The Tata Group has made an offer for a stake in India’s largest packaged water company, Ramesh Chauhan-owned Bisleri International, said three executives aware of the development.
“The Tata Group has made the offer to Bisleri for a stake acquisition which it wants to scale up eventually, and is very keen on the business,” said one of them. “This would give the Tatas a massive foothold in packaged drinking water across the entry-level, mid-segment and premium packaged water categories, and a ready go-to-market network across retail stores, chemist channels, institutional channels, including hotels, restaurants and airports, besides bulk-water delivery, since Bisleri mineral water leads across each of these channels.”
The Tata Group’s Tata Consumer business, which sells Tetley tea, Eight O’ Clock coffee, Soulfull cereals, salt and pulses besides operating Starbucks cafes, is actively exploring strategic acquisitions, chief executive Sunil D’Souza said in recent post-earnings investor calls. Inorganic growth would be a “significant part” of growth strategy, he had said. Tata Consumer has its own bottled-water business under NourishCo, but that remains a niche business. “The Tatas are open to either acquiring a stake through Tata Consumer, or at group level,” the executive added.
Bisleri has more than 150 manufacturing plants and a network of over 4,000 distributors with 5,000 trucks across India, according to information on its website.
A Tata Consumer spokesperson said in an email: “We do not comment on market speculation.” Bisleri International chairman Ramesh Chauhan was unavailable for comment.
Apart from mineral water, which it leads under the Bisleri brand franchise, Bisleri International sells premium Vedica Himalayan spring water.
Several Suitors
It also sells carbonated drinks Limonata and Spyci, and soda and fruit drinks, in addition to a smaller business of hand purifiers. It also has its own app Bisleri@Doorstep to deliver products directly to consumers, including bulk 20-litre packs as well as smaller bottles starting from 250 ml to 1 litre.
“The management team has set a target to reach a turnover of Rs 5,000 crore within four years and is well ahead of the plans,” said the executive cited above.
In packaged water, both Coca-Cola’s Kinley and PepsiCo’s Aquafina trail Bisleri, which has a share of about 32% of the organised market, an executive said, citing Nielsen data. Bottled water, though, remains an intensely competitive market with unorganised brands having a large presence.
Chauhan has said previously that if he decides to sell a stake in Bisleri, it would be to “an Indian… who will promote and develop the brand”. Being a legacy company with consistent brand equity, Bisleri has had various suitors, including Reliance Retail, which is aggressively stepping up its consumer play across categories including foods, beverages and personal care with several recent acquisitions.
“Recent talks with Reliance Retail did not materialise, though Reliance was very keen,” said another executive cited above.
Chauhan was wooed by multinational giants Nestle and Danone in 2002-03 for stake acquisitions. Both multinationals wanted to step up their presence in the packaged water segment, then as well as now a fast-growing but tough and fragmented market. Those talks didn’t make any headway.
Succession Planning
Succession planning may persuade Bisleri to look at any stake dilution proposals with greater interest, said one of the executives cited.
Chauhan’s daughter is involved in the business, but she also pursues her own interests. Chauhan had sold iconic soft drink brands he created – Thums Up, Limca and Gold Spot – to Coca-Cola in 1993 for about $60 million. Thums Up remains the country’s top-selling soft drink brand, with by far the highest market share within carbonated soft drinks, ahead of Coke and Pepsi.
