Some unions are best broken before they are sealed. Take the on-off deal between Tata Consumer Products Ltd (TCPL) and Bisleri International for the potential acquisition of the latter's bottled water business. After two years of talks, and a near-firm handshake, the sale has now been called off. While the exact reasons for the breakdown aren't clear - reports indicate that price might have been the issue - the final outcome may be the best result for both parties
Selling Bisleri, a high-volume, low-margin product, didn’t make much sense for the Ramesh Chauhan-led group. The eponymous brand is the clear leader in a booming market. According to GreyViews Research, India's bottled water market was valued at $22.72 billion in 2022 and is expected to reach $36.21 billion by 2030, at a CAGR of 6 percent from 2023 to 2030.
Genericisation of Bisleri
Producing bottled water isn't a complex business requiring any great technology. What’s more, there is hardly any threat of another product upending the tried and tested, though companies keep experimenting with variants and flavours. The key determinant of success then is the brand and in this Bisleri has an almost unassailable position as a generic for the product much like Xerox, Band-Aid, Post-it and Jacuzzi. Customers often ask for a Bisleri when they want to buy a bottle of water.
Comparisons have been drawn to Chauhan’s earlier sale of another successful product, Thums Up, which he sold to Coca-Cola in 1993. It was probably a smart move given what followed. The sale for $60 million, pre-empted the bruising battle of the colas which has seen both the multinational giants, Pepsi and Coca-Cola, carve out the market between them, only to find there is very little profit to be made after sinking millions of dollars in winning customers.
Bisleri faces no such challenges in the bottled water market. Having built the distribution network and cemented itself in the customer’s mind, the likes of Coca-Cola’s Kinley, Pepsi’s Aquafina and TCPL’s Himalayan Natural Mineral Water, Tata Gluco+ and Tata Copper+, don’t present serious competition to its 60 percent market share.
Succession planning
The only reason for the planned sale, and the reason offered by Chauhan, was his only child Jayanti’s lack of interest in running the business. Whatever the Chauhan family's internal dynamics, the argument doesn't pass muster. Even if Jayanti didn't want to run the business, there are many other options available to the senior Chauhan which allow him to keep the bestseller in his stable. Spinning it off into a publicly held company headed by a professional like Angelo George, the current CEO, with his daughter as vice chairperson, is one obvious option. There could be other similar structures that would simply eliminate the need for Jayanti to play an operational role if she doesn’t want to do so. Since money hasn’t ever been a driver for Chauhan, retaining one of the few homegrown brands which has trumped over multinational rivals, should be a matter of pride for the savvy entrepreneur.
For Tata too, the failure to buy Bisleri may be a blessing in disguise. Of late, the group has been confusing the market with multiple brands in the same space. In aviation for instance, it now has Air India, Vistara and AirAsia India, besides Air India Express, a piquant situation which has necessitated the incredibly wasteful need to kill the Vistara brand built at great cost over the last seven years.
A Bisleri acquisition would have led to a somewhat similar situation with the brand having to share space with other brands of water from TCPL. Taking a basic product to the market under three different names was always going to be a challenge. Having acquired Himalayan after buying into Dadi Bulsara’s Mount Everest Mineral Water Ltd in 2007, it spent the next 15 years looking for elusive profits. Bisleri’s addition would have given TCPL a leg up in the market but it would have come at the cost of orphaning or worse, killing Himalayan after 15 years of nurturing it. Instead, it can now spend the Rs 7,000 crore it had planned to pay for Bisleri on energising its in-house brands.
Sundeep Khanna is a senior journalist. Views are personal, and do not represent the stand of this publication.
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