Vied from Delhi: Bottled water emerges fast growing business

What's the name of the fastest growing industry in India? You might think it is IT services, which has been growing very fast for the last few years but is now slowing down. Is it pharma perhaps, which makes huge profits and is expanding rapidly ? No, it is water.

Bottled water, to be precise. From almost nothing a few years ago, it is now a Rs20 billion a year industry and growing smartly. Indians are prepared to fork out Rs10 every time they buy a litre of bottled water, though they complain bitterly when things like bus fares are hiked a few paise.

There is hardly a grocery shop anywhere in India, even in small villages, which does not stock bottled water. Even corner shops in slums in Delhi mint money selling the stuff, though quality is often doubtful. There are no official quality standards for water in India, just as there are none for soft drinks, including colas. Any bottled water with a smart label can pass off as the real stuff.

There are scores of brands, most of them local, but only about a dozen national brands, including Bisleri, which leads the field. Bisleri was launched by Parle of Mumbai nearly twenty years ago, when the company also marketed soft drinks.

Major brand

When the cola companies, Coca-Cola and Pepsi appeared in India, Parle sold its soft drink business to Coca-Cola and stuck to bottled water only. Bisleri business is worth about Rs5 billion a year, just ahead of Coca-Cola's bottled water.

There are other brands too, including Nestle and Pepsi but competition is so fierce that Nestle has decided to close down the business. The company has a huge marketing network for its milk products which it tried to use for its bottled water too, but without success.

On the other hand, Parle's Ramesh Chauhan, who pioneered soft drink business in India and the Gulf, before he sold out to Coca-Cola, says that he is about to set up a joint venture in France for his new bottled water business in Europe. Initially, he will be catering to restaurants and is aiming at a turnover of $5 million a year.

He will have to compete with popular local brands like Evian on their home ground, but Chauvan says that he will be catering to a niche market in Europe and does not anticipate much competition. Incidentally, Evian is available in India too at a price of about Rs50 a small bottle.

Some families in cities like Delhi and Mumbai buy water by the tanker (about Rs300 to Rs500 a tanker) and often spend Rs3,000-Rs5,000 a month on water alone.

When there were complaints that some colas contained traces of pesticides, there was a hue and cry in the Parliament, and the stuff was banned from its canteens. Now the parliament has set up a committee of its members – an unusual step – to go into the charges and a new quality standard for water as well as soft drinks is likely to be enforced.

Though it is not their main business, some liquor companies also market bottled water, mainly to get round the ban on liquor advertisements. Since they use the same brand names for both, liquor as well as well water, they are technical on the right side of the law. But when this loophole is plugged, they will realise that beer and water don't mix!

The writer is an India-based senior economic advisor.