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Boond-boond mein paisa: Bottled water is big business

By Laxmi Murthy

Corporate control over water and water distribution in India is growing rapidly: the packaged water business is worth Rs 1,000 crore, and it's growing at a huge 40-50% annually. Around 1,200 bottling plants and 100 brands of packaged water across the country are battling over the market, overdrawing groundwater, and robbing local communities of their water resources and livelihoods

Bottled water, one of India’s fastest-growing industries, is a business built on the foundation of bad governance, inequity and blatant exploitation. Hard to believe, but the evidence is becoming clearer.

According to UNDP estimates, around 1.2 billion people worldwide lack access to clean drinking water. Today, there are more people in the world’s hospitals suffering from waterborne diseases than any other ailment. Some 6,000 children die of such diseases every day.

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Providing safe drinking water is the responsibility of the state. That they are failing miserably is evident from the fact that over 1,600 Indians reportedly die every day because of waterborne diseases. Despite these astounding figures, the Indian state has literally washed its hands of the responsibility of providing clean drinking water to its citizens.

When one in six people globally lives without access to clean drinking water, does the answer lie in high-tech water purifiers and bottled water that’s out of reach for a majority of the Indian population?

Multinational corporations would have us believe so. And the reason is not hard to find: along with imported water treatment technology like activated carbon and ultra violet (UV) disinfection (Aquaguard), reverse osmosis (Reviva) and resins (Zero-B), the water treatment market is estimated to be worth around Rs 700 crore.

The bottled water industry is estimated to be a whopping Rs 1,000 crore business. It has grown at a rate of 40-50% annually over the past four years or so. According to the Bureau of Indian Standards, there are 1,200 bottled water factories all over India (of which 600 are in the state of Tamil Nadu). Shockingly, in most cases, the industry is making money practically for free, as bottling companies pay a minute amount to the government for the use of groundwater. To quote one example: In drought-prone Kala Dera, near Jaipur, Coca-Cola gets its water free except for a tiny cess it pays the government -- a little over Rs 5,000 a year in the three years 2000-2002, and Rs 24,246 in 2003.

Corporate control over water and water distribution in India is rapidly growing. As globalisation opens up opportunities for private players, investing in water and/or manipulating water scarcity makes increasingly good business sense for corporations. Over 100 brands are battling over the bottled water market, hard-selling their products in every way possible -- better margins to dealers, aggressive advertising, catchy slogans.

The real boost to bottled water came in the early- to mid-1980s with the growth of PVC packaging and, later, PET bottles. By the mid-1990s, many more players had entered the market, and competition was stiff: Coca-Cola’s Kinley, Pepsi’s Aquafina, Nestle’s Pure Life and a host of smaller companies. By 2002, Kinley overtook Bisleri, with a market share of 35.1% compared to Bisleri’s 34.4%. Kinley’s slogan, ‘boond boond mein vishwas’ (reliability in every drop), capitalised on the unreliability of ordinary piped drinking water.

Initially pitched at the well-heeled, bottled mineral water brands like the French-manufactured Danone were promoted at clubs, fitness centres, cinemas, department stores, malls, ice-cream parlours, cafes and retail sports outlets, besides restaurants, hotels and supermarkets, with a price tag of Rs 70 for a 1 litre bottle. Other brands later began pitching for the larger middle class and lower-middle class markets.

The summer of 2002 witnessed a ‘packaging revolution’ of sorts, with Coca-Cola India launching Kinley in 200 ml cups. The cups, priced at Rs 3 each, were first rolled out in pockets of Gujarat, and gradually spread nationwide. With this initiative in place, Coca-Cola began to generate market share from the institutional segment, such as restaurants and hotels, caterers, and transport channels like buses and trains.

The major growth in packaged water, however, was in the bulk water segment. According to estimates, bulk water packs of 20 litres, targeted at the institutional and home segments, grew at a rate of 30-40% in 2002 alone. Bisleri re-invented its 20-litre jumbo home pack, fitted with a spout, to acquire a more ‘consumer-friendly’ image.

According to industry estimates, the main consumers of packaged water are no longer restricted to the upper class but include middle class and lower-middle class families as well. The ‘rural’ market is currently dominated by tourists and travellers; packaged water is now beginning to be seen as an essential appendage to any form of travel.

Chennai accounts for a quarter of the industry’s revenues

The South, which is prone to water shortages, is one of the industry’s largest markets. Chennai alone accounts for a quarter of the revenue of the Rs 1,000-crore packaged water industry. Seven hundred thousand litres of water are sold in this city every day, of which 300,000 litres and 200,000 litres are reportedly supplied by multinational water brands and Parle’s Bisleri, respectively.

According to the Tamil Nadu Packaged Drinking Water Manufacturers Association, there are 370 authorised water supply units across the state of Tamil Nadu. The drinking water industry here has seen tremendous growth in the last four years, with hundreds of small-scale suppliers entering the water market. Regional players operate plants replete with wells/borewells, treatment units with modern reverse osmosis techniques and UV radiation units.

Around 220 water units operate near Chennai. Every day, companies rake in revenues of Rs 80,00,000 to Rs 1 crore from the city, according to industry estimates. Interestingly, the ratio of each player’s market share to the entire packaged water market is the same in both lean and peak seasons. The higher-income group and corporates usually go in for multinational brands like Kinley, while middle-income households prefer local suppliers. Currently, Bisleri, Apollo and Team are among the leading brands in the city.

The average price of a 25-litre can of water has fallen to Rs 25 from Rs 35 last year. This year, Brita, a can manufacturer that supplies 25-litre bubble tops in Chennai, slashed prices by Rs 5. Citing a 3% market share, the unit’s proprietor, Mohan Raj, admits that rivals have eaten into the revenue. Chennai-based Cherio claims to have a 25% share in the regional market and says it is one of the top five players in Tamil Nadu. Bulk water forms 25% of Cherio’s sales, while bottled water accounts for the remaining majority.

Bottled water is available in differently-sized packaging, from 200 ml (popular on flights) to 500 ml (a huge hit among the youth) to 1 litre and the large 2 litre bottles. Bulk water usually comes in two sizes -- the 25 litre HDPE can and the 20 litre bubble top PET. Pepsi, for its part, has priced the 1 litre Aquafina pack at Rs 12 to cater to the mass segment. While its retail strategy centres on the 1 litre pack, the company has also launched 2 litre and 500 ml packs to suit various consumer requirements.

Apart from domestic and commercial use of packaged water, the Indian Railways is a huge potential market. Water bottles, especially the 2 litre variety, are fast movers among the travelling population. According to officials at Cherio, the railways order 10,000 cases (of 12 bottles each) a day. It accounts for 5% of Cherio’s water sales.

Grocers are among Aquafina’s key distribution points, while top-end bottled water is selling fast across fine-dining restaurants. The Chennai-based Shyam Group of Hotels’ Aqua Division -- which sells the water brands Amravathi and Savera all over Chennai -- has fixed a maximum retail price of Rs 30 per can. After factoring in distribution and pilferage costs, the company says it makes a profit of Rs 2 per unit, and sells 2,500 cans a day. According to K Paari, manager, Aqua Division, the company bottles around 25,000 litres of water in Chennai every day. During the summer months (April to July), this rises to about 40,000 litres a day.

The myth of the ‘safe bottle’

Ironically, bottled water that claims to be a ‘safe’ alternative to ordinary tap water is itself suspect, as was revealed in a high-profile expose by the Centre for Science and Environment (CSE). The CSE study in February 2003 showed that most brands of packaged water available in the country contain levels of pesticide -- several of them banned -- significantly higher than permissible limits. These pesticides include organochlorines, organophosphorous, chlorpyrifos, malathion and DDT, which can cause serious physical impairment ranging from damage to the central nervous system to various cancers and congenital malformations.

The study found that while packaged water brands in Delhi had total pesticide content 36.4 times higher than permissible limits, Mumbai brands had 7.2 times the standard content. Evian, which is imported from France and not bottled in India, was the only brand in which no traces of pesticide were found. Significantly, the European Economic Commission directs that the maximum residue limit for total pesticides is 0.0005 mg per litre, and 0.0001 mg per litre for a single pesticide.

A month after publication of the study, the government withdrew the licences of eight bottled water units. This was followed, in February 2004, by the affirmation by an all-party, 15-member parliamentary committee, that beverage giants Coca-Cola and Pepsi Cola had been using pesticide-contaminated water. Pesticides, including lindane, DDT, chlorpyrifos and malathion have apparently contaminated groundwater sources because India has yet to formulate a comprehensive policy on pesticides used extensively for agriculture and vector control.

More recently, a test conducted by The Tribune newspaper through the department of microbiology, Punjab Agriculture University (PAU), in July 2005, revealed the presence of bacteria found in human and animal faeces in bottled water, indicating that it was contaminated and unfit for human consumption.

Of the nine randomly-picked sealed bottles of packaged drinking water -- HPMC, Thirst, Kinley, Fresh ‘n’ Cool, Aquafina, Blue Label, Equal 212, Bisleri and Springwell -- from markets across Chandigarh, all tested positive for bacteria of the coliform group which comprises Escherichia coli (or E coli), coliform and faecal streptococci.

A significant recommendation of the parliamentary committee was the need to introduce norms to monitor the quality of ordinary drinking water. Such monitoring would also serve to highlight major sources of contamination of ordinary drinking water, which is what most people in the country drink.

Bottling industry causes water woes

The water industry, which depends on groundwater, is a lucrative business for several players including private suppliers who sell water to water tankers and big bottled water companies. Over-extraction has led to the rapid depletion of water tables as well as deterioration of water quality in most cities. Higher rates of groundwater extraction in coastal areas have also led to salinity intrusion into coastal aquifers, especially in Tamil Nadu and Gujarat. Unplanned and uncontrolled groundwater extraction has disturbed the country’s hydrological balance.

For instance, Samriti, a Hyderabad-based NGO, alleges that Sri Sarvaraya Sugars, a bottling unit dedicated to producing Coca-Cola’s Kinley brand of water, located in the Khammam district of Andhra Pradesh, draws 225,000 litres of water a day. As a result, borewells in certain parts of Sattupalli village, that has a population of 25,000, are reported to have dried up. Similarly, M V R Mineral Water and S R Minerals, both contract bottlers for Coca-Cola’s Kinley brand of water, have been accused of depleting groundwater in Athur village, 40 km northwest of Chennai. M V R Mineral Water reportedly extracts 132,000 litres of water every day through deep borewells.

In Rajasthan’s Kala Dera, where there is a Coca-Cola bottling plant, the water table has plummeted. Wells in the area, varying in depth from 40-80 feet, are bone dry. The villagers claim that seven or eight years ago, these wells used to have water at a depth of around 10-15 feet. Farmers are forced to dig borewells and use submersible pumps, with the motor itself submerged to depths of 200 feet or more.

According to officials at the Ground Water Board’s Jaipur regional office who visited the site of the Coca-Cola plant thrice during mid-2004, the unit extracted 148,259 cubic metres of water in the seven months from March to September 2003. While additional extraction amounting to 100,000 cubic metres was estimated till the end of 2003-04, the figure during 2002-2003 was 137,694 cubic metres. This water could have irrigated land measuring at least 10,000 bighas, and produced agricultural yields capable of sustaining around 5,000 rural families!

Although companies are reluctant to part with production figures, it is estimated that the Coca-Cola plant in Kala Dera produces 600 bottles of soft drinks every minute. Activists say that 24 trucks, each laden with 1,100 crates, transport its products out of the plant each day.
As local sources of water become contaminated, demand increases for water corporations to sell a product that was once free.

Coca-Cola, the biggest player in the bottled water industry in India, has been responsible for a variety of violations. In Plachimada, Palakkad district, Kerala, the Hindustan Coca-Cola Beverages Pvt Ltd bottling plant has been depleting groundwater and distributing toxic waste as fertiliser to farmers around the bottling facility; this has created a serious public health problem.

The Kerala High Court, in December 2003, directed Coca-Cola’s Plachimada bottling plant to find alternative sources of water. It also said that the company should only be allowed to use as much water as that used by a landowner with 34 acres of land. But then, in April 2005, the High Court permitted Coca-Cola to extract up to 500,000 litres of water a day (the company needs 15,00,000 litres per day for optimal production) from the common groundwater resource at the Plachimada facility.

Since April 22, 2002, the residents of Plachimada have been on a vigil outside the gates of the Coca-Cola bottling plant in their village. The local panchayat has refused the company a licence to operate, and the bottling facility -- the largest Coca-Cola bottling facility in India -- was forced to shut down temporarily.

In another recent victory, in August 2005, the Kerala State Pollution Control Board ordered Coca-Cola’s bottling plant to “stop production of all kinds of products with immediate effect”. The company, in direct contravention of Indian laws, had resumed “trial” operations at its Plachimada bottling facility on August 8, 2005. The state government of Kerala also recently announced that it would challenge Coca-Cola’s right to extract water from the common groundwater resource.

The privatisation and bottling of water for profit denies the majority of people a fundamental right that should be guaranteed by the state. In the absence of an effective nationwide policy and norms for groundwater use, it appears that the bottled water industry is getting away with making huge profits out of a resource that rightfully belongs to all citizens. And, in the process, also destroying the environment and people’s livelihoods.

Surely there’s a message in the bottle that the policymakers will be forced to see?

(Laxmi Murthy is Editor of India Resource Centre and a Delhi-based journalist specialising in development and gender)

References

  1. ‘Slaking a City’s Thirst’, Priyanka Jayashankar and Swetha Kannan, Hindu Businessline, July 14, 2005
  2. ‘Bold and Bisleri’, Ratna Bhushan, Hindu Businessline, April 25, 2002
  3. ‘Water Woes and Bottle Battles’, Nityanand Jayaraman, www.indiaresource.org

InfoChange News & Features, October 2005