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Bisleri has maintained its leadership in the bottled water business. It’s now looking to consolidate and get a meaningful share of the carbonated soft drinks markets
There is a moment from her teens that is etched in Jayanti Chauhan’s memory. Accompanying her father, Ramesh Chauhan, often called the cola king, to the Evian mineral water bottling plant in France she was stunned by the sophistication. There were just three people on the shop floor at Évian-les-Bains (to the locals, it is just Évian) and it sparked a desire to have a plant like that.
“It was quite a revelation to see an automated pallet system. It must be even more sophisticated now,” she says, still awestruck two decades later. Walking us through her own plant in Mumbai’s suburb of Andheri, Chauhan, now Bisleri International’s Vice Chairperson, grins when she points to just a handful of folks on the factory floor. “We have also changed a lot. There are more machines now.”
Chauhan grew up to the sound of Thums Up bottles on the assembly line when she visited the factory her family owned. In 1993, her father took the decision to sell the soft drinks business—it also had Gold Spot, Limca, Maaza and Citra—to Coca-Cola for a reported $60 million. It was a defining moment in the industry at that time and over the next five years Chauhan senior shifted focus to Bisleri.
Though it was acquired in 1969 from Italian owners, it wasn’t until the turn of the century that the Bisleri brand came into its own (see graphic A Brief History). Today, it is a Rs 1,645-crore company and the undisputed leader in the highly-fragmented packaged drinking water business, where over 6,000 brands vie against each other. It has 128 plants now, and plans to hit 150 in a couple of years, of which at least 15 will be company-owned. It owns about 13 of the 128 now.
There is a renewed vigour in the company, so much so that there is little indication now that Chairman Ramesh Chauhan had spoken of selling the company to Tata Consumer Products for a reported Rs 6,000–7,000 crore just last November. Indeed, it is now planning to move into neighbouring markets, make a fresh foray into the soft drinks business and in the process, fire up the non-water business.
We want to create the most unique product portfolio and are very serious about the business... [we] are not even thinking of a sale
Jayanti Chauhan
Vice Chairperson
Bisleri International
Those diversification ambitions aside, Bisleri is still the biggest piece, it drives revenues and gives the company tremendous equity in the market. In fact, it is this dominance in water that the company is banking on for its soft drinks foray.
Like all businesses, the water one too was altered after the outbreak of Covid-19. It forced smaller players to take many tough decisions, but it also provided Bisleri an opportunity. “We decided to expand the number of manufacturing plants and our lines as well. In a state like Tamil Nadu, significant new capacity was put in place,” says Bisleri CEO George Angelo.
But there can be no doubt that it is a very tough business because it is highly fragmented geographically and its customer base is largely in the urban areas. The primary source is groundwater, which means that there is always the risk of overexploitation. Besides, this is a space that is monitored by the Central Ground Water Authority, which has divided the country into almost 6,600 zones and decides what is safe and what is over-exploited. That keeps companies on their toes while planning capacity expansion. “We map out our plants depending on where capacity is available,” says Angelo.
K.S. Narayanan, who has spent several years in the food and beverage industry and is now an independent advisor, says the packaged drinking water business is operationally intensive across geographies. “The segment has a limited play on margins as also limited scope for margin enhancement,” he explains.
Those low margins are also the result of the price-sensitive nature of the business. “Consumers see water as a basic hygiene necessity, making both availability and affordability very critical. Inevitably, the price point plays a big role,” says Narayanan.
Another reason behind the geographical fragmentation is logistics. According to Anand Kumar Jaiswal, Professor of Marketing at IIM Ahmedabad, the weight transported limits its geographical spread, leading to more plants being needed. “Besides, a large player like Bisleri must contend with relatively unknown local brands with lower distribution costs offering high margins to retailers. It works very well for consumers who are not brand conscious,” he adds.
Then there is the challenge on the manufacturing front. “Going for contract packers is a logical way to do it with both quality and product in our control. Eventually, we would like to have large-scale plants and that means making big investments,” says Angelo. Of course, a lot depends on the cost of land, but the capex would be at least Rs 50-60 crore for a new plant with some level of scale and could even be as high as Rs 100-120 crore. For a contract manufacturer without scale, the outgo is much lower at Rs 15-20 crore.
Bisleri imported a plastic recycling machine in the early 1990s. We have a good understanding of the whole model today
Angelo George
CEO
Bisleri International
Equally important is the sustainability part, since higher sales translate to increased plastic consumption. Angelo says the objective is to reduce its use, figuring out ways to reuse and also look at ways to recycle it. In the case of the 20-litre container, reusing is relatively easy. Apart from being environmentally-conscious, it leads to greater and more efficient cost control at the level of the business. “Bisleri imported a plastic recycling machine in the early 1990s. We have a good understanding of the whole model today,” says Angelo.
Being the first player in the business allowed Bisleri to set up the ecosystem from scratch. “In terms of innovation, we were the ones who brought the tamper-proof bottles into the market or the PET version with a focus on affordability. The 5-litre and 20-litre versions were also from our stable,” says Chauhan.
Of course, the company has one huge advantage—brand Bisleri’s generic nature to the category. “Xerox is the best example and something similar has taken place with Bisleri, since it is the first packaged water brand in India,” feels Jaiswal. In fact, many consumers ask for Bisleri when they mean mineral water.
Jaiswal recalls a phase around 1999-2000, when Kinley and Aquafina—packaged water brands owned by Coca-Cola and PepsiCo, respectively—decided to put in big money. But, “Bisleri was smart in investing both in manufacturing and marketing.” A case in point was the 1.2-litre offering or for that matter the 5- and 20-litre cans, where the multinationals have a very small presence. In the organised market in these two large volume segments, Bisleri has a market share of about 90 per cent. Given its loyal user base cutting across institutions and homes, less money is spent on marketing and advertising.
The company isn’t banking just on brand recall. Over the past few years, it has actively nurtured a change in its functioning style.
For a person from the next generation, Chauhan found the earlier system of decision-making a tiresome exercise initially. “It was actually exasperating and it was important to move to one that was more collective,” she tells BT, in what is her first big interaction with the media. One deterrent was the region-wise structure and that made way for what she says has been a more efficient vertical organisation in 2019.
In 2015-16, it brought EY aboard to give the company a contemporary touch. One of its big recommendations was bringing in a professional CEO for the first time in the company’s history. Heeding that advice, family-run Bisleri hired Angelo, an old HUL and Dabur hand, as CEO in mid-2019. “I was young and inexperienced. I needed someone at that critical stage,” says Chauhan, who studied product development at Fashion Institute of Design and Merchandising (FIDM) in Los Angeles.
Understandably, it was not an easy period and the people within took some convincing. “I am quite task-oriented as a person and clear that business will always be a period of learning,” she explains.
In terms of plants, the company has an enviable spread now. It has a presence in Odisha, Manipur, Gujarat, Kashmir and down south in Kanyakumari. The largest market is the south, an indication of the higher urbanisation there. “Our target markets are the 8,000 towns in India and not the 600,000 villages,” adds Angelo.
On the premium side of the water business, it has Vedica, launched in 2006 as Natural Mountain Mineral Water and relaunched six years later. This one has been a pet project of Chauhan’s. It is also sold in glass bottles, apart from the PET (polyethylene terephthalate, a type of plastic that is strong, clear and completely recyclable) version. “There were a lot of people who did not believe in the category but I saw how it was developing in other parts of the world. I was very clear on going for a glass bottle to give the brand a premium image,” she says. Her background in product development helped and there were innovations like a refractive label.
Xerox is the best example [of being generic to a category] and something similar has taken place with Bisleri, India’s first packaged water brand
Anand Kumar Jaiswal
Professor of Marketing
IIM Ahmedabad
Cut to the soft drinks piece, which is dominated by the two multinationals, Coca-Cola and PepsiCo. According to industry insiders quoting Nielsen numbers, the soft drinks space is a Rs 50,000-crore market.
And this isn’t Bisleri’s first foray here in recent times—in fact, the last couple of attempts did not work. In 2016, the company launched Bisleri Pop with four variants—Limonata, Spyci, Pina Colada and Fonzo—but had to exit with no success to speak of. A return with Fonzo as a mango-flavoured drink a couple of years later was again a disappointment.
Those hard lessons could come in handy here. “When servicing the millions of retail outlets with their branded offerings, it is critical for them to also have packaged drinking water in their portfolio. It helps in offering the complete package to the trade and allows them to sell it through the year unlike soft drinks,” says Narayanan.
Chauhan says the firm took a fresh look at the market between 2019 and 2020. “Yes, we did not get it right earlier simply because the understanding of the market was not adequate. From a technical point of view, we had to correct a few things and the focus after that has been on the distinctiveness of taste,” she says.
“We do not believe the market is saturated and if the flavours are unique, you will be in business.” Angelo chips in by saying the market for soft drinks is much larger than water, with the company’s current portfolio “having a clear synergy on both manufacturing and distribution making us a very strong competitor”.
The launch of fruit-based drinks also suffered with the imposition of the so-called sin tax levied by the government on products classified as unhealthy. “We are doing well with the range this time and the market has reacted positively,” says Chauhan. On offer are Bisleri Pop, an orange-flavoured carbonated drink, apart from Bisleri Rev with a cola flavour and Bisleri Spyci Jeera. The lemon-minty drink Limonata remains in the stable. “The non-water business brings in 7-8 per cent of revenue and the target is to take that to 15 per cent over the next two years,” says Angelo. The non-water segment includes Vedica, Bisleri Soda, and the recently launched soft drinks. It comes down now to how easily the market laps up soft drinks and the company’s ability to then ramp up capacity.
One thing it can count on is its agile marketing. It has launched a series of quirky campaigns featuring camels that was the result of a study conducted among the youth. It understood that water was moving from being just to quench thirst to a product enabling a fit and active lifestyle. So, the company has gone full steam on a hydration-focussed digital campaign featuring sportspersons like Lovlina Borgohain, Manpreet Singh, Ashwini Ponnappa and Nishadh Kumar. Keeping with the theme, it forged partnerships with four IPL teams—Mumbai Indians, Delhi Capitals, Rajasthan Royals and Gujarat Titans—and the Procam Group for major marathons earlier this year. The IPL deal gave Bisleri a chance to sample its soft drink portfolio at stadiums. In the south, Bisleri launched limited edition partnerships with films such as RRR, Jailer, Vikram, PS1 and PS2. That has now been replicated in the north too with a limited edition bottle in a marketing tie-up with Jawan, Shah Rukh Khan’s latest movie.
The pandemic threw up a somewhat unexpected opportunity of ordering water online. Now the consumer can ask for water through an app or through the marketplace. The D2C (direct-to-consumer) route gives Bisleri invaluable consumer data on areas such as frequency of purchase or ways to profile them. The app has seen half-a-million downloads so far.
But just how serious is the Chauhan family about Bisleri International? Last November, Chairman Ramesh Chauhan went on the record stating that discussions for a sale were being held with Tata Consumer Products in a deal pegged at over Rs 6,000 crore. It would help the buyer, a small player in the water business, strengthen its presence. By March, the deal was reported to have been called off.
Jayanti Chauhan, without getting into specifics, says the company is in a sweet spot. “We want to create the most unique product portfolio and are very serious about the business. Bisleri comes with a lot of trust and quality. Our focus is to grow the business, be innovative and [we] are not even thinking of a sale,” she says categorically.
In a business as dynamic as this, the search for new markets is a never-ending exercise. For Bisleri, the next stop will be the overseas markets and Chauhan has set her eyes first on the UAE. “The plan is to be there by the end of the year,” she says.
The large Indian diaspora is obviously one reason. “It is really an extension of India with a sizeable expat population,” she points out. Besides, there is almost no piped water in the UAE and the packaged version dominates. The key markets in the UAE—Dubai, Sharjah and Abu Dhabi, among others—have three–four large brands like Masafi and Mai Dubai. “Consumers look for quality and trust,” says Angelo. The plan is to first go with Bisleri through contract manufacturing for now, before looking at the possibility of taking other brands from the portfolio. “We would obviously like to be present in more markets outside India. That is apart from having more manufacturing units in India,” adds Chauhan.
As for strategy, Chauhan says that in terms of profitability and volumes, the business must double in four–five years. “Nothing would make me happier than Vedica getting to a certain level apart from soft drinks too taking off,” she says. The company is looking for a compound annual growth rate of 25 per cent, which Angelo thinks is tough but eminently achievable.
For Chauhan, the Bisleri journey has barely begun. It is one that she initially saw from close quarters and is now in the thick of. She feels this is the brand’s big moment with an unlimited potential to grow. The stage is well and truly set for the next round.
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