Over a dozen brands to compete for water purifiers market share

By: |
Pune | June 29, 2018 3:22 AM

Blue Star joint MD B Thiagarajan estimates the water purifier market in India to be worth Rs 4,200 crore and growing at 15-20%

Over a dozen brands to compete for water purifiers market share

The dominance of Kent RO Systems, HUL’s Pureit, Eureka Forbes’ Aquaguard and LivPure in the residential water purification market is being challenged. New entrants are wading into this market, a space with a handful of players, which will now see more than a dozen established brands compete for market share.

Among the recent entrants to this market is the Rs 4,750-crore turnover air conditioner and commercial refrigeration company Blue Star, which entered the market in October 2016 and has since then sold 50,000 units.

Blue Star will face some intense competition here. Apart from incumbents with a lion’s share of the market, there is water heater company AO Smith, which has entered the water purifier segment. Havells India added water purifiers to its expanding portfolio. Cookware and cooking appliances TTK too has launched water purifiers in the non-electric category. LG Electronics has launched water purifier range LG PuriCare. The market is currently worth around $1 billion but the market penetration is only 3%.

Transparency Market Research’s forecast says that the Indian water purifier market will be worth $4.1 billion by 2024. Demand for affordable and pure water will ensure swift uptake of water purifiers. According to Transparency Market Research, the market for water purifiers has gained immense traction in recent years due to an awakening towards healthier living and the dearth of sources of potable water has made the usage of water purifiers indispensable. Also, contamination of water bodies and depletion of fresh water resources has made water purification systems a dire need.

Blue Star joint MD B Thiagarajan estimates the water purifier market in India to be worth `4,200 crore and growing at 15-20%. There are around 2.6 million electric units comprising RO, UV and RO+UV systems. “The water purifier industry is currently dominated by specialists and Blue Star plans to be a specialist player in water purifiers too,” says Thiagarajan.

For Blue Star, this diversification was a way of de-risking the company’s business and deal with the cyclical nature of the AC business. Take for instance the summer of 2018, which was lacklustre for the room AC business because of rains in summer on the east coast and in the south, so it was a washout, say Thiagarajan. This affected the company’s top-line growth. The share of unitary products is around 46.9% and it includes AC, commercial refrigeration products and systems, purifiers and coolers

According to a KR Choksey research report, the Q4FY18 performance of the unitary products (AC and cooling) segment was unsatisfactory on a YoY basis with a mid-single digit growth. Blue Star ended FY18 with net sales of `4,740.81 crore, a growth of 8.1% YoY, while PAT was up 21.3% YoY to `149.25 crore. “Blue Star’s unitary product segmentation has always outperformed the market growth, helping grow both top line and bottom line. During the fourth quarter the company has witnessed slow growth in the electro-mechanical projects and packaged air-conditioning segment due to GST and lower capex from the private sector. With a growing order book and new product launches the demand for consumer products is increasing,” the report, said expecting a 8-10% growth in top line and 20-22% in PAT YoY.

The first of the new products from Blue Star was the water purifier. “This industry requires intense service after sales and Blue Star believes that with its years of experience and expertise in providing services to the AC products it will also provide service to water purifier products, the KR Choksey report said. What Blue Star can leverage is the network of 35 offices, 3,000 channel partners, 5,000 retail points covering 700 towns and five manufacturing facilities, and two more facilities being added soon. According to Thiagarajan, the company is spending around Rs 7 crore in R&D and Rs 35 crore in brand promotion and campaigns.

While the water purifier segment has seen many entrants in the country, not many have succeeded as water is a very complicated subject and technology is evolving, points out Thiagarajan. There are microbes, bacteria, virus, total dissolved solids from ground water, lead, arsenic and fluoride to deal with, and water quality varies across the country and within cities too, he points out.

But with an under-penetrated market, the competition is not with these existing and new companies in this business, but with the belief in India that boiling water makes it safe to consume, says Thiagarajan. Water in Bengaluru, Chennai and Kolkata are bad with TDS levels of 1,200 to 1,500 compared with the suggested limit of 300, he points out. This makes it an important buy and it is the first thing people look into when they buy a house, say Thiagarajan, and this is where Blue Start plans to leverage its brand equity distribution strength, as well as the brand’s strong association with water, with its portfolio of 35 water purifier models.

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