Discussions focus, say sources, on the possibility of pricing a 1-litre bottle of water below Rs10, perhaps even around Rs5. The joint venture may also offer fortified water and low-priced beverages in the wellness space to attract health-conscious customers.
The current standard price at which most 1-litre bottled water brands, including Coca-Cola’s Kinley, PepsiCo’s Aquafina and Parle’s Bisleri, are available is around Rs15. Himalayan, a product from TGB, is available at over Rs20, positioned on a premium platform as opposed to those popular brands.
The joint venture, reports say, will not develop products related to tea, as PepsiCo already has a tie-up with Unilever on tea beverages across the globe. It’s expected to cover areas other than India, too.
Executives in the Tata Group say while TGB, formerly known as Tata Tea, focuses on products that are ‘value-accretive’, the joint venture will dwell on products for the masses. “This way, we avoid any conflict whatsoever,” said one.
LK Krishnakumar, group chief financial officer for TGB, declined to comment, saying the nature and scope of the proposed joint venture was yet to be finalised. “It will take a few months,” they said. “I cannot comment on market speculation.”
A PepsiCo India spokesperson also said the company did not comment on market speculation.
The Indian packaged water market is already worth Rs1,500 crore to Rs2,000 crore, and constitutes 15-20% of the overall packaged beverage industry, which sees around Rs12,000 crore of annual sales. The water market is growing at about 20% yearly, but margins are very low as many companies do heavy discounting in the retail market. The market is divided into two distinct segments, institutional and retail.
The Tatas have also looked at affordable delivery of water. Last year, the group launched ‘Swach’, a compact and affordable 19-litre water purifier. Tata Chemicals, which built the product, had announced it would sell a million such pieces across the country in a year. The aim is to provide drinking water at only Rs30 per month for a family of five.
Source: Business Standard
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