Packaged Water Industry in India : An Overview 30th June, 2009

Pratik Pota Executive Director, South Pepsico India

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

Nearly half the market is made of Pouches

Retail water : Packaged water <5Ltr 500ml 1ltr 2ltr Pouches Bulk water : Water packaged in >5Ltr 10ltr 20ltr 25ltr
Bulk water 6% 500 ML 2% 1000 ML 34%

Pouches 49% 2000 ML 9%

It is currently heavily South biased

North 15% South 52% East 5%

And largely Urban centric

% Contr. Urban Rural 80% 20%

West 28%

Source : Nielsen

The 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%

Growth driven by Rural and Small Towns

All Regions seeing healthy growths

Region % Growth 25% 31% 20% 26% 24%

Metro

ROU 28%

Rural 38%

North East

% Growth

12%

West South India

Growth across all Packs

Pouches 500 ML 1L-2L Total 22% 13% 28% 23%

Source : Nielsen

What is fueling this Industry growth?

Higher disposable income

Increased On-the-go behaviour

Importance of Hygiene

Increased Availability

Affordable Price Points

7 Lakh 9 Lakh outlets

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 Waters

Flavoured Water Fruit flavoured

Functional Waters Vitamin/ Mineral fortified Added fibre/ performance enhancing ingredients Beauty ingredients Strengthen immune system/ treat specific diseases For diabetics

Differentiated Packaging Premium Packaging Appearance changing More eco-friendly

Natural Flavours
Sugar Free

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 You

Case 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 Lhdevesi (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-Ups

The 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

Nearly half the market is made of Pouches

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 Indias per caps - 5ltrs
www.fnbnews.com)

Statistics on some countriesAmerica 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 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

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

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