'Mineral water is where the action is'

It is August 23, Gokul Asthami. Bombay is celebrating Lord Krishna's birth anniversary; it is a holiday, a rainy one at that. With the sun screened by heavy, pacy monsoon clouds, the dim daylight and the mini-storm, however, heighten the sense of unusual lull at Parle Bisleri Limited's bottling plant, by the Western Express motorway in Andheri, a suburb in northwest Bombay.

The colourful crates, containing thousands upon thousands of soft drink bottles, dot the compound -- offering stark relief. So does the fourth floor of the mineral water major's building inside the premises. A handful of senior executives are in the chairman's office, storming each other's brains with ideas to improve the product packaging.

Chairman Ramesh Chauhan, 60, has flown in from his base in Delhi, to review business personally and to quiz them on aspects like design, shape, size, material of the proposed new containers for Bisleri mineral water. Everyone is aware that the multinationals -- Coke, Pepsi, Brittania, Nestle, Auswater -- are keen on raising their stakes in the Rs 7 billion, 700 million litre market, which grew by 70 per cent last year.

Bisleri has to not only retain its 60 per cent share but try and raise it. If it means work on holidays for the top brass, so be it.

The diminutive Chauhan, wearing simple leather slippers, rolls up the sleeves of his light-blue cotton shirt, which is tucked into off-white cotton trousers, and examines the tamper-proof seal mechanism of a blue bottle-cap. (One side of his office has thick glass shelves full of bottles and cans of mineral water and soft drinks of various makes.) He poses a few more questions, and airs a few suggestions. The A-team wants to get every detail, major and minor, right.

The determination to shake off the sticky image of guys who, seven years ago, succumbed to MNC pressure and sold off best-selling soft drinks brands like Thums Up, is evident. So is the urge to consolidate the good start to a new innings in mineral water. The notice board outside is full of printouts with inspirational one-liners.

Meeting over, Chauhan wonders if mineral water could be sold via the Internet! He is excited about Bisleri's initiatives to tackle the problem of used plastic bottles that consumers forget to crush. The company is setting up facilities for crushing used plastic bottles into chips which, in turn, would be converted into yarn, a raw material for polyester plants.

His company seeks to raise its turnover from Rs 4 billion to Rs 10 billion by 2002. It will invest Rs 3.5 billion on building its own countrywide distribution apparatus and bottling plants. It is confident that its plastic containers in various sizes and shapes will prove invincible missiles in its battle with the MNCs.

In an interview with Associate Editor Y Siva Sankar, Chauhan discusses Bisleri's aggressive forays into the water business, the MNCs in India, globalisation and much more.

It is said you decided to enter the mineral water business in a big way only because multinational companies were planning to enter this segment.

Not true at all, totally false. You cannot do things because somebody else is going to do something. It is a simple history. In 1968, we bought Bisleri from Bisleri Italy.

(The origins of Bisleri lie in Italy, and the brand owes its name to founder Felice Bisleri, an Italian entrepreneur. In 1967, Bisleri set up a plant in Bombay for bottling and marketing mineral water, which did not quite work. In 1969, the brand was sold out to Parle.)

At that time, we bought the brand to make Bisleri soda, not mineral water. We did nothing major for Bisleri mineral water from 1969. There were just some minor initiatives, but we didn't see it then as a big business. Even in 1993, when we sold our brands Thums Up, Limca and so on to Coca-Cola India, and till 1997-1998, we did not really do anything for Bisleri.

In 1998, we said, 'Look, now it's time (to do something). I don't have any other brand to build.' (In 1993, when it bought Parle's bestseller brands, Coca-Cola also got the rights to market the Bisleri brand of soda for five years. The brand reverted to Chauhan in 1998). So we started building Bisleri as a mineral water brand. From 1994 itself, conscious effort was put to building Bisleri. But it was still groping in the dark. Yes, we had a brand name, we had a product, but we had no facility as such, be it bottling plants, be it distribution network and other infrastructure. It was pathetic.

When we started the Bisleri brand building work in 1994-1995, we told ourselves, 'We are in the water business, not the plastic business.' So we didn't do anything about making the plastic containers, caps, etc. It was only two years ago that we started putting our heart and soul into Bisleri.

We went ahead and bought plastic bottle-making machines and other machines. Now we are making what is called the sport cap, which pops up and down the bottle-top.

Did you launch the Bisleri initiative because you had an idle brand or was it because you saw a big business opportunity?

As I told you, in 1993, we saw the brand lying idle. We saw a lot of time at our disposal unemployed. I didn't like the idea you know.... we were bottling Coca-Cola in Bombay and Delhi, which was donkey's work... brainless work, to be honest. There was no fun.

I like to build brands. I consider brand-building as one of my fortes, even though there have been flops. But a few good brands indeed have come out. Now, that was the interest.

Wait for another two years. You will see a dramatic change in Bisleri. We've just started seeing our efforts bearing fruit.

Even the last two years have seen dramatic changes. Last year, we grew by 80 per cent. This year, we are growing at the rate of 180 per cent. Next year, we hope to do 400 per cent.

Today, we are not all over India. Our production capacities are also limited. We are hard-pressed for capacities. When we sold to Coca-Cola, we did not sell our land and building. So all this property in Bombay is with us intact. We thought we could put it to some use.

Frankly, I didn't think that Bisleri would be that big a business. It's only when we started this half-litre (500ml) bottle, that we saw a dramatic rise in volumes and business prospects.

In the next two years, more dramatic changes will ensue because we are putting in a lot of machinery for making plastic containers, caps and so on, and many more locations are being opened up.

In Gujarat, Andhra, Madhya Pradesh, we're empty; even in Maharashtra, we are not particularly good. We are putting up a factory in Pune.

Earlier, you've said that you told yourselves that you are in the water business. Now, do all these projects make you a water-and-plastic company?

(Smiles). I don't like to think of ourselves as a plastic company. We are into plastics business because of necessity, we make plastic by default, so to say. These cups (he waves the 250 ml plastic cups to be introduced soon), we are still outsourcing them. Probably we will start making our own cups shortly. Not that I want to deprive the plastic manufacturers of their business. I'd do this on hygienic considerations because if we were to outsource these from an unhygienic place, it would be very difficult to wash them in a way to make them sterile.

When you started pushing Bisleri aggressively into the market, you had said that mineral water will gradually replace soft drinks in India. (Bottled drinks market in India is estimated at Rs 51 billion. Soft drinks account for nearly Rs 40 billion while fruit juices and other drinks make up the rest).

Replace is not the right word. Shall we say overtake? In all the major markets, water outsells soft drinks in terms of volumes/litreage, or, as Coca-Cola now calls, share of the throat. For instance, in the Middle East, water dominates over soft drinks.

Let me recall a bit of history. Mineral water used to be an elitist indulgence or something to do with health. Now it has become, first, safe drinking water; second, it seems to me that mineral water is gaining style. If one were to prefer mineral water to soft drinks, it seems one is considered more sophisticated, more hep, more happening.

The fact is the other way round. The multinationals are now coming into this business because we have made water look so attractive. That is the fact.

Ask anybody, why is Bisleri taking away the whole cake? If they are honest, they would tell you.

Okay, why is Bisleri taking away the whole cake?

(Smiles). That's what they (Bisleri's competitors) feel. There got to be something in it (Bisleri brand). They say the action is no more in the soft drinks business; the action is in the mineral water business.

You've been in the business of sweet liquids for a long time. Did it not ever occur to you that water could be a big business?

Honestly, not. Even in 1993, I never thought water will be bigger than soft drinks.

So what has brought about this sudden change in the market?

(He waves a Bisleri 500 ml bottle). This.

You mean mineral water in smaller bottles?

No, no (not the size). This costs just five rupees. Very convenient price. Look at it this way: Five rupees for half-a-litre (of mineral water). Ten rupees for 300 ml (of soft drink). You can't lose. There are articles in newspapers on how to sell a price-cut. Now, why do you need to cut price? You start with the correct price. Otherwise, you are getting into a hell lot of complications for no other reason.

To rewind a little. What exactly made you sell off your bestseller brands like Thums Up and Limca?

There we had no other choice. With these two big guys (Coca-Cola and Pepsi) coming in, with their deep pockets, our bottlers were not comfortable enough or prepared to take on Pepsi and Coke. Their combined strength was just too much. We had to sell.

So what makes you confident that you can take on the same multinationals this time round, in the mineral water segment?

Fortunately, we have got enough funds now. We've got a good amount of funds -- though I'd not say that our pockets are as deep as those of the MNCs. We've got a tremendous headstart over everyone else. Bisleri has the highest brand equity among the water brands in the country. By a long shot.

Is that enough to outsmart them?

Outsmart? We have outsmarted them without any inconvenience.

Outsell perhaps...?

We will outsell them all because we've got the momentum.

But then, they are also known for their brand-building ability...

(Interjects, dismisses the question midway). They don't (have such an ability). Who has got brand-building capacity?

You think Coca-Cola does not have such an ability?

Absolutely not. They've got brand destructive ability.

Why do you say that?

Thums Up and Limca were two brands which were built and given to them. And they paid to buy them. And they destroyed the brands. Even their own old brand Fanta, it is languishing.

Mr Chauhan, that's not entirely true. Thums Up is definitely visible in the market. They haven't destroyed Thums up....

They have destroyed it. Thums Up may be there today in the market but.... Today, seven years after I sold it in 1993, Thums Up could have been God knows where (throws up his arms, points to skyward, and traces in the conditioned air an imaginary Mount Everest). If you go out of Bombay, go to Madras, Bangalore or Delhi, Thums Up is pretty much finished. In Delhi, I think, it is finished.

Deep inside yourself, is there sadness at what has happened to your baby, so to say?

See, once you sell a brand, that's it. What they do with it is their business. A brand is not a human being...it won't talk back to you.

Take Pepsi. Did they build 7-Up? What did they do with 7-Up, Mirinda, Slice? They say, these are international brands. Coke...what have they done with Maaza? Things don't work (in the way they imagine).

If all these MNCs were to realise this and decide to exit the soft drinks business in India, would you re-enter the segment?

No. It's impossible. It won't happen (Coke and Pepsi exiting India). I know, it's a hypothetical question. But I feel there is no hypothesis here really. See, their core competence is Coke and Pepsi. And what Coke and Pepsi need to do, which, for some reason, they have not, is to decide once and for all: who is the winner in the cola war?

Now (after action began in the water segment), the cola war is gone... without... it's like the rained-out cricket match. No result.

Part II: 'What is happening is not globalisation, it is invasion'

Photo: Jewella C Miranda

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