STRATEGIC ANALYSIS OF BISLERI

PHASE 1

SUBMITTED TO

MS. AMRITA S.

SUBMITTED BY

PETHE SARANG S.MADAN LAL

VIPIN Y.KRATI S.

ABHILASH N.

INTRODUCTION

The global bottled water industry consist the sale of flavored and unflavored. In India there is

sale of only still unflavored water. The industry in Asia-pacific region is growing at rate of

13.2% generating annual revenues of $15 billion in 2009. In India the bottled water sector is the

fastest growing sector and the total market size is around Rs 2000 crores. There are more than

500 brands present in the industry and the market is mainly controlled by organized sector. The

health consciousness among the people, improper water supplies and unpredictable municipal

water supply are the various factors which have caused the growth of the sector. The strong

growth rate and lower entry barriers have attracted many players. The major players in the

market includes Parle Bisleri, Kinley, Aquafina, Oxyrich and Bailley. With the growing

competition the established players are undergoing a makeover. The major players have

introduced new bottle shapes, labels and communication campaign. The off-trade channel which

consist of distribution of bulk bottled water is growing on the grounds of unreliable supply of

water in many cities during summer. The unorganized players have major presence in the off

trade business. The flavored water segment is a niche category and has presence in North India

and major cities in India. As the consumer base increases the growth rate for bottled water is

expected to increase. The market operates on lower margins, the unit prices are expected to

increase on account of high costs in packaging and transportation. The major players after the

rebranding exercise are now concentrating on expansion of their manufacturing and distribution

capacities. The major players are trying to establish themselves in bulk water business through

brand equity whereas the unorganized players are resisting them through differentiation.

BACKGROUND OF COMPANY

Bisleri was emanates from Italy and the brand name is derived from its founder’s name Mr.

Felice Bisleri, an Italian entrepreneur. In the year 1967, Bisleri established its plant in Mumbai to

market actual mineral water which was not successful. In 1969, the company wanted to quit from

the business and then it was bought by Chauhan with an intention to convert it in to a soda brand.

But today it has captured a huge percent of share in Indian market and making its mark in the

international market. In 1969, bottled water of Bisleri was bought from Italian company and then

later it was bottled in glass bottles and then in 1980 it shifted to PVC bottles. In the mid-1980s it

switched to PET bottles which is meant for more life and clearness for mineral water. In 1995, it

launched 500 ml bottle and in 2000 it introduced container of 20 litres to reduce the price. In

1998, it introduces a tamper-evident and temper-proof seal. In 2009 it introduced

‘Bisleri’ first introduced its mineral water in Mumbai in the year 1965, in a glass bottle in two

varieties namely, bubbly and still. Signor Felice Bisleri was the main man behind the idea of

selling bottled water in India. Starting the year 1995, Mr. Ramesh J. Chauhan began expanding

the brand of Bisleri in terms of its operations significantly, since then the turnover of Bisleri shot

up remarkably to about 20 times in 10 years and the average growth rate of the brand was 40%

during this phase. In the present scenario Bisleri has about 8 plants and 11 franchisees all across

the country. The company dominates a 60% market share of the organized market. The

devastating popularity of the brand ‘Bisleri’ and the fact that they initiated bottle water in India

has made them synonymous to Mineral water in the country.

Bisleri has developed 8 exclusive pack sizes to suit the needs of the consumer. They have come

up with to two categories for that, namely, non-returnable packs and returnable packs. In the first

category they have 250ml cups, 250ml bottles, 500ml, 1Ltr, 1.5Ltr and 2Ltr bottles and under the

returnable packs they have 5Ltr and 20Ltr cans. In effort to offer its customers something

refreshingly new, they recently introduced Bisleri Natural Mountain Water – it is the water from

the foothills of the mountains located in Himachal Pradesh. So, presently Bisleri has two

variants: Bisleri with added minerals and Bisleri mountain water. The minerals found in its

mineral variant contain minerals such as magnesium sulphate and potassium bicarbonate. These

two minerals that are used are considered to be essential minerals for healthy living. Bisleri over

the years has become the brand cum market leader in the bottled water segment primarily

because of its rigorous R&D and strict quality control procedures it follows. They maintain

severe hygiene conditions in all its plants. The water packaged for consumption is put through

multiple stages of purification, then it is ozonized and then only the water is packaged for the

final consumption.

The vision, mission and values of Parle Bisleri is given below,

VISION

“Our vision is to be the dominant player in the branded water business where the second player

is less than 20% of our business.”

MISSION

“We are in the business to serve the customer. He is the most important person. He is the only

one who pays. He deserves the best quality and presentation at a worth of the price. We must

have world class quality, at the lowest production & distribution cost. This will make us an

unbeatable leader, and will have satisfied loyal customers.”

VALUES

“Integrity, Leadership, Teamwork, Co-operation, Quality, Passion, Openness and Transparency.”

PESTLE ANALYSIS

We have considered Indian mineral water industry for the analysis. The key points are given

below followed by the analysis.

Political

There are various political parties protesting against the pricing of mineral water.

There is stable government at the centre with liberal policies.

The government has imposed price ceiling on bottled water.

Economical

There is an increase in per capita income.

Most of the people are from middle and upper middle class.

Expansion of multinationals, IT and BPO companies in Tier 1 and 2 cities.

There is no licensing policy adopted in this sector.

There is availability of cheap labor.

The government is promoting new bottling plants through public-private partnership.

Social

Bottled water was earlier considered as a status symbol.

Bottled water is now the only source of pure drinking water in areas where there is

scarcity of water.

The bottled water is considered to be safe as compared to ordinary tap water.

There in increase in health consciousness of people.

Technological

The bundling of technologies like distillation, reverse osmosis, activated carbon filter, etc

helps in better quality of water.

There has been a shift in packaging from bottles made of glass to bottles made of PET.

This helps in recycling and reducing environmental pollution.

Legal

Governed by PFA and BIS standard.

BIS has provided standards for mineral and drinking water. The BIS approval was made

mandatory from 1999.

Mineral water should be packed in clean, colorless, transparent, odorless, tamper proof

bottles made up of polyethylene.

PFA and BIS lays standard for metals like lead, mercury, arsenic, aluminium and barium.

Environmental

The use of Plastic for bottled water increases environmental pollution.

The increase in consumption of bottled water causes depletion of valuable fossil fuels.

ANALYSIS

The PESTLE analysis helps us to analyze the various factors affecting the Indian bottled water

industry. We can observe that governmental policies regarding the quality of packaged water are

very stringent and all the companies have to adhere to the BIS standards. The liberal government

policies, growth of the IT and BPO sector in Tier 1 and Tier 2 cities and promotion of bottling

plant through public private partnership are favorable to the industry. The lower cost of set up

and availability of cheap labor has attracted many small as well as big players. There have been

incidents where pesticide contents have been found, also there have been instances where small

companies have been found using plastic unsuitable for human health. There is therefore

constant pressure on companies to maintain quality of product and packaging. There has been

increase in health consciousness among people and unavailability of safe drinking water in low

tier cities is favoring the sales of bottled water. The technological advances in purification

processes help in enhancing and maintaining quality of water. There is no industrial licensing

policy present currently which attracts many players to enter in this industry. The lower margin

associated and low entry barriers considerably affect the larger players. We can observe that the

companies adhering to the environmental standards, using proper packaging gains advantage.

The price war is not possible in this industry as the government has imposed ceiling on the price

of bottled water. However there is much possibility that companies start competing through

differentiation. The bottled water is considered as a status symbol so it can be possible that

companies enter the unexplored area of flavored drinking water. The scarcity of safe drinking

water in many areas creates opportunity for the players to cater to this growing demand. There

have been instances of protest against the bottled water companies against the pricing strategy

and over the depletion of scarce resources. However this will have very meager impact on the

industry considering the growing demand for pure and safe drinking water. We can observe that

the overall scenario for the industry is favorable for small as well as larger players. The industry

has considerable growth prospect in newer areas and the macro environmental factors attracts

new players.

PORTERS FIVE FORCES ANALYSIS

Porter’s five forces model is specially used in industry analysis. This will helps an organization

to make a strategy. The bottled packaged water industry is a part of beverage industry which

again comes under fast moving consumer goods. According to American agency the world’s

bottled packed water is expected to reach $65.9bn by 2012. The cause behind this is population

rising, consumer buying pattern, life style trends and growing level of health consciousness.

Threat of entry:

As the number of Bottled packaged water consumption is increasing in all over the world, the

opportunity for other players in increasing rapidly. In the bottled packaged industry the entry

barrier is low. The entry barrier is low due to local low production cost, less amount of capital,

easy to access government and legal law, local production law, less legal and government barrier

and low switching cost. The existing brand in beverage industry is paying attention and moving

into bottled packed water, as they have good brand image and the opportunity is very huge in this

industry. Eg. Pepiso coca cola

According to industry life cycle the bottled packed industry is at mature state and the most of the

market is covered by the Bisleri, Aquafina, kinley and Ozone. So the pressure for new entrants to

capture the market is very high. But according to still there are many local player that covered

the 26% of the market. But when we observe the product on differentiation the different among

product is very less or equal lent to nil. According to product differentiation the threats of

entrants is high. But the overall threat of new entrants is medium.

Bargaining power of suppliers:

The bargaining power of supplier is low, as the suppliers include municipal water system, bottles

and plastic cap, label printer filtration and deionization equipment, plastic grains and etc.

Sometimes the bargaining power of suppliers is depends on geographical location and the

technology adopted by the organization. The recyclable bottle used by the company needs

advanced technology or some dependant, like other packaging industry as the packaging cost is

high. But the large availability of suppliers leads to less bargaining power. The bargaining

power of supplier may include the inventory stock of bottles. Overall bargaining power of

supplier is less.

Bargaining power of buyer:

As the bottled packed water industry comes in oligopoly industry. The no of producer is less thus

the bargaining power of suppliers is less. The bargaining power of buyer is depends on the price

and product. The availability of product also affects the bargaining power of buyers. Availability

of substitute is also affects the bargaining power. As the competition is not much high, there are

mainly five to ten producer like Bisleri, Aquafina, Kinley, Oxyrich and Pure life so the

customers do not have any advantage moving from one brand to other brand. The product

differentiation is almost zero, so the bargaining power of customer is low.

Sometimes it depend upon the geographical location, segment of consumers both rural and urban

population, consumer buying behavior and consumer preferences.

Substitute product:

The availability of substitute is coffee, soft drink, juice and tea. The substitute of product affects

the price and market. The availability of substitute provides the option to customer and customer

can switch from one product to other. The beverage industry is always appreciated by every

country. The availability of various health drinks, juice, carbonic and no carbonic drinks and

availability of taste changed the consumer preferences. Consumer is using various health drinks,

carbonic and non carbonic drinks to quench the thirst.

The total size of food industry in India is almost $ 65.6 billion and soft drinks (juices and

carbonated beverage) contain $ 1 billion. Indian soft drink market consumption in a year is 284

million crates. Soft drink market is highly seasonal in nature, consumption in during offseason is

15 million crates and in peak season is around 25 million crates per month. In urban area

Consumption of soft drinks is 75% of whole Indian market. Indian soft drink market is

dominated by multinational companies Coca-Cola and PepsiCo. In India mineral water market is

$50 million and 65 million in crates. The monthly average consumption of mineral water is 4.9

million crates that increase in peak season to 5.2 million (Non-alcoholic beverage market in

India, 2009).

So we can draw that the bottled packed water consumption in India is one third of the total

beverage industry.

Rivalry:

The degree of rivalry and the competition affects the price, quality, profit and revenue in an

industry. As the market is almost on saturation state, and the industry refers the oligopoly

competition so there is a high competition to increase the market share. The market is dominated

by the very few players like bisleri(%), aquafina(%), kinley(%) and oxyrich, and they are trying

to increase their market share by product introduction, price, packaging and volume of water. As

there is no much difference among the product by different competitor, the rivalry is only in

terms of service and of marketing strategy. The intensity of rivalry is low as there is limited

player and the product is not price sensitive. According to Indian beverage association the

market will grow by in 2012 , the market shows the high growth rate so the competition is less

Conclusion:

On the basis of porter analysis we can draw that the market is safe for beverage industry.

According to producer perspective there is a huge opportunity and the control over market

cannot be influenced by one competitor or one supplier. The dependency of industry over

supplier is less also the rivalry is low among competitor.

SWOT ANALYSIS OF BISLERI

Strength

Extensive range of products

BISLERI is a providing a wide range of products to pull all types of customers. E.g. twelve

litres and twenty litres of bottle are for organization’s purpose and 500 ml and one litre is

suitable for individual purpose.

Strong brand image

BISLERI has been a generic name for mineral water and that is the reason maximum people

purchase BISLERI water only. Around seventy lakhs people have put their trust in BISLERI.

For example- when consumers go to purchase the mineral water then they ask for BISLERI

even though other brands are available in the shop.

High quality standard

BISLERI has been maintaining its quality standard for last few decades. Each bottle of

BISLERI goes through a précised process of multi stage purification which consists of

ozonisation and micron filtration. It holds six phases of distillation procedure which

guarantee the quality, safety and purity of water which is suitable for drinking purposes. It is

examined very accurately at every stage of manufacture which adds one more unit to its

strength.

Marketing

Bislery has a strong and effective strategy for marketing of its products. It is using print and

electronic media for its marketing and hoardings at the point of sale to supports their TV

advertisements. For example vehicles are painted in light green with logo of BISLERI easy

punchline as “drink and drive”

Increasing popularity

The popularity of BISLERI is growing at rapid pace. It has become the first preference of

people when they go to purchase the mineral water. BISLERI is enjoying a growth of 50%

per year. Its small pack is increasing its popularity for individual purpose and its bulk pack is

creating huge demand which is conducive to captivating the market. The bulk segment of

BISLERI is generating 60-70% of total revenue and company is looking forward to augment

it to 80%.

Distribution channels

BISLERI has around eighty thousands outlets in India. It distributes products directly to

retailers through its large fleet of truck by using a system known as route selling in which

truck driver is trained as a service man. This helps in maintaining the freshness of water and

shape of bottles.

The safety seal

In order to deliver the quality product to the customer every bottle of BISLERI is sealed with

a unique cap which is patented and cannot be replicated. This is a technical strength of the

company which guarantees that customer will get product of standard quality not duplicated.

Weaknesses

Reusable bottles

According to some relevant market research it is found that bottles are reused and refilled

with unhealthy water at railway stations. The tampering of seal and reuse of bottles is a

matter of concern for consumers and for company also. It defame the brand image of the

company. For example- some local sellers fill BISLERI bottles with impure and unhealthy

water and they sell it to uneducated customers as BISLERI water which affects their health

and brand image of the company.

Errors in production

Some faults have been found in the production process of Bisleri products. In some purity

tests pesticides were found in water. In the year 2002, tests were conducted by authorities

they found 2 cm insect in Bisleri bottle. That has reduced its sales and brought down the

reputation of the company. Some factories lost their license due to faults in production.

Government pressure

FDA has stopped the production of BISLERI due to insects and pests were found in

BISLERI bottles. Later, Government gave the permission to resume their production but

consumers were not satisfied and moved towards other brands. It is tested by various

authorities constantly.

Unable to fulfill the demand of the customer

In some parts of south India big BISLERI bottles are in great demand but the company is not

able to fulfill the demand of consumers for individual purpose. It is reducing the demand for

BISLERI and that is why people are bound to purchase other brands of mineral water.

Opportunity

Field growing at rapid pace

Water seems to be the best beverage for India in the upcoming time period. In last several years,

it has been indicated that drinking water market has shown high level of activity with several

new competitors. The worth of the bottled market is expected to be increased from Rs.1000 crore

to Rs.5000 crore by 2010.

Effective utilization of distribution chain

It is becoming a generic name for mineral water and if company can use the distribution channel

in order to provide the product to place where consumer require it most then company can gain

more success in this field. This company can establish good relations with dealers and other

distributors to market the product all across the world.

Expansion in Europe

Bisleri has introduced its product in European market which has brought lots of opportunities for

the company in the bottled water market. It will recover the loss of brand image; the company

has faced when insect was found in the market. It will be a strong response to critics and it will

enhance the trust of the consumer in Bisleri. It will improve the quality and provide international

brand image.

Introduction of premium pack

Bisleri has a range of its premium products. This is manufactured for use in five-star hotels and

other first-class consumers. The cost of this pack will be Rs. 20 per litre. It will create tough

competition with EVIAN, the greatest player in this field whose product costs Rs. 85 per litre.

Alteration of image

The company has changed its colour from blue to green and by doing this company has offered a

new product to the customers and they will enjoy a fresh product.

Increasing production

The company is focusing on the market and looking forward to increase the production by

establishing new more plants. It will enhance the capacity of production of the company.

Threats

Entry of big players

The market growth is showing that the demand for the mineral water is increasing. Therefore,

big players are focusing on the market; players like Pepsi, Coke, Britannia and nestle are curious

to increase their stakes in the market. Due to the tough competition between Pepsi and Coke,

BISLERI can be dissolved.

Entry of new players

New players are entering the market in order to capture some shares. Some of the players like

Tata-Tea and Godrej are looking forward to launch their product and this will heat the

competition. There are some other brands like EVIAN, ATCO, BRILLIAN water, DS FOODS

are also looking forward to launch their products. Hindustan lever is also looking forward to

launch its product in the product and this will lead to a tough competition.

Water filter manufacturing companies

It is facing competition from water filter manufacturing companies like Eureka forbes. They are

marketing their product in the market which has reduced the sales volume of bottled water.

Unauthorized manufacturers

In rural areas BISLERI is facing a tough competition from unauthorized manufacturers. The

local manufacturers sell their products at a low price than branded products.

New Government policy

Previously, government was not charging any tax on extracting the water from the ground.

According to new policy, government will impose tax on extracting the ground water and this

increase the cost of production. This will lead to high price of products which every consumer

cannot afford. The high production cost can be compensated by cutting down the market

expenses but this will affect the quality of the product.

CORE COMPETENCIES

There are tangible as well as intangible resources. The tangible resources are termed as the

physical assets of the organization whereas the intangible resources are termed to be non-

physical assets such as the information or knowledge of the product. Bisleri as a brand gains the

competitive advantage. It has goodwill in the market. The concept of the bottled water is

prevalent in the western countries as people are very health conscious. The bottled water slowly

and gradually came into existence as Coca-Cola and Pepsi entered the market. As people think of

the mineral water Bisleri is the first name which came into their mind. Bisleri has launched itself

into many different brands, as Bisleri mountain water and many more. Bisleri whenever

advertise itself on television or on press the only one message which is delivered is Bisleri is safe

and pure. The bottles are sealed and refilled and recycled on timely basis. The seal of Bisleri

bottles help the customers to remove the doubts which were created in their minds about the

purity of the brand. Thus, the brand itself is the core competency of Bisleri. It dominates the

market. As packaged water industry is growing at a fast rate (2.5%PA). Bisleri has a market

share of 60%. Bisleri maintains the physical and financial resources very efficiently and

effectively. These resources when combined helps in maintain and retaining customer’s

expectations to achieve the targets of the company. Entering into various segments of the society

as it produces premium, popular and bulk invests a large number and an efficient human

resources. The intellectual capital of the brand is playing the major role as the bottle seal of

Bisleri is patent. Bisleri provides a safe drinking water which maintains and take care of the

health of the people leading and attaining the threshold resources. As Aquafina and Kinley the

major competitors of Bisleri are entering with various strategies to beat the competition Bisleri

also focused itself to increase the awareness of the brand through advertising and fulfilling

customer’s minimum requirements by giving them pure and safe mineral water to drink. The

various segments it entered into covers different price ranges. The price ranges within 10 to 110

which can be easily available for every section of the society. Bisleri keeps on advertising again

and again that it works on safe and pure form of bottled water, which shows its complementary

resources and competencies. Analyzing these threshold resources and competencies is important

for the organization to sustain itself in the market with the same position. The seal of Bisleri is

also acting as its unique resource as it has got the patent and other organizations cannot imitate it.

The brand Bisleri itself acts as a unique resource as it is so popular in the minds of the people

that they don’t switch to other bottled water easily from Bisleri. This shows that the organization

is good in attracting new customers as well as retaining old customers and people turn out to be

brand loyal. The packaging was done in such a way that the customers can easily view the

sparkling clear water inside the bottle. It made the packaging transparent to gain the trust and

confidence of the customers on their brand.

It started reinventing and focusing on its distribution network which also plays its major core

competency. There were about 15 bottling plants of Bisleri and three franchisees all total there

were 350000 outlets of Bisleri. It works through manufacturers to clearing and forwarding agents

to distributors and finally to the ultimate customers. It has 52 bottling plants all over the country

as in Delhi, Goa, Mumbai, UP, Jaipur, Chennai, Rudrapur and Bangalore. It is going to expand it

by setting up new 25 bottling plants across India which will help it achieve 40percent more of

the growth rate in the fiscal. The new bottling plants are being placed in Maharashtra, Karnataka,

Tamil Nadu, Orissa, Kashmir, Jharkhand, Kerala and north Bengal. These plants are going to be

partly set up the franchisees and partly by the company itself. The company is also going to

double the capacity of manufacturing in Mumbai and Nagpur. The company has outlined a dual

distribution plan this way to gain competitive advantage. Parle Bisleri also tried to launch and

introduce bottled water in stationary, chemist shops where other soft drinks were not sold so it

was easily available to the customers. The company worked on its dual-distribution strategy to

gain competitive advantage. It kept on working and entering into rural India, interior markets and

penetrating into smaller markets of the country, pushing the brand in the roadside of metros and

new territories. The government institutions, hotels, railways were targeted as the major chunks

of the market. (Johnson, Scholes, & Whittington, 2006) (Press Trust of India, 2009)

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