😯 Tata’s Next $5.5 Billion Dollar Bet?
Bisleri or no Bisleri, Tata’s diving deep into the water space. Here’s why.
India’s $110 billion FMCG market is heating up!
This market is going to double in size to $220 billion by 2025!
And all major conglomerates want a piece of this large pie.
This FMCG pie has so far been dominated by the trinity of HUL, ITC and Britannia.
But another legacy brand is challenging them: Tata.
Now, to get a bigger slice of this competitive market, Tata wanted to enter a segment that most other brands are ignoring: the water space.
To do this, it wanted to acquire Bisleri.
But since Bisleri was reportedly asking for more than Tata was ready to pay, the deal is not going ahead any more.
*plays We Don’t Talk Anymore by Charlie Puth*
However, Tata is undeterred.
It’s still betting big on the water business.
So, today we will be looking at two things:
Why is Tata betting big on the water business?
What does the future hold for Bisleri?
Let’s dive deep!
🔍 The Shape of Water (Business)
To understand why Tata is betting big on the water business, we’ll just share four stats with you:
India is the 12th largest consumer of bottled water (by value).
Revenue from the packaged water industry in India was worth $5.55 billion in 2022. From 2018-2021, this market grew at a CAGR of 27%!
This revenue is a drop in the ocean when we compare it to the US’ revenue from the packaged water business. The US is expected to earn $94.07 billion in 2023 by selling packaged water.
With rising disposable income, a rise in travel demand and a rising concern for health, the packaged water bottle industry is set to grow by leaps and bounds.
So, Tata has done its research well, it just needs to execute now.
But why did it want to buy Bisleri?
👑 Bisleri: The Undisputed King
Reliance and Mukesh Ambani have taught India one thing: if you have money, you don’t need to waste time on ideation and manufacturing.
Buy an existing brand and enter a market as fast as possible.
That’s exactly what Tata wanted to do.
And who better to buy than Bisleri?
Bisleri is the most wanted mineral water in India (in the non-premium segment), enjoying a 32% market share.
Think that’s a small number?
Well, around 60% of the bottled water market is ruled by unorganised brands - tiny brands whose individual share doesn’t amount to much (Curious about how Bisleri managed to gain such a huge market share? ReadOn!)
And Tata’s own water brands haven’t been performing all that great so far.
In fact, the Himalayan Water brand was making losses until recently.
However, that is now changing.
Tata Copper+ has now become a Rs. 400 crore brand. Himalayan Water also broke even for the first time in FY22. How?
By increasing distribution.
So, Tata could enter this space, disrupt it, and silently make profits, while the others fight.
But there are two major questions:
Will Tata be able to disrupt this space and
What will be the impact on Bisleri?
🤔What’s Working for Tata?
Bisleri and Rail Neer are the only major Indian brands in the packaged water space.
Kinley and Aquafina are owned by Coca-Cola and PepsiCo.
With our focus on aatmanirbhar Bharat and the trust that the Tata brand brings, it could soon gain major market share.
Tata also has the Starbucks and Qmin stores to increase brand visibility and distribution for its water brands.
Tata also owns Indian Hotels Company Ltd., which owns Taj and many other hotel chains.
The presence of its water brands in these hotel chains could also help Tata gain mindshare.
And Tata is confident it will do well.
Sunil D’Souxa, the head of Tata Consumer Products, said, “Acquiring Bisleri would have fast-forwarded our plans by three years, but this plan was just a small puzzle in our big F&B (food and beverages) puzzle box. We will now back our own brands Tata Copper+, Tata Gluco+ and Himalayan mineral water with the strong resources we have at our disposal."
Something else that could work in Tata’s favour: Bisleri’s management change.
Jayanti Chauhan, the daughter of Ramesh Chauhan, the owner of Bisleri, is now going to run the show.
She could either take the brand to new heights, or she could run it to the ground.
🥤What’s Working for Bisleri?
While Tata has a lot of advantages, it will have to fight against Bisleri now, which as we said, is the undisputed king of this space.
After all, packaged water in India is synonymous with Bisleri.
We don’t ask for mineral water, we say “Bhaiya ek Bisleri dena”. (Give us a Bisleri).
Changing this behaviour could take a lot of time, especially in the water business, where you cannot really mess up the quality of the product.
So, Tata could have a tough task ahead of it.
Will Tata be able to beat Bisleri? Or was letting Bisleri go a big mistake? Let us know in the comments.
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Tatas are trying to buy companies....but they should lookat revamp TTML....last 2 decades this company has been on losses.....why cant they clear the debt and start with a clean slate. Hope they change TTML performance and its balance sheet.