89789457 Business Plan on Mineral Water

INTRODUCTION

EXECUTIVE SUMMARY

This proposed project presents an investment opportunity for

establishing a bottled water plant for providing pure drinking water.

The proposed product line will consist of bottles of 0.5 lit.,1.0 lit. , 1.5

liters,10 lit.,20 lit. In the initial phase of the project only 0.5 lit,1.0 and

1.5 liters bottles will be introduced in the local market. After successful

introduction of the new brand of bottled water the product line may be

extended to 10 and 20 liters cans.

According to a study conducted in 2010. The potential markets for

bottled / mineral water consist of local people,railway station ,pan wala,

cinema halls, foreign tourists, hotel industry, patients and travelers.

Moreover, the bottled / mineral water has been emerging as a daily

preference of the elite class.

The Indian market is booming industries for mineral water and is growing at

whopping rate of 40 per cent. The  total annual bottled water consumption in

India had tripled to 10 billion liters in 2011 from 1.5 billion liters in 2000. The

project would be set up in kolkata where all the required infrastructure

and amenities are available.

MINERAL WATER INDUSTRIES IN INDIA:-

 .

  According to a national-level study, there are more than 200 bottled

water brands in India and among them nearly 80 per cent are local

brands. In fact, making bottled water is today a cottage industry in the

country. Leave alone the metros, where a bottled-water manufacturer can

be found even in a one-room shop, in every medium and small city and

even some prosperous rural areas there are bottled water manufacturers. 

 While India ranks in the top 10 largest bottled water consumers in the

world, its per capita per annum consumption of bottled water is estimated

to be five litres which is comparatively lower than the global average of 24

litres.

Today it is one of India's fastest growing industrial sectors. Between 2000

and 2010, the Indian bottled water market grew at a compound annual

growth rate (CAGR) of 28 per cent - the highest in the world. The  total

annual bottled water consumption in India has 10 billion liters in 2010

from 1.5 billion liters in 2000. 

Start-up Summary

Blue water company is incorporated as HUF.,in which all the investment are made by

company itself , of which ownership owned by karta/ founder and director, Mr.ashok

chauhan

The start-up costs associated with legal expenses, maintaining office and facilities,

salaries, etc are to be financed by company itself.

Objectives

1. Start production of mineral water plant by the end of 2011.

2. Maintain Net Profit Margin 30% with selling price no higher than that of conventional water.

3. Increase the sales more than double more by the end of the year.

Mission Statement

Blue water is a mineral water company dedicated to provide clean water ,healthy

Water to the society.the main aim of the company is to provide quality product.

& consumer can easily get the product in the market.

Company aim to maintain the taste and quality of the product .so,that the end user can

Get natural taste of the water.

Team Introduction

Ashoke mittal

Indian, 35 year old ,working in mineral water industries past 20 year .he has a good experience in mineral water industries. he is worked as a production manager for 5 years, works as distribution manager for 5 years. he has a good knowledge of the product ,price ,promotion of the product.

Keys to Success

The key success factors in the mineral water are:

Competitive Prices: Unless the importance of the mineral water products is fully understood by consumers, we’ll not be able to sell it above market price of conventional water.

Constant Product Quality: making good reputation and constant conformance to performance standards of mineral water are especially important.

High-profile Management Team: products delivered on time, costs controlled, marketing budgets managed.

MARKET RESEARCH OF MINERAL WATER INDUSTRIES

The Rs. 500 crore bottled water market is witnessing hectic activity with

many players entering the fray in the last one-year and still more to come.

Part of the fast moving consumer goods (FMCG) sector, bottled water is the

only segment to have shown phenomenal growth of about 50 per cent in the

last one year.

Hindustan Lever (HLL), the consumer goods giant, has initiated plans to

enter this sector. The company is considering whether to set up its own

facilities for bottled water or go in for an acquisition.

Nestle India is the latest to enter this market with the launch of its brand

`Pure Life' in New Delhi last week. It plans to grab a 50 per cent market

share in the next two years and emerge as a strong player. The company

has not ruled out acquiring existing brands. The product will be available in

other cities as well soon. The water is bottled at Nestlé’s new plant at

Samalkha in Haryana. Nestle has already launched two of its global

premium mineral water brands `Perrier' and `San Pellegrino' which are

targeted at niche markets.

The market is expected to continue to grow at a healthy clip. In fact, in the last two

years, there has been a doubling of growth. Major players include Parle Bisleri,

Parle Agro, Coca Cola, PepsiCo, and among domestic players UB and Britannia.

The success of bottled water could be attributed to two factors. First, it has been

an underdeveloped business for a while now and, second, soft drink manufacturers

have priced themselves out by a long shot. The prices of soft drinks have, in fact,

doubled in the last ten years and this has happened because the price of

concentrates has shot up during this period.

In fact, soft drink major Coke launched its Kinley brand of bottled water and

Pepsi its global brand Aquafina. Pepsico is reportedly contemplating two

more pack sizes for its bottled water. Kinley's new product follows the

launch of `Chhotu' Bailley, which is a 350 ml bottle introduced by Parle

Agro. Kinley water was launched in August 2000 in one-litre bottles for

Rs.10. The water is produced at Coca-Cola's three Greenfield manufacturing

plants at Bidadi near Bangalore, Dasna in Uttar Pradesh and Goa. The

company plans to either add more water bottling operations or go for

contract bottling as it goes national.

Marketing Consultants, with a current market share of 38%, Bisleri offers the

maximum number of pack sizes. Kinley follows it with a 28% share. The other

brands including Aquafina and Bailley constitute 11% & 6% per cent market share

in the bottled water market.

The Samsika survey further says that there are as many as 186 brands in the water

market. Out of this, two are national brands, 17 regional and 167 local brands.

Apollinaris, a natural sparkling mineral water brand, has been introduced close on

the heels of Nestle coming out with its sparkling water brands - Perrier and San

Pellegrino. The product is being imported and distributed by the Mumbai based

company, Veekay Food & Beverages. It is now available at restricted retail outlets

in Mumbai and Delhi and a separate sub-brand is simultaneously being launched to

take care of institutional sales.

It is also being launched under the sub-brand of Big Apple and Lemon. But the

product is in a different price bracket altogether with the 750 ml Apollinaris Big

Apple pegged at Rs. 99 and the one litre Apollinaris Classic sparkling water at Rs.

90.

With over 200 players jostling to be the thirst-quenching favorite of the Indian

consumer, the business is growing at a rate of over 50 per cent annually. The

country's bottled water business is estimated to be around Rs. 1,100/- crore, of

which the branded market accounts for Rs. 700 crore and about 700 million

litres in volume.

India’s 1 billion plus population needs between 1-2 billion litres a day. More than

200 brands of bottled water are being retailed across the country.

An estimated 850 million liters of bottled water is bought every year.

rainy winter summer

0102030405060708090100

sales

sales

As we can see from the diagram above that most of the sales of Bottled water

comes in the summer season. Therefore, the right time to launch such type of

product is summer season.

In monsoon time also a good response can be generated because there are people

who are very much conscious of their health and this makes them to go for

packaged water. Therefore, the sales are good in rainy season.

In winter season the sales are very low because of climatic conditions.

BRANDS AVAILABLE :

Various brands that are available in KOLKATA. Few of them are as follows:-

BRANDS LITRES - 1 LITRE. ETC 20 LITRES

Bisleri Yes Yes

Kinley Yes Yes

Aquafina Yes No

Bailley Yes Yes

Brilliant Yes Yes

Hello No Yes

Spakel Yes Yes

Harnil No Yes

Apurva No Yes

Bally No Yes

Krishna No Yes

RETAIL OUTLETS

There are above 1,00,000 retail outlets in KOLKATA.

SR. NO CLASSIFICATION PERCENTAG

E

1 GROCERY & GENERAL STORES 40%

2 DEPARTMENTAL STORES 03%

3 COLD DRINK HOUSE 02%

4 HOTELS & RESTAURANTS 5%

5 BEER BARS 02%

6 PAN BIDI SHOPS 28%

7 OTHERS 20%

BRAND WISE SHARE

Bisleri38%

Kinley28%

Aquafina11%

Bailley6%

Others17%

BRAND WISE MARKET SHARE %

The ORG-MARG survey conducted recently shows that the market leader Bisleri is

having 37.6% market share followed by Kinley, Aquafina, Bailley and others with

28.2%, 11.11%, 5.7% and 17.4% respectively.

One thing is very clear from the two surveys conducted that the market leader is

Bisleri with Kinley, Aquafina, and Bailley are the trailers, and now with

Manikchand into mineral water, the competition is becoming tough.

MARKET CATEGORISATION

The market of packaged drinking water is categorized as follows:

1. Theatres / cinema halls/ multiplexes.

2. Corporate.

3. Caterers.

4. Hotels, Resorts.

5. College canteens.

6. General Stores etc.

CINEMAS

Brand Share:

MARKET SHARE OF VARIOUS BRANDS IN CINEMA HALLS IN 1 LITRE PACK

BISLERI11%

KINLEY52%

A'FINA18%

BAILLEY19%

BISLERI

KINLEY

A'FINA

BAILLEY

Findings:

Price closely followed by Brand Name, Convenience, & Service are the important

factors that affect the buying decision process

Cinema halls, Cyber Cafes, Bowling Alleys, Video game parlors are some places

where people generally go to have a nice time.

The above centers already have the kiosks of the cola companies like Coke, &

Pepsi along with the vending machine of Nescafe. Thus there definitely is a

potential for the introduction of a kiosk vending pure water in these categories of

outlets

HOTEL AND RESTAURANT

36%

30%

21%

9%4%

Bisleri

Kinleys

AquaFina

Bailey

Others

Findings:

Price closely followed by Service, Taste of water and Ease of operation are

the important factors that affect the buying decision process.

Hygiene is a very important factor when a customer decides to snack/eat in

a particular outlet. More so when we interviewed food stalls in Juhu

Chowpatty a majority of the food stall owners said that they now provide

their customers with the 1 liter Bisleri bottle as many customers refuse to

accept the water offered to them.

BRAND WISE DETAILS:-

PARLE BISLERI PRIVATE LIMITED

Company: Parle Bisleri Private Limited.

Brand: Bisleri

Address: Parle Bisleri Pvt. Ltd., Western Eastern Highway, saltlake(E).

Product: Packaged Drinking Water

Design:

Quality: ISI Marked.

Packaging: Pet Bottles

Target Market Segment: Health Conscious people

Positioning: Safe Water

Distribution: Bottling plant (saltlake)

For 1 Litre, etc.

The Company directly approaches the retailer. They have tracked kolkata through

various routes and accordingly they service. Their major hub is kalighat,ravindra

sarovar,park street.

Schemes:

One Litre

One Box free on 5 Box

Half Litre

One Bottle free on 1 Box

For 20 Litre. jar

Bisleri sell their product through their own network and they have also appointed

Distributors for each area to sell their product.

Bisleri-DISTRIBUTOR Details for 20 Ltr.- South kolkata

Distributor: Nos. 16

Average sales per Distributor: 110 Jar per day.

Vehicle: Nos. 7 (for Distributor)

MRP: Rs. 60

Net Cost Price (for Distributor): Rs. 43

Margin of Rs. 17 (39.53%)

Service Frequency: Alternate days

Vehicle: Nos. 12

Distribution Weakness: Company is not addressing the compliant from distributor and end user.

Company does not use Polycarbonate Jars in 20 Litre, which result in loss of face value and

ultimately losing customer.

HINDUSTAN COCA COLA BEVERAGES PRIVATE LIMITED

Company: Hindustan Coca cola Beverages Private Limited

Brand: Kinley

Product: Packaged Drinking Water

Design:

Quality: ISI Marked.

Packaging: Pet Bottles, Polycarbonate Jars

Target Market Segment: Health Conscious people

Positioning: Safe Water

Trade Promotion: Effective TV ads (Boond Boond mein vishwas), Banking on Parent

Brand, Mobile Van.

Distribution: For 1 Litre. etc.

The Company directly approaches the retailer. They have tracked kolkata through

various routes and accordingly they service.

Schemes:

One Litre

One Box free on 2 Box (Net Rs. 80 per Box)

Half Litre

No scheme

For 20 Litre. Jar

Kinley sell their products through their own network only. They have appointed

HDA (Home delivery Agent) for some area to sell their product.

Service Frequency: Alternate days

MRP: Rs. 65

Lowest Selling Price to Corporate Rs. 50.

Distribution Weakness: Not been able to penetrate in interior area since they have not

appointed Distributors in most of the area.

COMPANY: PEPSICO INDIA LIMITED

Brand: Aquafina

Product: Packaged Drinking Water

Quality: ISI Marked

Packaging: Pet Bottles

Target Market Segment: Health Conscious people

Positioning: Safe Water

Trade Promotion: Banking on Parent Brand, Banners.

Distribution:

Bottling plant (Chembur, Roha)

Distributor for catering kolkata Market

o v kalighat

o v tollyganj

o v m.g.park

Resources

o v Large Vehicle (Soft Drink Vehicle

For 1 Ltr. etc.

The Company directly approaches the retailer. They have tracked kolkata through

various routes and accordingly they service.

Schemes:

One Litre

One Box free on 3 Box (Net Rs. 80 per Box)

Half Litre

No scheme

For 20 Ltr jar

The Company has not entered the 20-litre Packaged water Market

‘Distribution Weakness:

It seems that the Company is not pushing their packaged water brand “Aquafina”

and concentrating on Beverages market. Many times their products are not

available in the market. Aquafina packaged Bottles water is given in a scheme

to promote their Beverages brand.

SWOT ANALYSIS OF THE PACKAGED WATER INDUSTRY

STRENGTH

1. The industry is growing @ 40%.

2. In India the market is huge & untapped.

3. Growing awareness among the people about the importance of mineral

water.

WEAKNESS

1. Many players entering in the race.

2. Any local person can start manufacturing.

3. Rural population is not using the packaged water.

4. Not very economical

5. Quality not properly maintained e.g. Bisleri & hence has bad effect on the

whole

OPPORTUNITY

1. Sustained Market growth increase in coming years

2. Literacy rate growing and hence the awareness of safe drinking water to

avoid the diseases.

3. Huge population & untapped market.

THREAT

1. Many substitutes available

2. Too many players will dilute the market & the profit margin

MANUFACTURING PROCESS

BUSINESS PLAN

High quality goods to taste bottled water will be processed/produced for the

end user. The

plant will start its operation from 60% capacity and finally reach 100% capacity

by the end

of 2 years. There is also anticipated growth of 20 % in sale price of the product.

PRODUCT SALES

Plant Capacity liters per day 15,000 Gallons

Production per year (liters) 18,711,000

Ratio of 1.5 liter and 0.5 liter bottle 80:20

Production of 1.5 liter bottle 9,979,200

Production of 0.5 liter bottle 7,484,400

Total annual production 17,463,600

Sale price of 1.5 liter bottle (Rs.) 15

Sale price of 0.5 liter bottle (Rs.) 8

Capacity utilization in first yr 60%

Sales price growth rates 10%

Production capacity utilization growth rate 25%

Maximum Capacity utilization 95%

Sales 100% capacity 209,563,200

RAW MATERIALS

There are many sources of natural water from spring or ground water in Ravindra sarovar,

the project shall be located at site where require water is available.

PRODUCTION PROCESS

The first step for setting up a water purification plant is the analysis of source of

water.

After the chemical analysis, the specifications of the purification plant are set. In

the

purification plant, source water is stored in the feed water tank, passes through

the sand

filter for preliminary water filtration.

Water then passes through the dosing pump-I where chlorine is added to kill the

germs in

the water. After the chlorination, water passes through carbon filter. It helps in the

maintenance of proper odor and taste of the water. It also removes chlorine from

water.

Water is then passes from dosing pump-II, where Sodium Meta Bisulphate is

added. It helps

in dechlorination of water.

Water is filtered next and passes through dosing pump-III, where anti scallant is

added. It

prevents scaling of membrane from calcium, magnesium and biological growth.

Water then

passes through reverse osmosis module. This stage of the process makes water

clear from

all the contaminations and minute particles. Water then passes through dosing

pump-IV,

where minerals are added for taste development.

After this stage, water undergoes Ultra Violet treatment to avoid any

contamination from

bacteria and other micro organisms. Water then passes through automatic

washing, filling

and capping plant. Here water is filled into bottles. After filling bottles are taken

into the

warehouse or shipped to the retailers. The complete process flow diagram is as

under.

DISTRIBUTION CHANNELS

Branding and marketing of bottled water is as essential as water for the

survival of the

human body. The traditional marketing tools include site advertisement, TV

and print media advertising and brochures. This study allocates 10% of the

revenue for advertising and promotional purposes.

Apart from the traditional marketing tools, this study suggests to focus more

on other marketing magnets that include interactive marketing, interactive

marketing may include educating the general public about the importance of

water and its daily consumption requirements for human body through the

participation in seminars and in general public gatherings (e.g. College and

University gatherings). One of the marketing options is to sponsor public

events like cricket matches or hospital campaigns, distributing free brochures

about water and its daily consumption, water requirements in different age

brackets.

The interactive marketing may be designed through seminars and workshops

about the daily human consumption requirements and diseases originating

from the lack of

pure water. Overall marketing strategy may change with the change of target

market. A

market research study is recommended to design the different dynamics of

marketing before launching the new brand. Marketing expense has been

included in the total project cost and it has been estimated around Rs.5 million.

The entrepreneur may decide to increase or decrease the amount of marketing

expense depending upon this choice of promotion activities and type of media

used.

Following table gives the breakup of the marketing expense.

.

Distribution is very important for the success of the new brand. The

stronger the distribution

the more successful will be the new brand. The distribution strategy should

be designed

after a careful study of the market for going for regional distribution or for

nation wide

distribution.

HUMAN RESOUCE REQUIRMENT

The following requirement of staff along with their levels and monthly salary is foreseen forthis project.

Marketing Strategy

1. Emphasize inherent qualities of water and focus on target markets.

We must differentiate our mineral water with other brand. We need to establish our business offering as a clear and viable alternative for our target markets.

2. Produce high quality water.

3. Offer competitive price at the level of the conventional mineral water.

4. Create strong distribution channels to ensure stability of production.

5. Emphasize key advantages of our product.

6. Build a relationship business: long-term relationships, not single-transaction deals with customers.

7. Focus on water distributors and big consumers as key target markets .

PROJECT FINANCIALS

OPERATIONAL DATA

The plant will be operated in the first year at 60% capacity and as the expertise develops the100 % pant capacity will be attained by the end of SECOND year.

FIXED COST

The fixed cost is expected to be Rs 12.7 Million as described below.

Land 1,230,000

Building / Infrastructure 1,057,500

Machinery & Equipment 6,240,000

Furniture & Fixture 108,500

Office Vehicles 2,056,360

Office Equipment 202,500

Pre-operating Cost 1,816,268

Total Capital Costs 12,711,128

WORKING CAPITAL

The investment in the initial working capital is of Rs 3,580,000

OVERHEAD COSTS

In the first year following overhead cost are estimated.

Administration Expenses 12,854,400

Utility expenses 428,292

Traveling 624,000

Office Vehicle and running 102,800

Office stationary 124,800

Promotional expenses 12,049,884

Insurance expenses 186,491

Depreciation 1,119,697

Amortization expenses 363,254

Miscellaneous expenses 3,614,965

Total 31,468,583