According to the Trade Promotion Council of India, the packaged drinking water bottle market in India was valued at $24 billion in 2019
Foraying into the direct-to-consumer model, experts say, is not going to be easy.
The pandemic has dealt a severe blow to packaged drinking water companies, which are highly dependent on offices, airlines and the HoReCa (hotels, restaurants and catering) sector for about 50% of their sales. With tourism just resuming, retail sales for the segment have been dismal. Bottled water companies are, hence, looking at alternative ways to reach consumers directly.
According to the Trade Promotion Council of India, the packaged drinking water bottle market in India was valued at $24 billion in 2019, and was expected to reach $60 billion by the end of 2023. However, this segment — 80% of which is unorganised — could see a de-growth of over 30% due to the pandemic, experts say.
Brands such as Bisleri, Aquafina and Bailley are adopting the direct-to-consumer model, by launching their own online platforms or tying up with delivery apps. Bisleri, for instance, has launched its own website, and is also taking orders for delivery through its customer care number.
Angelo Geroge, CEO, Bisleri International, says the company has tied up with Zomato, Dunzo, Big Basket and Amazon for delivery, and offline, it has ramped up its presence at pharma and milk shops.
Parle Agro’s Bailley, which had started delivering 20 litre jars through online channels during the lockdown months, is now looking at “aggressively” expanding it. “Direct-to-home was a huge opportunity that came up during the pandemic, and we are now focussing on strengthening it,” says Nadia Chauhan, JMD and CMO, Parle Agro.
Most of these companies have also tied up with the micro delivery app OwO, launched in June 2020, for delivery of water to residential areas. Fake packaged drinking water has been a challenge for this category, given that it’s largely unorganised. However, in the current scenario, consumers are even more cautious.
“Due to the pandemic, consumers are keen on directly sourcing bottles from the companies,” says Ajay Chhangani, CEO, OwO Technologies. The platform, which has Bailley, Bisleri, Aquafina, Coca-Cola’s Kinley and Patanjali’s Divya Jal listed on its app, claims to be servicing 500 orders per day in Gurugram. It plans to expand to other areas in Delhi-NCR soon. OwO gets about 30% of its business from institutional sales, and the rest from consumer sales.
A spokesperson from Aquafina, which recently tied up with the OwO, says, “Given the current landscape, such partnerships enable us to get access to multi-storeyed, large residential societies.”
Foraying into the direct-to-consumer model, experts say, is not going to be easy. According to Subhendu Roy, partner, consumer and retail industries, Kearney, the packaged water segment has a very low gross margin — 10%, as against 50% for aerated beverages — and delivering directly to consumers comes at an extra cost due to the logistics involved.
“It will be quite difficult for this category to sustain during this period,” says Roy, unless they tailor their communication and talk about the health aspect and propositions like extra minerals, nutrients, etc.
According to Rajat Wahi, partner, Deloitte India, “These companies need to figure out ways to acquire customers, bring them to their website, and also gear up for the last-mile delivery costs.”
Industry watchers believe that this new avenue will not compensate for the overall loss of business. “This is a short-term measure; because this category is also dependent on impulse purchases. If people are not stepping out of home, they will not buy bottled water,” says Ankur Bisen, senior VP, retail and consumer, Technopak.