Rising oil prices linked to the Iran war are beginning to disrupt India’s packaged drinking water industry, pushing up the cost of plastic bottles, caps and packaging just weeks before peak summer demand, according to a report by Reuters.
The industry, estimated to be worth around $5 billion (about Rs 40,000 crore), is facing rising input costs as crude oil prices increase the cost of polymers, the key raw material used to manufacture plastic bottles, the report added.
For now, most companies have not increased retail prices. However, smaller manufacturers have started raising prices for distributors, signalling possible pressure on consumers if costs continue to rise.
Smaller bottled water makers raise distributor prices
According to the Federation of All India Packaged Drinking Water Manufacturers’ Association, around 2,000 small bottled water manufacturers have increased prices for their resellers by about Re 1 per bottle, roughly a 5% increase.
Industry executives told Reuters prices may rise further in the coming days.“There is chaos, and within the next four to five days, this will start impacting customer prices,” Apurva Doshi, secretary general of the federation, told Reuters.
Typically, consumers pay less than Rs 20 for a one-litre bottle of packaged drinking water in India.
Packaging costs surge as crude prices rise
The biggest pressure is coming from packaging materials derived from crude oil. Industry data shows that the cost of polymer used to make plastic bottles has jumped about 50% to Rs 170 per kilogram. The price of bottle caps has more than doubled to Rs 0.45 per piece, while the cost of corrugated boxes, labels and adhesive tape has also increased sharply, the report added.
These costs are rising just as the industry prepares for the summer season, when bottled water demand peaks across the country. India’s packaged water market includes major players such as Bisleri, Kinley (Coca-Cola), Aquafina (PepsiCo), Reliance and Tata, all competing for a share of the rapidly expanding sector.
Premium mineral water segment also feeling pressure
Even the fast-growing premium mineral water segment is beginning to see price adjustments.
Natural mineral water is estimated to be a $400-million market in India, with demand rising among affluent consumers and in the hospitality sector. According to market research firm Euromonitor, premium water accounted for about 8% of India’s bottled water market last year, up sharply from 1% in 2021, Reuters reported.
Shiroy Mehta, chief executive of Aava, which sources mineral water from the foothills of the Aravalli range, told Reuters that the company has raised prices by about 18% for resellers. “Most manufacturers are absorbing 40–50% of the cost to ensure they don’t lose clients. It’s a difficult situation for the beverage industry ahead of the summer season,” he told Reuters.
Why bottled water demand remains strong
Despite rising costs, demand for packaged water remains strong in India, where access to clean drinking water remains uneven. Researchers estimate that around 70% of India’s groundwater is contaminated, making bottled water an important source of safe drinking water for millions of consumers, as per Reuters.
For now, large companies appear to be absorbing the cost increases. But if crude prices remain elevated and packaging costs continue to rise, industry executives warn that retail prices may eventually follow.