Tata Consumer Products to buy a stake in Bisleri International

resr 5paisa Research Team 9th December 2022 - 08:27 pm
Listen icon

Bisleri International, owned by Ramesh Chauhan of Parle, could just be the next big target of acquisition in the FMCG sector. According to news on the street, the Tata Group has made an offer to purchase a stake in Bisleri International, India's largest packaged water company. While there has been no confirmation, either from the Tatas or from Bisleri International, the news is that this deal could be announced very soon. Tatas may either buy Bisleri stake under the banner of Tata Consumer Products, or just under the broad Tata brand.


Tatas already have a strong mineral water brand in the country under the brand name of Himalayan. However, Bisleri rules in size, bottling plant facilities as well as reach across the length and breadth of India. The idea is that Tatas want to use this inorganic acquisition to scale up the bottled water business of the Tata group substantially. Bisleri has leadership in the entry and mid-segment and with the acquisition of Bisleri, Tatas will have a foothold in the entry-level, mid-segment and premium packaged water categories.


That is not all. Tatas will get a readymade network across retail stores, chemist channels, institutional channels etc. This acquisition will also give the Tatas access to key consumption pockets like hotels, restaurants and airports. Bisleri also has a very large presence in the bulk water delivery to offices, societies, wholesalers for further distribution etc. It is not just the massive reach but also the captive market of Bisleri that the Tatas will get easy access to. However, not much is known on the pricing, valuations, terms of the offer etc.


Tata Consumer Products (formerly Tata Global Beverages) has been on a product and brand consolidation mode in the last few years. It currently sells Tetley tea, Eight O' Clock coffee, Soulfull cereals, salt and pulses. The salt business is the one they acquired from Tata Chemicals about 3 years back as part of the group level restructuring. Tatas also has another bottled-water business under NourishCo, but that remains an extremely niche business. Buying into Bisleri will give the Tatas access to the fast-growing mass market for water.


The advantages of taking over a player like Bisleri for a brand with deep pockets like the Tatas, cannot be overestimated. Consider these numbers. Bisleri has over 150 manufacturing plants as well as an enviable network of over 4,000 distributors with 5,000 trucks traversing across India at any point of time. Apart from the very strong presence in the mass market for bottled water, Bisleri International also has the premium Vedica Himalayan spring water, which his packaged and sold to very niche customers only.


In the packaged water business, Bisleri International has a 32% market share, which puts them well above competition. Even Coca Cola’s Kinley and Aquafina by Pepsi, trail Bisleri in terms of market share, despite the huge marketing and advertising muscle that these large multinationals bring to the table. Bisleri is also a digitally savvy company with its own app (Bisleri@Doorstep) designed to deliver products directly to consumers; either in bulk quantities or even in small denominations. Bisleri targets Rs5,000 crore sales in 4 years.


Bisleri has had its own share of interested buyers. Both Danone of France and Nestle of Switzerland wooed Chauhan in the early 2000s to sell the bottled water business to them. More recently, Reliance Retail was also in talks with Chauhan to take a stake in Bisleri International but apparently that did not work out. RRVL was keen to pad up its FMCG presence through packaged water. Tatas are the latest in the Bisleri fray.


Ramesh Chauhan has been an extremely canny businessman who sold his marquee brands; Thums-Up, Limca and Gold Spot to Coca-Cola in 1993 for $60 million. Till date, Thums-Up is ahead of Coke and Pepsi in carbonated drinks. However, this time around, Chauhan is quite emphatic about only selling the bottled water business to an Indian entity and not to a foreign entity. Whether that has anything to do with his experience dealing with Coca Cola India is not known.


What really attracts buyers to the bottled water business is the huge potential. As disposable income levels rise and people become more health and hygiene conscious, there is likely to be a big shift towards bottled water consumption. Even the numbers show a huge growth potential. The market size for bottled water in India stood at $2.43 billion as of March 2021. This is expected to grow consistently at about 13.5% CAGR in the coming years. That is surely a market large enough to fight for.
 

How do you rate this article?

Characters remaining (1500)

Disclaimer: Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.

FREE Trading & Demat Account
+91
''
Resend OTP
''
''
Please Enter OTP
''
By proceeding, you agree T&C*
Mobile No. belongs to