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Tata plans water brand to take on Coke, Pepsi

By Ruchita Saxena in Mumbai
June 05, 2008 02:24 IST
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Tata Tea, which sold its stake in US-based Glaceau last year, plans to begin selling a low-priced bottled water in the country through its unit Mount Everest Mineral Water, to take on global rivals such as Coca-Cola and PepsiCo in the Rs 1,500-crore packaged drinking water market.

"We want to do it quickly,'' Pradeep Poddar, managing director and CEO, Mount Everest, said. "The market is still very young and we can evolve it further through marketing new offerings."

The company may sell its bottled water brand for masses at rates lower than those offered by competitors Bisleri, PepsiCo and Coca-Cola, he said. "The challenge for us is developing a right technology."

Tata Tea, which owns 31.73 per cent stake in Mount Everest, doesn't have a mass market bottled water brand in India. The company's Himalayan brand is a premium brand controlling about half of the natural mineral water segment.

Coca-Cola's Kinley and PepsiCo's Aquafina together dominate about quarter of the mass bottled water market. Bisleri, owned by Ramesh Chauhan, accounts for 16 per cent of total sales. More than 50 per cent of the packaged drinking water market is dominated by 200 odd water brands that sell in regional pockets.

The move to create a low-price bottled water is part of Mount Everest's strategy to develop a comprehensive water-based beverage portfolio that straddles all the price points in the domestic market.

Both out-of-home and in-home consumption of packaged drinking water has grown in the country as consumers increasingly see it as an option for getting safe and clean drinking water. Growing health awareness is also boosting demand for bottled water that offer functional benefits like losing weight and nutrition.

"We would focus on introducing brands that can be volume-drivers for the company,"  Poddar said. The firm's strategy reflects the parent Tata Group's drive to expand its brand presence in top and low-end segments. As part of the plan, the Tata Group is developing the world's cheapest car Nano and acquiring marquee brands including Jaguar and Land Rover, he added.

Tata Tea, which acquired 30 per cent stake in Energy Brands (Glaceau), a vitamin-enriched water brand, in August 2006 for $677 million, sold the stake after nine months as Coca-Cola offered to buy it out for $1.2 billion. It bought the natural mineral water brand Himalayan in the premium segment in August 2007.

Poddar believes that domestic water market could grow in line with the western world,  where there is a huge demand for value-added water products like functional water, which offer health and wellness benefits to  consumers.

Mount Everest would look at the twin approach of developing its own brands and acquisitions to build its portfolio to service the demand in the country as well as globally.

MEMW's Himalayan operates in a premium segment at a price of Rs 25 per litre as against the average price of Rs 12 per litre of other brands in the packaged drinking water space. However, the company has realised that volumes lie in the Rs 1,500 crore packaged drinking water market that is growing at the compounded annual growth rate of 25 per cent. Out of this, the natural mineral water forms just Rs 100 crore.

The company is also focusing on developing the brand equity and distribution of the Himalayan brand. "Following the rebranding of Himalayan, the response we received for the brand in Mumbai, where it is currently being marketed, was very encouraging. In the course of two months, we would also roll-out this brand nationally in the retail outlets where it was not present" said Abanti Sankaranarayanan, executive director and deputy chief executive officer, Mount Everest.

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Ruchita Saxena in Mumbai
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