s&d report on water bottle industry

8/4/2019 S&D Report on Water Bottle Industry

1/22

Submitted to: Submitted By:

Prof. Jojo Joy N Ashish Gupta (10072)

BSM Koundinya (10074)

Kundal Mahanta (10085)

N Sourya Subhanjan (10089)

Study on Sales and

Distribution Strategies

of Bottled Drinking

Water in Mysore

( FINAL REPORT- Group 8 )


2/22

1

Table of contents Page

1 Introduction 2

1.1 Global Market 2

1.2 Indian Market 4

2 Objectives 63 Methodology 6

3.1 Primary method 6

3.2 Secondary Method 6

4 Marketing campaign 7

5 DISTRIBUTION CHANNEL 8

6 Organizational Structure of the retail outlets that we visited 9

7 Supply of Goods 9

8 Layout 10

9 Target Market 13

10 Promotion and Customer schemes 1311 Product range 14

11.1 Bisleri 14

11.2 Kinley 15

11.3 Aquafina 15

12 Segmentation 16

13 Positioning 16

13.1 Bisleri 16

13.2 Kinley 16

13.3 Aquafina 17

14 Consumer Habits and Practices 17

14.1 Behaviour of the consumer 18

15 Gap Analysis 19

16 Conclusion 20

17 Reference 21


3/22

2

1.Introduction1.1 Global Market

Water is the most important necessity for life. The drinking-water needs for individuals vary

depending on the climate, physical activity and the body culture. But for average consumers

it is estimated to be about two to four litres per day. The growing numbers 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 just like other consumer items.

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

tourism corp. etc. has also added to the growth.

In the refreshing drinks market, bottled water is the most vibrant segment with market share

of about 38%. Several bottled water companies are looking to enter developing markets with

immense growth potential such as Asia and Middle East. China is one such market where

sales of bottled water are rapidly increasing. Companies are trying to capitalize on weather

changes such as summer and increase in health consciousness amongst consumers. The

bottled water industry is expected to witness greater participation from soft drink and dairy

processing companies, fostered by economies offered by existing international distribution

network, and processing equipment.

As stated by the recent report published by Global Industry Analysts Inc., global bottled

water market is dominated by Europe and United States, 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 flavoured 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 of 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. The non-sparkling water market constitutes the bulk of

bottled water shipments, accounting between 80-85% of the market in both volume and value

terms. Non-sparkling bottled water is also expected to offer the highest growth opportunity,


4/22

3

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

water in United States is projected to reach US$15.1 billion by 2012.

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.

The bottled water industry is in a continuous state of flux. Entry barriers are low, and

decreasing by the day. Large companies are consolidating by acquiring local/small/niche

players to increase capacity as well as product portfolio. Consolidation in the industry is

expected to accelerate, resulting in higher degree of concentration, with the leading players

strengthening their global presence. Bottled water industry in the Asia-Pacific region is

expected to experience a major boost, as more companies venture into the market to

capitalize on the latent demand potential.

Product, marketing/promotion, packaging, distribution, price, and technology would be the

key factors in garnering market share in the industry. With the ever-increasing presence of

soft drink majors, such as, Coca-Cola, and PepsiCo, and established leaders Nestle, and

DANONE, the market is expected to become a cauldron of action in the future.

Key players dominating the global Bottled Water market include Aqua Gold International

Inc., Boreal Water Collection Inc., China Water & Drinks Inc., Groupe 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.


5/22

4

1.2 Indian Market

Indians currently spending about $330m a year on bottled water, analysts estimate. The

packaged water market constitutes 15 per cent of the overall packaged beverage industry,

which has annual sales of at least $2.6bn.

Almost all the major international and national brands water bottles are available in Indian

market right from the malls to railway stations, bus stations, grocery stores and even at

panwala's shop.

The growth and status of Indian Bottled Industry in comparison with Western or Asian

market, India is far behind in terms of quantum, infrastructure, professionalism and standards

implementation. The per capita consumption of mineral water in India is a mere 0.5-liter

compared to 111 litre in Europe and 45-liter in USA. Also As per UN study conducted in

122 countries, in connection with water quality, India's number was dismal 120. In

comparison to global standards India's bottled water segment is largely unregulated.

The Water shortage around the world and particularly in the developing countries has opened

new doors for bottled water Industry.

Bottled water is sold in a variety of packages right from 200 ml pouches and glasses, to 330ml bottles, 500 ml bottles, to one-litre bottles and even 20- to 50-litre bulk water packs. In

terms of cost the bottled water business in India can be divided broadly into three segments,

premium natural mineral water, natural mineral water and packaged drinking water. It is

obvious to found the bottled water manufacturer in metro cities though it might be running

only in one room or shop, but its surprising to know that at present in many medium and

small villages and even in some of the prosperous rural areas you will find the local

manufactures of bottled water and local brand of bottled water laying with the well-known

brands on the same shelf.

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 and created Bisleri as the synonym of

mineral water but now that image is getting deteriorated with the entry of major international

giants like Coca cola, Pepsi, Nestle and noticeable presence of national players like Mount

Everest, Manikchand, Kingfisher. Their distribution network with professional marketing

approach has resulted to capture the major chunk of the bottled water market though they are


6/22

5

receiving good fight from the local players as well. One thing have to be noted in this

business is that the required infrastructure and the distribution network requirements are same

for major players and small or local players but in as per my belief where they can make

difference is the only marketing and branding part.

The Indian market in 2010 reached Rs. 4,000 - 5,000 Crore with 33 per cent market for

natural mineral water. According to a national-level study, there are more than 200 bottled

water brands in India and among them nearly 80 per cent are local brands. This industry is

dominated by the big players like - Parle Bisleri, Coca-Cola, PepsiCo, Parle Agro, Nestle,

Mount Everest, Kingfisher and Manikchand and so on. These players can be called as the

trend setters in the marketing of packaged drinking water.

This growth rate makes Indian Bottled water market as one the fastest growing in the world.

The factors contributing to such a rapid growth are sound economy, disposable income of the

people, poor public water distribution system and infrastructure and the Indian government

hardly cares for what happens to the nation's water resources.


7/22

6

2.Objectives:Any promotion activity should end up as a sale, only then will a company benefit from it.

And in almost 90% of cases the final decision is made or sale/ buy decision is influenced at

the point of purchase. This is more so in the fast moving consumer goods industry as the

customer is either motivated to buy a particular brand by the channels or the availability of

certain brands only forces the customer to buy it.

This makes the sales by the channel, their strategy to push a product or brand, the display and

aesthetic aspect of the product and brand very important part of the sales activity. Our study

aims to capture this aspect or sales activity the details and reasons for each of the

departmental stores, small stores, kirana stores, vendors to influence the customer to buy aparticular product. The study also tries to capture the channel, distribution networks and

management of each of the brands viz. Bisleri, Kinley, Aquafina and Bailey.

3.Methodology:Collection of data is done through:

3.1 Primary method:

1. Visiting all sorts of branded bottled water sellers in Mysore city.2. Visiting multi/mono brand distributors (based on availability in Mysore city).3. Interviewing the people of the channel at different levels of hierarchy.4. Collecting data through relevant questionnaires and survey.

3.2 Secondary Method: Where ever primary sources of data and information are inadequate,

we propose to collect information from:

1. Internet: the company websites, and other related websites.2. Data from economic and business data collection agency sites.3. If possible collect information via company representative through e-mail.4. Information available in other research studies, journals and projects.


8/22

7

4.Marketing campaign The Breakaway Seal: keeping in mind the consumers need to recognize a genuine

product that cannot be tempered with. Unique caps have been patented and cannot be

duplicated. This technical strength ensures that the consumer will only get a high safe

product when they will drink these brands.

The companies also increased advertising in the media, especially television, and thegrowth of bulk bottled water sales to homes has also helped to increase volume sales.

Bisleri enjoys first mover advantage in bottled water, having been present on the

market for more than 30 years. It enjoys strong brand equity in the country as Bisleri

is synonymous with bottled water to most consumers. Kinleys marketing campaigns

ride through the Coca-Cola brand equity and brand positioning. The 2008 adcampaign on trust theme was much needed to revitalize the companys image after the

pesticide scandal. Aquafina uses Pepsis image and campaigns as a trendy thing to

carry, not just water bottle.

These companies plan to introduce vending machines for its packaged drinking water.The first initiative of its kind was taken by Bisleri in India. Bisleri has tied up with

vending machine company Grabbit to set up automated machines in offices, shopping

malls, airports and other high traffic points. Aquafina and Kinley also try to followsuit in the future.

Kinley and Aquafina sponsor refrigerators to the retail outlets under their marketingcampaign. This provides easy visibility to their products. More often the products are

kept closer to the main roads so that the commuters can notice easily.

Bisleri has started the Aqua green revolution with changing its theme colour fromblue to green. Kinley is currently campaigning using trust theme to regain customer

fidelity. Aquafina is gradually shifting from youth centric advertisements to safety

and purity based campaigns.

Currently none of these three brands have a brand ambassador.


9/22

8

5.DISTRIBUTION CHANNEL

They have appointed Distributor for each area to sell their products and have also approachesto the Retailers.

They appoint a sales representative to each distributor. The salesmen are divided among the

territories defined by the distributor.

The distributor has 5 routes. Out of the 5 routes, one is the main route and the other four are

sub routes. The salesmen have to handle these routes. This helps in avoiding horizontal

conflict and leads to better focus and evaluation of sales performance of the salesmen.

The company sales person makes a visit once every week on Friday. Every Friday a report is

given by the sales representative to the area head. Communication regarding stock

replenishment, etc. takes place over phone. The person of the company whom the distributors

communicate with is the Sales Executive. At times the company deploys its own men to do

the distribution job for the Distributor also.


10/22

9

6.Organizational Structure of the retail outlets that we visitedThe organizational structure of a retail store will vary by the size and type of the business.

Most tasks involved with operating a retail business will be the same. However, small orindependent retail stores may combine many sectors together under one division, while larger

stores create various divisions for each particular function along with many layers of

management.

The small specialty shop named ARYA Bakery had all its employees under onecategory called Store Operations and the owner sitting on the Manager cum Cashier

desk.

The kirana stores or the mom & pop stores we had visited had the owner/managerhimself as the sole worker with one/no assistants.

Large department stores like More, Daily Needs , Big Bazaar had a completestaff consisting of a manager, assistant manager and sales associates for its Food and

Beverages, Sporting Goods department, Home and Garden, Bed and Bath, and each

additional department.

In order to define the store's organization, one needs to start by specifying all tasks that need

to be performed. Then divide those responsibilities among various individuals or channels.

As the store grows and the retail business evolves, the dynamics of the organization's

structure will change too. Therefore it is paramount to redesign the store's organizational

chart to support the decision-making, collaboration and leadership capabilities that are

essential during and after a growth period.

7.Supply of GoodsIn this section we try to analyse the supply of goods to the various retail outlets visited. The

basis for the study was the lead time (time from order to stock received) and the order placing

method. The findings are summarized in the table shown below. From our interaction with

the employees of these outlets we got to know that respective company salespersons come

regularly and verify the stock available. They also check for the expired or soon to be expired

bottles and immediately take it back. In this criterion, all the three competing brands are

Proactive. The supply comes from the company depot which is in Mysore. Distributors


11/22

10

make sure that the respective company lead time and frequency of supply is kept intact. The

lead time and frequency of salespersons visit is also dependent on sales and size of the

outlet. More the sales through the outlet, more the frequency of visit, subsequently lesser lead

time.

Name of the Outlet Lead Time(in days) Order placement method

MORE 1 Salesperson

ARYA Bakery 0 Salesperson

Mom & Pop stores 1 to 2 Salesperson

8.Layout

The refrigerator provided by Coca-Cola containing Kinley along with other products of the

company. It is kept in the anterior part of the outlet so as to attract maximum attention of the

customers and also the travellers going on the road.


12/22

11

Bisleri bottles in display stand, which are kept with other local products. These are not kept in

the most visible parts of the outlet, but people come and ask for the product.

Outlay of Arya bakery. Coca-Cola refrigerator kept at the entrance of the outlet. Other

brands are separated and kept in cold cell owned by the outlet owner.


13/22

12

Aquafina and Bisleri kept in one place due to lesser space availability.


14/22

13

9.Target MarketTarget market is a set of buyers sharing a common needs or characteristics that the company

decides to serve.

Targeting Premium drinking water segment Major part of the consumer base for bottled water lie in metros and semi metro

towns

10. Promotion and Customer schemesKinley and Aquafina are promoting along with other sister brands by their mother companies

through retail outlets. These two companies sponsor refrigerators to the outlet bearing the

company logo, which is branded and designed beautifully to catch attention of the customer.

Visibility plays a vital role in purchasing decision of customers at the point of purchase.

Coca-Cola and Pepsi showcase their products (respective water bottles) in anterior side and

noticeable parts of the outlet. Bisleri doesnt provide with a refrigerator, instead they givedisplay stands to keep their bottles. They promote through its quality and frequent service to


15/22

14

the retailers. Moreover they offer highest sales margin to the retailer, which is 17%, as

compared to 15% offered by Aquafina and Kinley. It drives the retailer to promote Bisleri

more than the other two brands. Two litre variant of Bisleri comes with a handle to make it

easy for the customer while carrying, which is not present in other two brands (2-litre

variant). Bisleri has made such an image in the minds of customers that it doesnt need much

of promotion. As the retailers say, people come and ask for Bisleri and it has become a

generic name for the mineral water.

11. Product range11.1 Bisleri

Bisleriis available in the retail outlets in 1 litre, 2 litre, 5 litre and 20 litre pack sizes.Although Bisleri has 250 ml cups, 250 ml bottles, 500 ml, 1.5 litre bottle sizes, these

are not readily available in the market. 20 litre packs are frequently ordered for party

or bought as family pack.


16/22

15

11.2 Kinley

Kinley is available in a range of packaging including 500ml, 1 litre, and 2 litre PETbottles, and 20 litre and 25 litre bulk jars for larger consumption.

11.3 Aquafina

Aquafina is available in various pack sizes like 500ml, 1 litre and 2 litre bottles andin bulk water jars of 25 litres

.


17/22

16

12. SegmentationBottled water industry is segmented into four segments based on price and type of water. All

the three brands (Kinley, Bisleri, Aquafina) fall under same segment with almost same price

and offering.

Segment Products Price/litre in Rs

Premium natural mineral water Evian, San Pellegrino and Perrier 80110

Natural mineral water Himalayan and Catch 25-30

Premium drinking water Bisleri , Kinley , Aquafina and Bailey 15-16

Normal drinking water Local brands 10-12

13. Positioning13.1Bisleri-

Sweet taste of purity

Earlier it has positioned itself as Pure and Safe, which they have modified to Play Safe

through new ad campaign. Bisleri has changed its packaging colour from blue to green to

showcase its go green purpose. It has started Aqua Green Revolution campaign to create

eco-friendly image of the company.

13.2Kinley-Boond boond mein Viswas (trust in every drop)

Kinley has positioned itself as a trust brand, which is indicated by its tagline. It tried to

strengthen its brand positioning by communicating the statement, Water which can be

trusted and is truly safe and pure. After pesticide allegation and scandal, it repositioned itself

in 2008 with introduction of trust theme.


18/22

17

13.3Aquafina-The purest part of you

The campaigns created by Aquafina have helped the brand to drive premium, modern and

youthful image. It targeted the young generation and positioned itself as a fancy product to

carry. As its tagline suggests, it also tries to position itself as a pure product, just like any

other mineral water manufacturer. But the core theme of positioning remains youth oriented.

14. Consumer Habits and Practices Consumers are growing more health conscious and are more careful of their drinking habits.

Brand loyalty is very low as all the products taste the same so they can buy just any product

which is on the shelf, same as that of soft drinks and fruit beverages.

Availability in the chilled form and brand awareness plays a crucial role in purchase

decisions.

While there is no aversion to consumption of mineral water by any age group, this product

is mainly consumed by the people in the age group >40 years who have less attraction of soft

drinks or other synthetic drinks whereas youngsters look in for soft drinks and fruit beverages

to quench their thirst.

Visibility is another factor that should be taken care of by the companies as consumers are

not very brand loyal and consume whatever is in front of them.

Consumers often drink bottled water as an alternative to tap water. They think it tastes better

(no chlorine taste) and perceive it to be safer and of better quality. They also look for

security: food scandals in industrialized countries and water-borne diseases in developing

countries greatly influence consumers attitudes. Consumers buy bottled water to feel well

and to lose weight. Bottled water is perceived as a healthy alternative to other beverages.

Thus, for the aerated beverages bottled water offers a potential threat. Moreover, increasing

urbanization, causing declines in tap-water quality, can also explain the popularity. Because it

is untreated, natural mineral water is perceived as natural by city dwellers looking for

genuine products. Higher living standards and auto usage enable people to easily bring home

more and heavier bottles of water. At the office, a bottle of water is now a common sight on

the desk, next to the computer and the telephone. Drinking bottled water is a sign of a rise in

the social scale. Above all, bottled water has become a huge marketing success.


19/22

18

14.1 Behaviour of the consumer

Consumer behaviour is the study of when, why, how, and where people do or do not

buy a product. It blends elements from psychology, sociology, social anthropology and

economics. It attempts to understand the buyer decision making process, both individually

and in groups. It studies characteristics of individual consumers such as demographics and

behavioural variables in an attempt to understand people's wants. It also tries to assess

influences on the consumer from groups such as family, friends, reference groups, and

society in general.

Bottled water industry is a highly saturated industry where in the product

differentiation is less. The need of all the consumers is one and the same. So the numero-uno

influencing factor will be price. In this bottled water industry, there will be high price

sensitivity. If one of the three major brands reduces the price then obviously the momentum

will be shifted towards that brand. So price is the major influential factor. After the price, it is

the brand name that influences buyer decision process. For example, the only brand that pulls

consumers, in case of bottled water, is Bisleri (which is obviously the market leader). There is

little differentiation among other brands. But mostly buying a water bottle will be an impulse

decision rather than a planned one.


20/22

19

15. Gap Analysis15.1 Current situation

Bisleri Kinley Aquafina

-Doesnt provide refrigerator,hence selling chilled water isa problem for the retailers- No advertisements-Not aggressive in marketingcommunication strategy,hence riding through thegoodwill and image of thecompany-Highest retailer margin of17%- Cloners are flooded in themarket-Market price has increasedover the time-Production capacity islimited as compared todemand

-Margin to the retailer islesser than Bisleri, around15%- Pesticide scandal is stillhaunting the brand-Market price has increasedover the time-Cloners are flooded in themarket-It has the advantage of itsparent company

-Margin to the retailer islesser than Bisleri, around15%-Limited target segment, i.e.youth-Market price has increasedover the time- Cloners are flooded in themarket-Availability in the market isa problem for the company-Aquafina packaged bottleswater is given in a scheme topromote Pepsis beveragesbrand.

15.2 How to fill the gap

Bisleri Kinley Aquafina

-Should come up with

advertisement-should provide refrigeratorsto retail outlets

-Should increase productioncapacity-Increase the visibility inbigger and multi-brandoutlets-Should curb the cloners andimitators

-Margin to the retailer to beincreased-Increase the frequency oftrust based advertisements

-Leverage on the alreadyexisting distribution network-Should curb the cloners andimitators

-Margin to the retailer to beincreased-Need to expand the targetsegment

-Pepsi logo should benoticeable in the bottle-Should curb the cloners andimitators


21/22


22/22

21

Reference

1. http://en.wikipedia.org2. http://www.bisleri.com/3. http://pepsicoindia.co.in/brands/aquafina.html 4. http://www.coca-colaindia.com/products/kinley_water.html 5. http://www.worldbank.org.in
http://en.wikipedia.org/http://en.wikipedia.org/http://www.bisleri.com/http://www.bisleri.com/http://pepsicoindia.co.in/brands/aquafina.htmlhttp://pepsicoindia.co.in/brands/aquafina.htmlhttp://www.coca-colaindia.com/products/kinley_water.htmlhttp://www.coca-colaindia.com/products/kinley_water.htmlhttp://www.worldbank.org.in/http://www.worldbank.org.in/http://www.worldbank.org.in/http://www.coca-colaindia.com/products/kinley_water.htmlhttp://pepsicoindia.co.in/brands/aquafina.htmlhttp://www.bisleri.com/http://en.wikipedia.org/

s&d report on water bottle industry

Documents