Packaged Water Industry in India : An Overview

30th June, 2009

Packaged Water Industry in India : An Overview

30th June, 2009

Pratik Pota

Executive Director, SouthPepsico India

Pratik Pota

Executive Director, SouthPepsico India

The Packaged Water Industry includes Retail and Bulk Water and is 250MM c/s in SizeThe Packaged Water Industry includes Retail and Bulk Water and is 250MM c/s in Size

Retail water : Packaged water <5Ltr• 500ml• 1ltr• 2ltr• Pouches

Bulk water : Water packaged in >5Ltr• 10ltr• 20ltr• 25ltr

1000 ML34%

Bulk water6%

500 ML2%

Pouches49%

2000 ML9%

South52%

North15%

East5%

West28%

% Contr.

Urban 80%

Rural 20%

Nearly half the market is made of Pouches

It is currently heavily South biased

And largely Urban centric

Source : Nielsen

The Industry is highly fragmented and localThe Industry is highly fragmented and local

% Contribution of the Top 5 Players ~35%

Number of Players in the Category >1000

Source : Nielsen

The Retail Packaged Water Industry is growing at ~25%The Retail Packaged Water Industry is growing at ~25%

Region % Growth

North 25%

East 31%

West 20%

South 26%

India 24%

Pouches 22%

500 ML 13%

1L-2L 28%

Total 23%

  Metro ROU Rural

% Growth 12% 28% 38%

Source : Nielsen

Growth driven by Rural and Small Towns

All Regions seeing healthy growths

Growth across all Packs

What is fueling this Industry growth?What is fueling this Industry growth?

Increased On-the-go behaviourHigher disposable income Importance of Hygiene

Affordable Price PointsIncreased Availability

7 Lakh 9 Lakh outlets

The growth is expected to continue given the low Per Caps The growth is expected to continue given the low Per Caps

Per Capita Consumption

(Litres)

Global Average 25

USA 130

Mexico 269

Italy 245

Thailand 117

India 1.7

Globally, the Bottled Water segment has extended into Enhanced and Value Added WatersGlobally, the Bottled Water segment has extended into Enhanced and Value Added Waters

Vitamin/ Mineral fortified

Added fibre/ performance enhancing ingredients

Beauty ingredients Strengthen immune

system/ treat specific diseases

For diabetics

Functional WatersFlavoured Water

Fruit flavoured

Natural Flavours

Sugar Free

Differentiated Packaging

Premium Packaging

Appearance changing

More eco-friendly

How will the Water Segment evolve in India?Some Crystal Ball Gazing!

How will the Water Segment evolve in India?Some Crystal Ball Gazing!

Category will continue to grow at >20% by Volume

Increase in number of new pack offerings• Straddle Magic Price Points

Greater Differentiation• Packaging Innovation

Emergence of Value Added waters• Flavoured

• Functional

Thank YouThank You

Case studyCase study

In USA, Y Water released Brain Water under the Y Brain Water brand. Y Brain Water Brain Water is 100% natural, rich in nutrients, low in calories and free from artificial ingredients. According to the manufacturer, this water improves memory. The product has been USDA organic certified and is available in a 9-fl. oz. unique bottle.

In Finland, Plup released Spring Water under the Plup brand. Plup has launched Lähdevesi (Spring Water) in a 0.4L bottle in a totally new drinking bottle design. The manufacturer encourages consumers not to return the bottle, but rather to re-fill and re-use it. The bottle is said to be highly durable and suitable for heavy use, such as hiking or boating. Other ready-to-drink-products will be sold in the bottle through grocery stores on a mass-market level as well as through other channels.The manufacturer is said to donate a vast amount of its profit for environmental issues such as cleaning up the Baltic Sea.

Source : www.gnpd.com

Back-UpsBack-Ups

The profitability algorithm of Bottled Water presents a significant challengeThe profitability algorithm of Bottled Water presents a significant challenge

MC Construct of 1L/ 500ml/ Pouch (get from IC/ Anshul)

The growth is expected to continue given the low Per Caps The growth is expected to continue given the low Per Caps

Global water consumption –estimated at 53bn gallons 2008 (242 bn ltrs) (beverage marketing

corporation) and growing World Per Capita Consumption

averages 25ltrs(www.fnbnews.com

India’s per caps - 5ltrs www.fnbnews.com)

Statistics on some countries- America

• US&Mexico – 29% of world market

• US Per caps 130ltrs, Mexico – 269 ltr

• Canada and US, bottled water is one of the fastest growing industries

Europe• France,Spain, Italy,

Germany – 18% of world market

• 13 of the top 20 bottled water consumers are European countries

• Percaps in Italy highest at 245 ltrs

(beverage marketing corporation)

Middle east and Asia• UAE, with 182ltr percaps, 3rd

highest consumer in the world• China has almost 10% in global

volume with the highest growth rate CAGR (15.6%) over 03-08. However, per caps only 17.5ltr

• Thailand only Asian country in Top 20 consumption countries

Nearly half the market is made of Pouches

What would be the key triggers of growth?What would be the key triggers of growth?

Barriers to Growth

• Availability /Scale

• Quality standards of unorganised players leading to loss of confidence in the industry Triggers

• Growth in affordable packs at Rs.5 and Rs.10

• More variants in the top end (Mineral and fortified waters)

• More health/hygiene consciousness