Booming bottled water market still has space for local players

Today, Indians are consuming more than 20 litres of bottled water per head each year, compared to just 4-5 litres 15 years ago, research by ValueNotes has noted.

India’s bottled water industry witnessed a boom in the late 1990s, soon after Bisleri launched its packaged drinking water in the country. 

This significant growth was fuelled by a surge in advertising to give the message that “bottled water is pure and healthy​”. Today, alongside greater health awareness, the poor quality of tap water and the ease of availability of bottled water, consumption of bottled water is on the increase.

Speedy growth​

According to the study, the total Indian market for packaged water was valued at Rs60bn (US$1bn) for 2013 financial year, of which the top five players accounted for 67% of market share. The market is now expected to grow annually at a rate of 22% to reach Rs160bn (US$2.7b) by 2018.

Packaged drinking water, which holds about 85% of the market, is also witnessing strong growth due to other factors, including changes in lifestyle and an increase in foreign tourist arrivals. 

Natural mineral water, on the other hand, which falls under the premium water segment and is primarily consumed by urban residents owing to its high cost, will witness growth that will be restricted to consumers in cities.

The industry is currently dominated by its top five players, including Bisleri, PepsiCo, Coca Cola, Dhariwal and Parle. But with these companies struggling to penetrate into smaller, non-tier cities and towns due to poor infrastructure, there is an opportunity for small regional players to build a presence in these markets, the report says.

Smaller players​

According to Shilpa Eguvanti of ValueNotes: “Even as the industry is on a growth path, smaller local players and the unorganised sector are eating into the market of the established players, often by imitating their trademarks​.”

The highest sales of bottled water come from the retail sector, but this is changing with demand increasing from social functions and corporate events, especially for bulk water or bottled water cups. 

To capture all segments of society, water players have started foraying into packaged water pouches at low price points, but this is still at an experimental stage, said ValueNotes.