safe source of high intensity disinfection. Ultraviolet light has no effect on pH,

color, flavor or aroma. It has no other detrimental effects on product stability,

leaves no residue and produces no harmful by-products.

Filtration: Filtration can be used to remove contaminants and

particulars such as silt, colloids, chemicals and certain microorganisms that may

be found naturally in water. The filters that are used are changed regularly to

ensure optimal performance.

Ozonation: Ozonation is a disinfection process using ozone gas, a

form of oxygen, instead of chlorine. Ozone is an effective water disinfectant that

does not leave a residual taste, color or odor to water.

After complete above process again water store in water tank for maintain quality and

this process increase the value of product. And this storage and distribution activity

covered under outbound logistic.

38 www.ibwa.org

S.V.I.M. Kadi 170

Outbound LogisticIn this activity of value chain manufacturer store and handle finished goods and than

go for packaging of products and store product in warehouse.

1) Mineral Injection: Minerals are found naturally in water, but the production of

bottled water may result in the removal of these minerals. Minerals injection is

used primarily in waters that have been purified to restore certain minerals to the

water. Examples of these minerals include calcium, magnesium of fluoride.

2) Sanitary Bottling

Bottling: FDA’s bottled water Good Manufacturing Practices (GMPs)

mandate that bottled water is bottled in sanitary, safety-sealed containers

under sanitary conditions. Materials utilized for the container, cap and

seal must be approved by FDA for food contact. IBWA members

implement a voluntary system called HACCP (Hazard Analysis and

Critical Point), which has adapted from FDA and the U.S. department of

agriculture for a science-based approach to safety throughout the bottled

water process.

Containers: Whether it is a single-use or reusable water, all containers

are approved by FDA for food contract. Reusable container washing,

rinsing and sanitizing are carefully evaluated to comply with federal, state

and industry requirements. Open bottles in the plant are protected from

airborne contamination throughout the production process.

Filling and Capping: Bottles, whether single-serve or cooler size, are

required to be filled and capped in a fully enclosed, positively pressurized

room with an air handling system that filters the air.

Caps and Closures: Caps and closures are made of materials that must

comply with FDA standards and guidelines for food contract. Bottled

water, by definition, is provided to consumers in sanitary, safety-sealed

containers.

S.V.I.M. Kadi 171

Coding: Coding is used on bottles to provide a record of production dates

and lot numbers. This assists bottlers, distributors and retailers in product

tracking and inventory control.

Labeling: Bottled water products must adhere to arrange of FDA labeling

standards, including the bottled water standards of Identity, which

establish uniform terms to define bottled water types as well as applicable

labeling standards under the Nutrition Labeling Education Act (NLEA). A

bottled water product bearing a particular statement of identity must meet

the particular requirements of the FDA standards. Definitions include:

drinking water, artesian water, groundwater distilled, deionized water,

mineral water, purified water, sparkling bottled water, spring water, sterile

water and well water. If bottled water is misbranded, it is subjected to

recall. Labels must include the name of the manufacturer, packer of

distributor.

Other labeling requirements should be as per PFA Rules and Packaged Commodities

Rules as prescribed in IS: 14543 – 1998 (Specification for Packaged Drinking Water).

1. Packaging Requirements

It is well known that drinking water should be packed in clean, colorless, odourless,

clear, tamperproof containers, which are hygienically safe. Much of the water is

packaged in similar bottles as carbonated soft drinks, and would, therefore, carry

many of the same requirements.

2. Color and Clarity

Clarity is one of the most important requirements and is the main reason why clear

bottles of plastics are used. A resin with higher levels of co-polymer adds to the

clarity. As regards the light blue color in the bottles, this is permissible for one time

use bottles. However in India, the BIS (Bureau of India Standards) have prescribed

colorless bottles for multi trip/reusable containers.

Since currently almost all the bottlers use blue colored containers, studies have

commenced at IIP to establish whether blue color helps to reduce the UV effect and

the percentage of blue color that could be considered to be added without affecting the

clarity of the bottle.

S.V.I.M. Kadi 172

3. Purity

Because water is a flavorless product, using a plastic that remains tasteless and

odorless is imperative.

4. Mandatory Certification

To prevent adulteration, the quality of the bottle and its sealing drew great attention

and concern. The standardization of the quality of the water and the bottles was not

thought of earlier. There was a concern whether mushrooming brands in packaged

drinking water would really ensure quality and safety. The provisions of mandatory

BIS certification and that of Prevention of Food Adulteration Act (PFA) have brought

in assurance to the consumers that packaged drinking water is trustworthy.

The Indian Standard IS: 14543 – 1998 prescribes the quality and safety requirements

of packaged drinking water.

5. Plastic Package Types

As the market has evolved, so too has its packaging mix. Bottles may be the favourite

container for packaging water, but glass rarely features as the first choice today. Glass

together with cans and cartons have a diminished share. Glass retains a high profile in

outlets where the water is for Consumption on the premises (hotels, restaurants, cafes)

remaining particularly strong in Central and South America and Europe, especially

Germany.

Plastics are versatile materials and are in many cases capable of matching or

surpassing the characteristics of other types of packages. They do not corrode, are

hygienic lightweight and often provide opportunities for reducing the weight of the

packages used.

A variety of polymers are available which can be used for packaging of drinking

water.

6. Polyethylene

Low-density polyethylene film is the most important group of plastics used in

packaging drinking water. Polyolefin’s also have the highest calorific value of all

constituents in the packaging waste stream and are, therefore, prime candidates for

disposal through incineration with energy recovery.

S.V.I.M. Kadi 173

7. Polyethylene Terephthalate (PET)

PET is the most extensively recycled plastic of the present time. It is easier to collect

than other plastics. It has a high intrinsic value, is economic to recycle even with

existing collection systems and there are well-developed markets for its recycling,

such as carpet fibres and fibre film. The important feature of used PET is its ability to

be converted 25-litre HDPE Container 20 litre PET Container

Chemically to the monomer from which, It was produced using hydrolysis or

methonolysis. The US Food & Drug Administration for food-packaging applications

has approved PET produced by chemical recovery of this sort. For packaged drinking

water PET bottles are used in 50ml to 20 litres capacity.

Perrier has developed a new container that incorporates a layer of nylon sandwiched

between layers of PET to comply with the requirement for a standard 12 months

shelf-life mineral water.

8. Polypropylene (PP)

Polypropylene (random clarified co-polymer) is widely used for food contact

applications throughout the world and enjoys favorable status with food and

regulatory agencies. PP containers/cups with peelable lids are used for packaging of

drinking water in 100, 200ml. capacities with suitable lids for closures.

9. Poly Vinyl Chloride (PVC)

Earlier, the most commonly used package for mineral water was stretch blow

moulded bottle of PVC, as PVC is rigid, clear and has adequate impact strength.

Compared to other polymers, PVC requires lower amount of energy to produce. If

collected separately, it can be readily recycled. The recycled PVC is sandwiched

between inner & outer layers of virgin polymer in co-extruded PVC pipes. The major

concern for safe use of PVC for non-toxic and food contact applications is the residual

monomer level in the resin. The FDA in USA and regulatory agencies have specified

the monomer levels at 5ppm in PVC resin. PVC containers in capacities of 100, 200,

250 and 1000ml are used for packaged drinking water.

S.V.I.M. Kadi 174

10.Polycarbonate (PC)

Polycarbonate can be processed into useful end products by any of the usual

processing techniques like extrusion, blow moulding, injection moulding etc.

Polycarbonate containers are popularly used for muti-trip application for mineral

water containers of 15-20 litres.

11.Polyethylene Naphlthate (PEN)

This is a high performance resin and the containers made out of this resin are used for

refillable, returnable mineral water.

12.High Impact Polystyrene (HIPS)

HIPS (High Impact Polystyrene) containers cater to the 200ml mineral water market.

These containers are provided with heat sealable peel able lids.

Processing of Water for Bottling

In India, the quality of drinking water is very poor in comparison to other countries.

Treatment of water is required for purification. To produce high quality drinking

water as prescribed by the World Health Organisation (WHO), conventional

processing methods like coagulation, flocculation, sedimentation, ion exchange,

filtration and oxidation etc. are not sufficient. Membrane processes have advantages

over other treatment processes. Micro-filtration and ultra-filtration are said to be very

useful in removing micro-organisms. Reverse osmosis membranes are used to remove

various contaminants found in drinking water. A combination of reverse osmosis and

de-ionization can be used to produce high quality water.

After getting purified water from the operation again manufacturer add value through

bottling, capping, labeling and coding, for this activity collect raw material of cap and

label from warehousing and than dispatch finished goods for warehousing and store

finished product.

Warehousing

After producing finished product company store in warehouse for maintain market

demand flow. And on basis of stock operation department produce finished goods and

maintain demand and supply. When any distributors put order then transport finished

goods through any intermediary and provide finished product.

S.V.I.M. Kadi 175

Distribution

After warehousing finished product company play a role of distribution of product in

this activity they play a role of Delivery reliability, Stock management by location

and Re logistic of PET.

In this activity try to increase sales via increase awareness in market about product

and provide product as per retailer or dealer requirement. And also maintain

relationship with retailer for long term profitability.

Customer Services

Here industry play a role of service provider to their customer like Testing,

Communications and Information systems for maintain relationship with customer or

user of the product. Also providing replacement of defected bottled to mall and

distributors.

Supporting Activity

Support Activities

The primary value chain activities described above are facilitated by support

activities. Porter identified four generic categories of support activities, the details of

which are industry-specific.

Technology Development - includes research and development, process

automation, and other technology development used to support the value-chain

activities.

Human Resource Management - the activities associated with recruiting,

development, and compensation of employees.

S.V.I.M. Kadi 176

Firm Infrastructure - includes activities such as finance, legal, quality

management, etc.

Support activities often are viewed as "overhead", but some firms successfully have

used them to develop a competitive advantage, for example, to develop a cost

advantage through innovative management of information systems.

1)R&D Activity

Testing

To help ensure bottled water safety and quality, all bottles follow sources and finished

product testing and monitoring requirements, which are mandated by FDA, the states

and IBWA throughout the entire process. The water is routinely monitored and tested

for:

Organics, such as:

o Pesticides

o Herbicides

o Volatile organic compounds

Inorganic such as lead, copper, zinc, chloride, and minerals

Microbiological

Radiological

Physical properties

Primary activity is dependent on supportive activity because all measures, process and

operation not possible without supportive activity of value chain.

Continuous monitoring for Reduction in wastage water (Operation)

Research on Eco-friendly PET bottle (Supplier)

Above all test measure at every level of the value chain

2) General Administration

General administration also monitored all activity of the value chain. And for

this purpose company maintain such department like finance and Marketing and this

department play role to support all primary activity of the value chain here we

develop relation of both department.

S.V.I.M. Kadi 177

Finance department continuously focus on resource allocation to the all

activity and on basis of profitability finance department give resource for

development. Finance department define all activity and its cost driver and on that

basis find out projected financial requirement for each activity.

Purchase Department maintain activity of raw material procurement and

maintain long term contract with supplier. Also find out best and cheap raw material

from market for reducing cost of raw material.

Marketing Department support distribution activity, and increase sales of the

product and market awareness. Also Marketing Department support distribution

channel and sales. Marketing Department continuously measure market demand and

preference of the customer so it helpful for development of new flavored bottled

water.

Recycle of PET bottle (Norms)

Collaborate with raw material supplier (Supplier)

3) Human Resources management

H.R Department is a part of general administration but it plays a major role

before starting any primary activity first H.R. Department do activity of recruitment.

For purchase of goods H.R. department select purchase manager for maintaining

routine activity collect labor and for selling product choose marketing manager and

also define cost of all employee of the organization. This department finds out

requirement of skilled or unskilled labor and on that basis hires people and reduce

cost of over employee.

This department is more useful in non technology industry because in that type

of industry labor requirement is more as compared to technology upgraded industry.

But without selection of expert and experience person for doing work firm not

S.V.I.M. Kadi 178

perform will so H.R. Department is highly support all value chain activity of the

industry firm.

Hiring expert and experience person (Distribution)

Relationship with supplier (Distribution)

From above graph we are differentiate value added and cost added activity in bottled

water industry. Value added means add some value through pretreatment,

purification, packaging and distribution service of the bottled water. Cost added

activity means add extra cost in product like raw material, transportation and

warehousing of goods. In value chain Activity Company differentiate product through

value added activity and get benefit of low price product through cutting cost in cost

added activity.

S.V.I.M. Kadi 179

OT AnalysisOpportunity:

Untapped Market.

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. Bottled water

market focuses only on urban area but not focus on rural area because in past

rural area people not that much conscious about health and safety also the

distribution cost was high. Today more than 50% market covered in rural area

through pouches so here a big opportunity for bottled water player. 39

Change in lifestyle.

Bottled water shows the status among society and this reason increase the

consumption of bottled water product. Also rich people are increase demand

of bottled water in market.40

Increasing Population Growth and literacy rate.

India is a second largest in population so it increases the demand of all

products also people are literate so they all drink safe water so here Bottled

water player grabs this market. (Source:- census.com)

Awareness on health.

People are more conscious about their health and safety so they not use tap

water or any other water which is available without any purification process.

This factor affects the total demand of bottled water market in India.

39 www.waterstocks.com40 World Consumer Lifestyles Databook

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