micro analysis of aava bottle water

MANAGEMENT RESEARCH PROJECT II ON “AAVA BOTTLED WATER”

CHAPTER - 1

INTRODUCTION

Only three decades ago few knew about mineral or spring water, and fewer still thought that

one day most Canadians would spend a lot of money to buy it!

Water forms an essential part of every human being. After air, water is the most important

necessity for life. Water plays a number of functions for the body. It serves as the body’s

transportation system, it acts as a lubricant, it regulates the body temperature etc.

The eulogy for water is an unending thing. In fact, more than 2/3rd of the human body is made

of water. The importance of water for human body can be well accessed from the fact that if

the amount of water is our body is reduced by just 1-2%, we feel very thirsty. If it’s reduced

by 5%, our skin will shrink and we will have difficulty moving our muscles and if it’s

reduced by 10%, we will die.

Moreover with this commodity being a human necessity it makes best sense to do business in.

As a normal human being requires on an average needs 2-3 liters of water everyday and

world population is more than bn (growing at 2-3% annually), the business opportunity is

humongous and the potential is largely untapped.

Since ancient time people have used water from mineral spring, especially hot springs, for

bathing due to its supposed therapeutic value for rheumatism, arthritis, skin diseases, and

various other ailments. Depending on the temperature of the water, the location, the altitude,

and the climate at the spring, it can be used to cure different ailments. This started the trend

of using mineral water for drinking purpose to exploit the therapeutic value of the water. This

trend started gaining momentum in mid 1970s and since then large quantities of bottled water

from mineral springs in France and other European countries are exported every year.

The bottled water industry is estimated to be a whopping Rs 1600 crores business. It has

grown at a rate of 38-40% annually over the past four years. Initially pitched at the well-

S.V. INSTITUTE OF MANAGEMENT, KADI 2007-09 1


heeled, bottled mineral water brands like the French-manufactured Danone were promoted at

clubs, fitness centers, cinemas, department stores, malls, ice-cream parlors, cafes and retail

sports outlets, besides restaurants, hotels and supermarkets, with a price tag of Rs 70 for a 1

liter bottle. Other brands later began pitching for the larger middle class and lower-middle

class markets.



1.1 ABOUT BOTTLE WATER INDUSTRY

The Water shortage around the world and particularly in third world countries has opened

new avenues for bottled water Industry. If we compare the growth and status of Indian

Bottled Industry with western or Asian market, we are far behind in terms of quantum,

infrastructure, professionalism & standards’ implementation.

My experience over more than 10 years in Bottled water industry has given me an insight into

the working style, problems and approach of Indian processors. This WEBSITE is a platform

to provide necessary information to plan, set operate, maintain & grow under prevailing

marketing conditions.

Multinationals have entered Indian Shores, making rapid strides in Indian Market and have

eroded market share, image and infrastructure of leaders and small players alike. My belief is

that through methodical approach, Indian companies CAN withstand this onslaught, which is

threatening to gobble up the competition & eventually, the Market. Though in a way, this

entry has provided a semblance of professionalism to the market and Indian firms HAVE

noted the same. Unless a matching product, not necessarily coming from huge infrastructure

matching them, is brought in the market, it would be reduced to NO COMPETITION.

My wishes to present Indian entrepreneurs and those who are planning to take the plunge. If

one has general perception that bottled water in India is a saturated Market now, take my

words: it is just the beginning and thirsting for more, day by day…

DEMAND OF WATER WOULD NEVER GO DOWN… & WATER WOULD NEVER

BE OUT OF BUSINESS



Market Structure

The Market Segmentation of Bottled Water in India

Segment Share (%)

North 25

East 10

West 40

South 25

Source: Indiastar.com

In above table we show the market segmentation of this water across different regions of the

country assume that the consumption of bottled water indicates the property of consumers in

respective region.

The west region occupies the first place in the market while the south and the north jointly

occupy the second position. The market of east region is low. However, the bulk of the

bottling plants are concentrated in the southern region which is starved of water, yet , a place

like Chennai alone account for major part of total revenue.

Lucrative Business

What is amazing is that people are prepared to pay Rs. 10 for a liter of water-especially when

the cost of material input (0.25 paisa per liter excluding labors cost) pales into insignificance

before the price of the product. In nutshell, in manufacturing bottled water, the major costs

are not in the production of treated and purified water but in the packing and marketing of it.

Hence, the cost of packing can be as high as 15 to 35% of the price of the product. The cost

of the bottle along cap and cartoon is the single biggest cost between Rs. 2.50 and Rs. 3.75

for a one –little bottle. For water sold in big plastic jars (20-50 liters), which are also reused,

or in pouches, this cost is much lower. This is precisely why company sell water at even Re.

1 a liter in a 20-25 liter jar and stills makes profits. Labor and establishment and marketing

cost are highly variable and depend on the location and size of the companies. Informal

sources indicate that the gross profits of this industry can be as much as between 20-205%.



The reason that companies do not have to bear the cost of the main row material-water-has

made this industry highly profitable.

The cut-throat completion among the market players in packaged water industries has come

to stay in India. The share of the farm may dwindle if they don’t make any concentrate effort

to change its growth strategy as per the need of the hour. Distribution has become critical for

this industry due to the high volume and low margin effort. The price may more or less

remain strictly under this business as farms are afraid of losing their customer to rival. The

home segment and exploring of country market the best avenues available for the farm to

maximize the profit. Time has come for the bottle water industries in the country to be

innovative in their flavors, the packaging design and promotion to attach highly conscientious

customers.



WHY PEOPLE DRINK BOTTLED WATER

Alternative to other beverages

Trendy

Luxurious

Convenience

Worries about tap water

“Bottled water is purer.”

“Bottled water is just safer.”

Differently regulated

Hype, myth, and

propaganda

Perception of difference

“Bottled water tastes better.”

Placebo effect

Caters to different “tastes” (preferences)

Bottled water is better than tap water

3 out of 4 cases, it is tap water

Source: http://www.epa.gov/

http://www.cfsan.fda.gov/~dms/botwatr.html (FDA/CFSAN website)

http://www.nrdc.org/water/drinking/



http://www.cfsan.fda.gov/~dms/botwatr.html

http://www.epa.gov/


1.2 PRODUCT LIFE CYCLE (ESTIMATION 1990 TO 2015*)

The Exponential Increase In Demand Bottled Water:1990-2015

Source: Advertising express May 2008, - pg- 55

S.V. INSTITUTE OF MANAGEMENT, KADI 2007-09

Year Million Cases

1990-91 2.2

1991-92 2.6

1992-93 3.5

1993-94 4.7

1994-95 6.5

1995-96 8.5

1996-97 11.5

1997-98 15.5

1998-99 20

1999-2000 26

2000-01 33

2001-02 44.5

2002-03 55.6

2003-04 68.15

2004-05 82

2005-06 97

2006-07 112.85

2007-08 129.85

2008-09 146.8*

2009-10 164.45*

2014-15 265*

7


Million Cases

265

164.

5

146.

8

129.

9

112.

9

978268

.15

55.6

44.5

332620

15.5

11.5

8.56.5

4.7

3.5

2.62.2

0

50

100

150

200

250

300

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2015

Introduction Stage

Here 1990 is select as a base year and from 1990 sales of Bottled water increase year by year

but not that much level up to 2004-05 so this stage covers under introduction stage of bottled

water industry. And after increase awareness among people and also know about side effect

of non purified water people diverse from tap water to bottled water and this change increase

sales of bottled water in market. In this stage firm focus on branding and patent for maintain

right to produce.

Growth Stage

After 2005-06 bottled water sales increase in market and it shows growing stage of the

industry, because people are now use bottle water for status and for health safety. Now in

2008 bottled water industry growing at a rate of 38% so it sales increase faster as compared

to past year so we can say that industry came under growth stage. Maintain existing features

and also add new things in product. Here broader audience available for industry product.



1.3 INDIA TO FACE SEVERE WATER CRISIS

IN THE FUTURE

The per capita water availability in India is projected to decline to about 1,140 cubic meters

per year in 2050 from 1820 cubic meters per year recorded in 2001 according to the

Intergovernmental Panel on Climate Change (IPCC).

"India will face a severe water crisis in 20 years if the government doesn't change its ways

and clashes are already taking place because the resource is so scarce." This was the warning

by the World Bank way back in 2005. "Estimates reveal that by 2020, India's demand for

water will exceed all sources of supply.

All these reports point to just one thing for us now. That we should be on serving water and

be judicious in its use. If water is wasted today then its our future generation which will

suffer because of it. So everyone needs to make a point from now to save water in anyway

they can.

Water infrastructure projects should also speeden up in the country through public-private

partnership. This is of immense importance in a country where rural population has very little

access to safe drinking water. What these infrastructure projects will also ensure is

employment generation and in the current global crisis the country need to stand up and

generate local employment through these opportunities and challenges.

With vast population base, growing middle class population and strong macroeconomic

environment, the Indian food & drinks market has emerged as the rapidly growing segment in

the Indian retail industry. Rapid transformation in the lifestyle of Indians, particularly those

living in Urban India, has resulted in a dramatic increase in the demand for processed or

health food, packaged and ready-to-eat food products and water specially packaged in bottle.

India is developing nation and whose growth last five year increase highly. The growing

demand for bottled water speaks volumes of the scarcity of clean drinking water and the

quality of tap water. It has become an icon of healthy lifestyle emerging in India. It is of the

pet material used in bottled water that makes a big difference in taste. Almost all has traces of



plastic flavor. The interesting scenario is that we have, on the one hand, a vast majority of

population which is struggling hard to get access to potable water and on other, the new

generation concentrated in urban areas getting accustomed to bottled water ‘culture’ even

though it means they have to pay through their nose for it. Selling ‘safety’ –i.e. pure and

simple water- has now become one of the fastest growing industries in India despite the harsh

truth it is build on the foundation of bad governance, inequality and blatant exploitation.

However bottled water provides the distance advantages of convenient packing, consistent

quality and is ubiquitous.

The fastest growth in the consumption of bottled water in the world has been recorded in

India according to a new study conducted by the US based earth policy institute. It even

question the rising thirst for bottled water with consumption tripling in India and more than

doubling in china over the past five years.

The sales of bottled water have exploded globally particularly in Europe, North America and

India in recent years, largely as a result of positive public perception on the safety of mineral

water. The corporate control and distribution over this important liquid asset is growing as

brisk rate in India. The packaged water business in the country is estimated to be a whopping

RS 1600 Cr and is growing at an immense rate of 40% annually. According to Bureau of

Indian standards (BIS), there are 1200 bottling plants (out of which 600 are in the state of

Tamil Nadu) and 200 Brands of packed drinking water across the country (nearly 80% of

which are local) batting over the markets which amply signifies the market is big even by

international standards. At this significant growth rate, the market is expected to humble the

fizzy drinks market soon. Nevertheless, in India the per capita bottled water consumption is

still quite low-less than five liters a years as compared to the global average of 24 liters.

Major Players in Indian bottle water

Parle's Bisleri

Coca Cola with its brand Kinley

PepsiCo with its brand AquaFina

Manikchand with its brand Oxyrich

K.K.Beverages with its brand Kingfisher



India had the world's third largest GDP - $4.02 trillion (PPP) in 2006-07 - which is touched to

reach $27 trillion by 2050, becoming the third largest economy after China and the USA.

Given the scenario, boom times are ahead for packaged water (or treated water).

Bottled water or the packaged water category, estimated to be over Rs 1,600 crores (which

according to the Bureau of Indian Standards are more than 1,800 in number), is "witnessing

an unprecedented amount of action."

In other words, domestic companies Parle, United Breweries, Tatas, DS Foods and

multinationals PepsiCo and Coca-Cola, the world's largest aerated drinks maker, are all

"battling for leadership" in the rapidly growing packaged water market in India. As things

stand, food and beverages (not to speak of tobacco) account for the largest consumption

categories (40%) in India, which has emerged as one of the fastest growing economies in the

world with about 8% annual GDP growth.

Bisleri (the current market leader) was the first-of-its-kind packaged water brand in the

country when it was launched in 1967. It has now made a foray into packaged natural spring

water, a category which has been witnessing exponential growth, in double digit figures, over

the past couple of years. Dr Krishna also noted that India was the first market outside the US

to have PepsiCo's Aquafina launched in 1999 when the market was just beginning to grow.

This summer, Coca-Cola's $4.1 bn global acquisition of the US-based vitamin water brand

Glaceau (formally known as Energy Brands Inc) to expand its non-carbonated beverage line

made headlines, even as the Tata group which agreed to sell its 30% stake to Coke by the

year end, had cash registers ringing with its acquisition of mineral water brand, Himalayan.

In June this year, Tata Tea acquired the Mount Everest Mineral Water Company that

manufactures the Himalayan brand of spring water ( a 44% stake for Rs 210 crore), making it

the largest acquisition of a packaged water firm in the domestic market.

In India, the per capita bottled water consumption is still quite low - less than five liters a

year as compared to the global average of 24 liters. However, the total annual bottled water

consumption has risen rapidly in recent times - tripling between 1999 and 2004 - from about

1.5 billion liters to five billion liters.



The rise of the Indian bottled water industry commenced with the economic liberalization

process in 1991. “The market was virtually stagnant until 1991, when the demand for bottled

water was less than two million cases a year. Since 1991-1992, it has not looked back, and

the demand in 2004-05 was a staggering 82 million cases."

Bottled water is sold in a variety of packages: pouches and glasses, 330 ml bottles, 500 ml

bottles, one and 5-litre bottles and even 20-50-litre bulk water packs. The bottled water

business is divided broadly into three segments in terms of cost: premium natural mineral

water, natural mineral water and packaged drinking water. Premium natural mineral water

includes such imported brands as Evian, San Pellegrino and Perrier, which are priced

between Rs 80 and Rs110 a liter. Natural mineral water brands like Himalayan and the

indigenous Catch brand owned by DS Foods Ltd are priced around Rs 20 a litre. Packaged

drinking water is the biggest segment and includes brands such as Parle Bisleri, Coca-Cola's

Kinley and PepsiCo's Aquafina which are priced in the range of Rs10-12 a liter.

Player Market share

Parle- Bisleri 40%

Coca cola- Kinley 23%

PepsiCo- Aquafina 11%

K.K.Beverages 10%

Tata 8%

Other(Oxyrich,Yes

Bailley,Aava)

8%

As per market estimates, Parle's Bisleri has held on to its 40% market share even as Kinley

and Aquafina "are fast catching up". Aquafina has approximately 10%. The rest, including

the smaller players, have 20-25% of the market share.

Coca-Cola India which has captured 20 -25 % share of the packaged mineral water category

with its brand Kinley, is all set to enter the flavored and sparkling water segment that was, till

recently, the domain of Catch.



1.4 FIVE REASONS NOT TO DRINK BOTTLED WATER

1. Bottled water isn’t a good value

Take, for instance, Pepsi’s Aquafina or Coca-Cola’s Dasani bottled water. Both are sold in 20

ounce sizes and can be purchased from vending machines alongside soft drinks and at the

same price. Assuming you can find a $1 machine, that works out to 5 cents an ounce. These

two brands are essentially filtered tap water, bottled close to their distribution point. Most

municipal water costs less than one cent per gallon.

Now consider another widely-sold liquid: gasoline. It has to be pumped out of the ground in

the form of crude oil, shipped to a refinery (often halfway across the world), and shipped

again to your local filling station.

In the U.S., the average price per gallon is hovering around $3. There are 128 ounces in a

gallon, which puts the current price of gasoline at fraction over 2 cents an ounce.

And that’s why there’s no shortage of companies which want to get into the business. In

terms of price versus production cost, bottled water puts Big Oil to shame.

2. No healthier than tap water

In theory, bottled water in the United States falls under the regulatory authority of the Food

and Drug Administration. In practice, about 70 percent of bottled water never crosses state

lines for sale, making it exempt from FDA oversight.

On the other hand, water systems in the developed world are well-regulated. In the U.S., for

instance, municipal water falls under the purview of the Environmental Protection Agency,

and is regularly inspected for bacteria and toxic chemicals. Want to know how your

community scores? Check out the Environmental Working Group’s.



While public safety groups correctly point out that many municipal water systems are aging

and there remain hundreds of chemical contaminants for which no standards have been

established, there’s very little empirical evidence which suggests bottled water is any cleaner

or better for you than its tap equivalent.

3. Bottled water means garbage

Bottled water produces up to 1.5 million tons of plastic waste per year. According to that

plastic requires up to 47 million gallons of oil per year to produce. And while the plastic used

to bottle beverages is of high quality and in demand by recyclers, over 80 percent of plastic

bottles are simply thrown away.

That assumes empty bottles actually make it to a garbage can. Plastic waste is now at such a

volume that vast eddies of current-bound plastic trash now spin endlessly in the world’s

major oceans. This represents a, killing birds and fish which mistake our garbage for food.

Thanks to its slow decay rate, the vast majority of all plastics ever produced still exist

somewhere.

4. Bottled water means less attention to public systems

Many people drink bottled water because they don’t like the taste of their local tap water, or

because they question its safety.

This is like running around with a slow leak in your tire, topping it off every few days rather

than taking it to be patched. Only the very affluent can afford to switch their water

consumption to bottled sources. Once distanced from public systems, these consumers have

little incentive to support bond issues and other methods of upgrading municipal

water treatment.

There’s plenty of need. In California, for example, the requirement of $17.5 billion in

improvements to the state’s drinking water infrastructure as recently as 2005. In the same

year, the state lost 222 million gallons of drinkable water to leaky pipes.



5. The corporatization of water

In the documentary film, authors Alan Snitow and Deborah Kaufman demonstrated the rapid

worldwide privatization of municipal water supplies, and the effect these purchases are

having on local economies.

Water is being called the “Blue Gold” of the 21st century. Thanks to increasing urbanization

and population, shifting climates, and industrial pollution, fresh water is becoming

humanity’s most precious resource.

Multinational corporations are stepping in to purchase groundwater and distribution rights

wherever they can, and the bottled water industry is an important component in their drive to

commoditize what many feel is a basic human right: the access to safe and affordable water



Chapter - 2

GLOBAL POSITION OF BOTTLED WATER

Bottled Water Consumption Jumps

Bottled water represents the fastest growing segment of the global beverage market with a

market share of about 38%. World bottled water market is expected to reach $65.9bn by

2012, stimulated by rising population, consumer spending patterns, lifestyle trends and

growing levels of health consciousness, among others.

The market is expected to grow rapidly in the coming years due to growing consumer

concerns about fitness, water quality and health. As stated by the recent report published by

Global Industry Analysts, global bottled water market is dominated by Europe and the US,

which together account for about 55% of the market value estimated in the year 2008.

Bottled water will continue to fare well in the global beverage marketplace as a healthy

alternative to carbonated soft drinks. Gains in bottled water market will also come from

flavored varieties and convenient packaged formats, especially single-serve packs.

Sparkling water market is dominated by Europe, which accounts for more than 75% of the

world market estimated in 2008. Western Europe comprises some of the world's largest per

capita bottled water consumer markets, which include Germany, France, Spain and Italy. The

largest proportion of bottled water consumers can be found in Germany, as 88.2% of its adult

population drinks bottled water.

The non-sparkling water market constitutes the bulk of bottled water shipments, accounting

for between 80-85% of the market in volume and value terms. Non-sparkling bottled water is

also expected to offer the highest growth opportunity, outgrowing the sparkling bottled water

market by three to four times. Market for non-sparkling water in the US is projected to reach

$15.1bn by 2012.



The major challenge for most companies is product innovation and differentiation as water is

still just water. Containers are an important part of bottled water, as they constitute nearly

47% of cost. Even look, weight and price of the product are as significant as the water itself.

For instance, Colorado-based Biota sells bottled water in biodegradable bottles that are

produced using corn in order to attract consumers who are ecologically conscious. Some

companies try to attract children by selling bottled water in attractive bottles with vivid

designs and colors.

Key players dominating the global Bottled Water market include Aqua Gold International

Inc, Boreal Water Collection Inc, China Water & Drinks Inc, Group Danone, Danone Naya

Waters Inc, Isbre Holding Corp, Nestle SA, PepsiCo, Quilmes Industrials Sa-Adr, Saint Elie,

San Miguel Corporation and The Coca-Cola Company.



GLOBAL BOTTLED WATER MARKETLeading Countries' Consumption and Compound Annual Growth

Rates2007 Millions of Gallons CAGR*Rank Countries 2002 2007 2002/07

1 United States 5,795.6 8,823.0 8.8%2 Mexico 3,898.6 5,885.2 8.6%3 China 2,138.4 4,787.8 17.5%4 Brazil 2,541.8 3,621.1 7.3%5 Italy 2,558.2 3,100.9 3.9%6 Germany 2,291.5 2,743.2 3.7%7 Indonesia 1,622.5 2,400.6 8.2%8 France 2,225.6 2,283.2 0.5%9 Thailand 1,277.0 1,533.1 3.7%10 Spain 1,191.4 1,284.0 1.5%

Top 10 Subtotal 25,540.7 36,462.2 7.4%All Others 9,054.2 13,407.3 8.2%

WORLD TOTAL 34,594.9 49,869.6 7.6%Source: Beverage Marketing Corporation

GLOBAL BOTTLED WATER MARKETPer Capita Consumption by Leading Countries

2002 – 20072007 Gallons Per CapitaRank Countries 2002 2007

1 United Arab Emirates 35.2 68.62 Mexico 37.7 54.13 Italy 44.2 53.34 BelgiumLuxembourg 32.7 39.55 France 37.1 35.86 Germany 27.8 33.37 Spain 29.7 31.78 Lebanon 24.9 29.39 United States 20.1 29.310 Hungary 13.5 28.511 Switzerland 24.2 28.212 Slovenia 18.8 25.213 Austria 20.9 25.014 Czech Republic 21.1 24.615 Croatia 14.9 24.316 Saudi Arabia 23.8 24.117 Cyprus 21.4 24.018 Thailand 20.1 23.619 Israel 12.4 23.220 Portugal 19.9 22.4

GLOBAL AVERAGE 5.6 7.6



Europe and North America both contributed more than 60% of global market sales of bottled

water it shows more awareness of bottled water in market and Asia is after this two area Asia

cover 26% from global sales.

Bottled water—a general term referring to natural mineral water, spring water, and purified

water supplied to consumers in bottles—is the world’s fastest-growing commercial beverage.

Global consumption of bottled water more than doubled between 1997 and 2005, reaching a

total of 164.5 billion liters, or 25.5 liters per person. While Europe and North America still

dominate the bottled water market, consumption in Asia and South America has increased

dramatically over the past five years, expanding at 14 percent and 8 percent a year

respectively.

The United States is the world’s largest consumer of bottled water, with Americans drinking

28.7 billion liters in 2005. But consumption per person is a different story: in 2005 each

Italian, on average, drank more bottled water than anyone else in the world—192 liters,

compared with 99 liters for Americans. Among the top 10 countries, Brazil, China, and India

have doubled or even tripled consumption between 2000 and 2005, though per capita intake



in China and India is still far below the global average. Altogether, almost three quarters of

the world’s bottled water is consumed in the top 10 countries.

Worldwide, people buy bottled water in order to have safe drinking water, especially

consumers in developing countries who face unreliable municipal water supplies, water

scarcity, and continual water contamination. In most industrial countries, however, where

municipal water is better regulated, people drink bottled water also for better taste, for

convenience, and as a substitute for other beverages. In the United States, calorie-free bottled

water has attracted consumers concerned about obesity.

Urbanization, improved living standards, office working environments, and aggressive

marketing strategies have helped boost the global sales of bottled water. Home and office

delivery of bottled water has become a popular service and supplies nearly 28 percent of the

water consumed.

The difference in cost between bottled and tap water is staggering: the bottled version costs

from 240 times to more than 10,000 times as much. The Pacific Institute, a California-based

think tank, found that bottled water sold in most industrial countries costs $500–1,000 per

cubic meter, compared with 50¢ per cubic meter of California’s high-quality tap water. Most

of what consumers pay goes into production, packaging, transportation, advertising, retailing,

marketing, and profits—not the water itself. In 2005, selling bottled water in the United

States generated more than $10 billion in revenue.

Bottled water is regulated as a food product in the United States and Canada, while the

European Union has two directives: one on natural mineral water and another on drinking

water that includes bottled spring or purified water. Regulation codes for bottled water

generally cover the composition, contaminants, processing requirements, and labeling. The

Codex Alimentarius—an international food code initiated by the World Health Organization

and the Food and Agriculture Organization— can be adopted by countries that lack national

regulations



CHAPTER - 3

ABOUT COMPANY

A story that began when time began, before the Himalayan or the Alps were born. This is the

story of the majestic Aravallis, one of the world’s oldest mountain ranges, a mountain range

that was before anything else was and is a legend that lives on with the passage of time.

Aava is a natural mineral water originating from the holy hills of Taranga, a part of the

world's oldest mountain range, the Aravallis. Every drop of Aava is naturally purified with

great patience. Drop by drop for 20 years, Aava trickles down from the catchments area to

our deep underground reservoirs.

Along the way, it is purified as it passes through layers of alluvium and clay that act as

natural filters. In a world where every alternate food item claims to be fortified, nothing about

aava is artificial. Nature has endowed Aava with a unique mineral composition that is

beneficial to health.

Aava natural mineral water is directly obtained from protected natural sources, thus ensuring

that’s the water is naturally pure. It therefore need not be put through all the chemical and

other purification processes that packaged drinking water necessarily goes through. Aava

tastes natural. Some even call it delicious. Not like the bitterness of water processed through

reverse osmosis.

Aava is packaged in an environment that adheres to the toughest international certification

standards, guaranteeing that the water contained in every bottle of Aava has the same natural

purity and unaltered mineral composition.



WHAT MAKES AAVA SO DIFFERENT

Packaged drinking water (IS : 14543) Aava natural mineral water (IS : 13428)

Raw water could be sourced from anywhere.

(municipal water, ground water etc.)

Aava is obtained from protected

natural sources.

This water is rendered potable through various

processes such as reverse osmosis (RO).

(chemicals, UV rays, pesticides)

Aava is natural pure and does not need to put

through any chemical process, UV radiation or

reverse osmosis.

RO further strips healthy minerals present in

water. If the ph level in this demineralised

packaged drinking water falls, as per one

theory, the water may tend to become acidic.

Aava is well-balanced healthy drink. It has a

natural mineral composition that is beneficial

to health and is absolutely safe to drink.

For every 1 liter if water processed through

RO, 2 liters or more is wasted.

Not a single drop of “Aava” water is ever

wasted, hence “Aava” is awarded ISO 14001

certification.

RO can never fully eliminate chlorine content,

which can lead to cancer.“Aava” is 100% free of chlorine.

Most of packaged drinking waters are treated

through cancerous UV rays.“Aava” is not put through uv rays at all.

Most of packaged drinking waters / bottles are

laced with pesticides to eliminate germs.“Aava” is 100 % free of pesticides.

Most of packaged waters sourced from

municipal taps have excessive fluoride content

leading to diseases of teeth, bones as well as

“Aava” has well balanced fluoride content

within prescribed limits, by ISI & other

international standards.



nervous systems.

“Aava is India’s most certified water and goes through 77 different tests before and after

being bottled, perhaps making it the “best drinking water of Indian today.”



3.1 PRODUCTION DEPARTMENT

FULLY AUTOMATED AND HYGIENIC PLANT

The Aava water plant is the first of its kind in India; it is a fully automatic, washable,

air-conditioned, hygienic plant.

The plant even adheres to pharmaceutical standards, and uses the “Clean Room”

technology (class 10,000) within the automatic filling, capping and sealing system so

that Aava’s original mineral composition as well as the purity of the air and water is

maintained at all times.

Aava Natural Mineral Water is untouched by human hands at all points.

Aava is also not put through any chemical procedures that can contaminate its original

purity.

The company’s fully automatic bottling unit currently produced one Lakh bottles of

water of water a day and another 1000 ‘Family-pack’ 20 ltr & smaller jars.

Hi Mec Machine which produce 60 bottle per minute

Filler who fill 9 bottle per Sash



Sand Filtration Machine

There are 63 different chemical, microbiological and other tests. Aava does not go through

certain processes that other Packaged drinking water like Activated Carbon Filtration,

Softening and RO purification. The new Osmonics E-Series Ozone Generators feature a

durable flat plate ceramic cell construction that provides stable ozone output at higher

concentrations (from 6 to 10 per cent by weight), while efficiently producing up to 3 ppd (57

g/hr) of ozone.



3.2 HUMAN RESOURCE DEPARTMENT

Today the management people are become more and more important in organization. Most of

the companies are following on the quality of their work force to create a new competitive

advantage for themselves. It is the quality of the work force that will matter in the future. So

investing in the work force is inevitable for any organization, which wants to succeed in the

long run.

The secret of success of the companies is the way they treat their employees. Employees

should be treated as colleagues and merely as means to profit. Employees are more important

of the company, just as much as top management. Employees are the heart of organization.

Thus is because, even though organizations has all the M’s namely machine, market, money,

man, management. It would not be able to achieve its objective more effectively and

efficiently if its manpower is dormant. It is very important, therefore, for the human resource

manager to invest and develop its manpower in such a manner so as to make its lively

resources and it’s constantly responding to any changing situation.

Formerly importance was given to personnel management and industrial relations, which

were treated as separate functions. But now to fast respond to changing environment both

these functions have been assembled in to the Human Resources Management, which is also

concerned with developing manpower and above this.



3.3 HUMAN RESOURCE FUNCTIONS

The resource management, at Aava Company., is divided in to seven important parts namely:

3.3.1 HUMAN RESOURCE AND PLANNING:

It is a process by which an organization ensures that it was right number and kind of people,

at the right place, at the right time, capable effectively and effectively competing those tasks

that will help the organization to achieve its overall objectives. For this, it takes into account

both the internal activities and factors in the external environment.

The various objectives of human resource planning are:

(a) Making correct estimation of manpower recruitment

(b) Coping with changes.

(c) Managing manpower according to need of organization.

(d) Help in recruitment and selection.

3.3.2 RECRUITMENT:

It is a process of searching for prospective employees and stimulating them to apply for the

jobs. It includes job description, position and hiring specifications.The need for recruitment

may arise from the following situations:



Vacancies due to transfer, promotion, retirement, termination, permanent disability or

death. This type of needs is caused by the mobility of human assets.

Creation of vacancies due to expansion, diversification, growth of job specification.

Such need is caused by growth of organization.

At Aava company the following are the steps that are undertaken for determining the type

and the number of people to be recruited:

The department in which recruitment is required submits such detailed plants to HR

department.

HR department head and that particular department’s, which want new personnel, sit

together and discuss out the issue

Question-answers are held and on that basis plans are scrutinized.

Finally they the MD and he gives the sanction of manpower.

People are recruited either from within organization or from external sources:

Deal with internal people.

Call applications through consultants and job hunts.

Recruitment through advertisements.

3.3.3 SELECTION:

The next step after the recruitment is selection. Selection is an act of determining by the

organization, whether or not to make a job after and the candidate decide whether or not to

accept it. This involves a series of steps as discussed below.

Securitizations of the applications

This is done to see whether they match the recruitments of the job or not. These done by

verifying whether the applications, that are received, are in accordance with those mentioned

in the advertisement. The applications of those candidates who do not match the stated

requirements are rejected and the remaining consider for further processing.



Interview for senior level position

If the candidate is to be interviewed for senior level position, the interview process is very

long. Candidate interviewed by different people through out the whole way. Generally, for

senior level position, mostly all of the senior managers interview the candidates.

3.3.4 ORIENTATION (SOCIALIZATION)

It is a programmed design to help employees fit smoothly in to an organization. To make the

selected candidate familiar to the culture of the organization, he has to be exposed to various

area of the organization, which is called induction of employees. Induction programme is

very necessary. Focus is on job rotation. It gives the new entrant appear in to an inner

working of each and every department. Induction exposes new entrants to all kind of jobs.

Aava Company when the new recruit joints the company, introduce each department of the

company and also inform about the activity of company. New recruit also inform rules and

regulation of the company.

3.3.5 TRAINING AND DEVELOPMENT

Training is the act of increasing the skills and efficiency of the employees. Training inputs

imparts the necessary skills to the employees. The purpose of this activity is to provide

training to the employees so that they can achieve higher standards of production by

increasing there level of performance on there present assignment, quality of work, to

develop more and more people to take up new challenges so that when the need arises,

vacancies, can more easily be filled up from internal sources to improve organizational

climate, to improve the standards of safety etc. it is needed because Aava’s plant is fully

automated.

At Aava Company for the existing employees, the training needs are identified concluding

regular performance appraisal. During these appraisal the employees himself on the basis of

his performance determines the area in which he is required to undergo training.

3.3.6 PERFORMANCE APPRAISAL



Performance Appraisal is an act of reviewing and assessing the performance of the

employees on the basis of set standards for each and every employee, through such

appraisals, through such appraisals, deviation that is the detected. On the basis of this, other

decision and training needs of the employees are identified.

At Aava company, the performance is done from six month. Every year the performance

appraisal is done from six month. Every year the performance appraisal form is issued to each

and every employee to be filled.

3.3.7 TRANSFER AND PROMOTION

Transfer:

Transfer of the employees may be due to any of the following:

1. To fill up the requirements of the important and potential areas.

2. Need based transfer: The excess employees of one department are transferred to the

department in which the requirement exists.

3. If the employee has not performed well even after several warning, then of transfers

are given.

Promotion:

At Aava bottle, an employee is eligible for promotion strictly on the basis of this capability

and his on the job performance. If this performance track record has been consistent for a

couple of years and if there exists a vacancy at the next higher up then he would be promoted.

Promotion may be gives in the organization in the same level.

3.3.8 INDUSTRIAL RELATION FUNCTIONS

INDUSTRIAL DISCIPLINE:



Industrial discipline means to observe the rules, regulations and procedures, which are

necessary for effective functioning of the company. For the purpose of maintaining the

discipline within the company, neutral and fair treatment is given to all the workmen/ staff

members in the manner of discipline.

GRIEVANCE HANDLING:

Grievance may be due to discontented in any of the following areas:

Relating to wages and attendance.

Relating to discipline.

Relating to the enhancement in the job.

Relating to the working conditions.

Relating to the method of supervision.

If workers leave any problem relating to any of the above-mentioned areas, they report

directly the concerned department. The department then reports to the HR department. The

HR department acts as a counselor who tries to solve the grievance by hearing from the both

parties.

WAGE SETTLEMENT:

The wages settlement of the company is cushioned on the staff and workers. The settlement is

reviewed every three years. Workers put their demands regarding the wages, working

conditions, safety level etc to the management.

3.3.9 LABOR WELFARE

Satisfied employees are the best assets of the company. Hence importance is given to labor

welfare at Aava Company. The company provides its workers and the staff persons various

statutory welfare facilities as per the provision of the Factories Act.



Provident Fund schemes: Aava Company have started its own trust since 1992 for

provident fund. The contribution of employees is 12% of the salary in the provident fund

scheme.

Bonus: The employees get bonus at the rate of 20% of annual salary during the financial

year.

Gratuity: The employees got the aspects gratuity at the rate of 15 days salary per year of

services at the time of retirement or resignation.

Loans: Aava. provides loans for the employees and workers on 12 monthly installments.

(a) and the company profitability. The payment is made on every last working day of the

month.

3.3.10 MANPOWER OF THE COMPANY:

There are 50 Employee in Aava Company. It Include:

Co- founder of Aava Company – Mr. Behram Mehta

Assistant Manager – Mr. Rajubhai Padaliya

Account Department – Yamini Gupta and Shekhar Pandey

Creative Department – Sajit Surendran and Mehul Chokshi

Laboratory Chemist – 4 Person

Production department – 30 Person

Administrative Department – 5 Person

Sales Department – 5 Sales executive

Salary Structure

Assistant Manager – 15000 Per Month

Account department – 9000 per Month

Creative Department – 12000 Per Month



Laboratory Chemist – 9000 Per Month

Employee in Production department – 3000 Per Month

Sales Department – 10000 Per Month

3.4 MARKETING DEPARTMENT

Vision:

To provide superior water to our consumer

Mission:

To provide the healthy water in order to facilitate people

Slogan:

“Water,Water, Evrywhere, Not a Drop to Drink”

Short term goals

To boost the sales

Creating value for customer

Long term goals

Make the brand loyalty As PEPSI Has

To give the awareness to use it



3.4.1 MARKETING MIX

1) Product

Bottled water

1) Gold bottled water

2) Cup-cap

For the first time in India, the 1L pack comes with an in-built cup with a unique

double-seal. Thus, it makes sharing your water easy without the mess of having to

drink from the same spout.

3) Sports

The 750ml bottle is designed to suit the needs of the fitness-conscious individual “on

the go”. With a double-seal “sport-cap” that’s leak proof, its deal for people working-

out, as well as for children, to avoid spilling.

4) Mini bottled water

The 300ml/200ml bottle is available for you to quench your thirst instantly without

having to carry around the weight of a big bottle. Its convenient size even allows for it

to be stored in small bags.

5) Family pack(20 litre, 10 litre & 5 liter Jars)

Aava is also available in 20L & smaller packs so that a glass of refreshing Aava is

only as far as your dispenser is, when you want it.



LABELING & PACKAGING

Sticker containing ingredients

On the other side usp of the product is specified

Net weight or volume

The batch number

The name of source or place of origin of the product

The date of packaging

The date of expiry

Direction for storage

Treatment for disinfection

The license or certification from the concerned authority

Introduction about the company

USP

Packaging

2) Pricing



Changing the product to reflect the product's life cycle is only part of the essence of a well

balanced marketing mix, and so PRICE enters the second important consideration of the

marketing mix. When setting a price on a range for your products, you need to ensure that

you can recoup any overheads, compete with rival companies and charge a price your

customers are willing to pay. To do this you need to fine tune your pricing policy and you

could achieve this in a number of ways.

Price Decisions

Some examples of pricing decisions to be made include:

Pricing strategy (skim, penetration, etc.)

Suggested retail price

Volume discounts and wholesale pricing

Cash and early payment discounts

Seasonal pricing

Bundling

Price of the bottled water

6) Gold bottled water - Rs.20

7) Cup-cap - Rs.15

8) Sports - Rs.15

9) Mini bottled water - Rs.10

10) Family pack(20 litre, - Rs.60

10 liter & - Rs.40

5 liter Jars) - Rs.25

3) Place

Distribution channel

Primary distribution



Direct to institutes like IIM, Abon India, Taj, For seasonware, multiplex etc.

Secondary distribution

Distributor TO retailer TO consumer

4) Promotion & Advertising

Advertising is non-promotion of goods and services, by a sponsor (a firm or person) who can

be identified and who has paid for this communication. This purpose of advertisement is to

sell something a good service, idea person or place, either now or later this goal, reached by

setting specific objective that can be expressed individual ads. Those are incorporated into an

advertising campaign recall again from the buying decision process that buyers go through a

series of stages from unawareness to target customers to the next stage in the hierarchy say

from awareness to interest. Advertisement plays an important role in the success of coca-cola

product since its first newspaper ad. Advertisement is a key of implementing a strategy over

one hundred year old to trigger desire as offer and in as many ways as possible.

Promotion And Advertising Strategy

Radio(Fm Radio 98.3)

Newspaper (Sandesh, Economic Times, Gujarat Samachar)

Billboard

Business to business promotion

Dangular , Banner

Some other techniques for promotion of company

In INDIA – ENGLAND One-day cricket series Aava Bottle sponsor.



Aava has been able to blaze a trail by tying up with key hotels and airlines. Air India

carries Aava water for many of its flights and the bottle water has already established a

foothold in Gujarat with a large number of airlines and hospitability companies of Sabse

Bada Gujarti.

A show celebrating the economic and artistic achievement of the local region. Sheeple

Enerprise now plans to take the brand national, focusing on big cities and tourist spots.

Ahmedabad and South Bombay are strongholds for the company. Aava currently serve

nine airports in India and is distributed on air India which files to over 100 countries,

similarities the brand is also available on smaller airlines such as Spice jet and Go Air.

Thirsty for growth while retaining association with luxury and quality.

Aava has secured a listing on the menus of India’s premier clubs and Karnavati Club as

well as hotel groups such as the Four Seasons, Le Merien, Hyatt, Ramada and the Grand

Bhagvati Group.



Aava provide water at time flud, and also free water for Thalesmia, Cancer and also

provide free camp and provide cost to cost to students.

Aava provide water at different college events like B.K. School Management,

Ahmedabad.

The company is currently in negotiation to strengthen Aava’s presence in the Indian states of

Rajashan, Meharastra, Goa and Karnataka. In terms of international expansion, Mehta

believes there is great potential for Aava to gain export growth in the Middle East, South East

Asia and Eastern Europe

Thus marketing role plays a very important role in achieving the objectives of a company.

undoubtly, value utility is created by the manufacture of product or service but time and place

utilities are created by marketing role. According to drucker, “both the market and the

distribution channels are often more crucial than the product”. they are primary. the product

is secondary. in an economy like that of india, where marginal shortages can lead to

disproportation distortion in prices, a dependable and efficient distribution system is very

much essential. the distribution system creates a value added to all most all products. All

from the above study not withstanding its restructuring efforts pepsi is still far away with its

great competitor like coke.

LIST OF CLIENTS:

Air India from 6 Airports

Four Season Hotel Group

Ramada Group Tea

ITC Welcome Group, Baroda

Fortune Landmark, Ahmedabad

Flight Kitchen Ambassador

IIM (Ahmedabad)

Hotel TAJ Umed

Hotel CAMA



Fun Cinemas

Wide Angle Cinemas

CCI club Mumbai

Ambani School Mumbai

Jet Lite

Indigo Restaurant

Getting shelves

They gets or purchase shelves in big departmental stores and display their products in that

shelves in that style which show their product more clear and more attractive for the

consumers.

Eye Catching Position

Salesman of the coca cola company positions their freezers and their products in eyecatching

positions. Normally they keep their freezers near the entrance of the stores.

Sales Promotion

Company also do sponsorships with different college and school’s cafes and sponsors their

sports events and other extra curriculum activities for getting market share.

Direct Selling

In direct selling they supply their products in shops by using their own transports. They have

almost 10 vehicles to supply their bottles in ahmedabad. In this type of selling company have

more profit margin.



3.4.2 STP Analysis

Segmentation

Customer segmentation is the practice of dividing a customer base into groups of individuals

that are similar in specific ways relevant to marketing, such as age, gender, interests,

spending habits, and so on. Using segmentation allows companies to target groups

effectively, and allocate marketing resources to best effect. According to an article by Jill

Griffin for Cisco Systems, traditional segmentation focuses on identifying customer groups

based on demographics and attributes such as attitude and psychological profiles. Value-

based segmentation, on the other hand, looks at groups of customers in terms of the revenue

they generate and the costs of establishing and maintaining relationships with them.

1) Geography –Urban and semi urban

Aava Natural mineral water has divided segmentation on the bases of geography. Under

geography segmentation they are targeting to urban area just like Ahmedabad, Gandhinagar

and city area.

2) Age –Youngster

Also the Aava is segmenting on the bases of Age that is of youngster and the lady who faces

the problem to drink the water directly from the bottle.

3) Education-Health consciousness

The product itself suggests the segmentation that the product is related with health of the

community and the community understands this thing from the education background. So,

one of the segmentation is education.

4) Lifestyle



The product is stylish so every body will purchase who wants to live in lifestyle. Lifestyle is a

psychographic segmentation which is considered by the Aava bottled water.

5) Need-Basic need

Water is a basic product and Aava providing natural mineral water to their customer. So, one

of the segmentation would be of the need base.

Targeting

Doing business without knowing what your target market is will prevent you from reaching

your objectives: increased sales, market share or brand awareness.

Outline:

I. Identify Potential Customers

II. Conducting Market Research

III. Choosing a Target Market

IV. Compiling a Customer Profile

Identify Potential Customers

There are two types of customer groups that you can target: individual consumers or other

businesses. Individual consumers are somewhat more difficult to target because they are

diverse and unpredictable, they typically have small individual budgets, and their buying

preferences may change as they age. Businesses as a target market tend to be fairly stable

over time and have large budgets to spend on various products and services. The Aava has

also two kind of customers that is individual and institutional customers as they had identified

their potential customer from the segmentation bases.

Conducting Market Research

There are many sources of market research — much of which is free of cost — that have

already been compiled that you can draw from for basic information about your prospective



customer group. Search the Internet and your local library for studies and data that have been

gathered for your particular industry.

Choosing a Target Market

After you have conducted a sufficient number of surveys, compile the results to determine

which markets make the most sense for your business to target. And according to that choose

a group which you want to target.

Compiling a Customer Profile

Just as a mission statement guides the operation of your company, a customer profile will

guide your sales effort. Develop an overview of your target customers so that you and all of

your employees are clear about whom you are selling to.



POSITIONING STRATEGIES

There are seven positioning strategies that can be pursued by Aava

1) Product Attributes: What are the specific products attributes?

The product has natural mineral water features which is does not any RO and UV process to

purify the water. The RO and UV containing chemical and related drugs to clean the water

but it is somewhat harm to body of the human.

2) Benefits: What are the benefits to the customers?

It is totally safe and healthy product which can be the benefit of the product. Aava certainly

has positive health implication for osteoporosis, arthritis as well as cataract.

3) Usage Occasions: When / how can the product are used?

The product can be use to drink as well as for the kitchen use.

4) Users: Identify a class of users.

The product will be use by youngster, sports person, ladies and child. For child and ladies

they are specially focuses to providing cap on the bottle.

5) Against a Competitor: Positioned directly against a competitor.

As product is patented from its packaging style no body will copy the packaging style. So,

this could be the strategy against competitor.

6) Away from a Competitor: Positioned away from competitor.

Same as above the packaging is the main differentiating factor for the Aava bottled water.

7) Product Classes: Compared to different classes of products.



As all players generally focuses on the youngster and men but meanwhile Aava bottled water

is focuses on the child and women also.

8) Product Attributes: What are the specific products attributes?

The product has natural mineral water features which is does not any RO and UV process to

purify the water. The RO and UV containing chemical and related drugs to clean the water

but it is somewhat harm to body of the human.

9) Benefits: What are the benefits to the customers?

It is totally safe and healthy product which can be the benefit of the product. Aava certainly

has positive health implication for osteoporosis, arthritis as well as cataract.

10) Usage Occasions: When / how can the product are used?

The product can be use to drink as well as for the kitchen use.

11) Users: Identify a class of users.

The product will be use by youngster, sports person, ladies and child. For child and ladies

they are specially focuses to providing cap on the bottle.

12) Against a Competitor: Positioned directly against a competitor.

As product is patented from its packaging style no body will copy the packaging style. So,

this could be the strategy against competitor.

13) Away from a Competitor: Positioned away from competitor.

Same as above the packaging is the main differentiating factor for the Aava bottled water.



14) Product Classes: Compared to different classes of products.

As all players generally focuses on the youngster and men but meanwhile Aava bottled water

is focuses on the child and women also.



CHAPTER - 4

COMPREHENSIVE STUDY OF INDIAN MARKET & AAVA

4.1 PEST ANALYSIS

4.1.1 POLITICAL FACTORS

Political factors include government regulations and legal issues and define both formal and

informal rules under which the firm must operate. Some examples include:

Norms and Regulation

BIS: Bureau of Indian standards is a premier organization engaged in setting standards for

various products and services. According to BIS, experience chemists and microbiologists are

a must to carry out the tests as per the ISI specification.

ISI: Indian Standard Institution is the former name of BIS but till date ISI is the MARK

given by this organization. It is compulsory for all the manufacturers who intend to set up the

processing unit, to obtain the ISI mark from Bureau of India Standards.

PFA: Governed under Prevention of Food Adulteration Act 1954, this agency safeguards the

interests of the consumers through constant check on the food and beverage sector.

FDA A regulated packaged food product

Bottle water adheres to federal and state regulation and standards. At the federal level, bottle

water is regulated as a packaged food product, governed by the U.S. Food and drug

administration. At the state level, bottled water is regulated in various ways, typically through

state environmental, Food or agricultural agencies. IBWA industry standards are in several

cases stricter than both federal and state regulations.



Unless the inspection is done by the staff, tests carried out in an independent lab and official

confirmation and license number is obtained, unit can’t commence commercial production.

Indian bottled water is governed under 2 categories:

1. Packaged Natural Mineral Water [ Under IS: 13428:1998, Amendment 1-5 upto15th

October 2004]

2. Packaged drinking water [ Under IS : 14543: 2004 ]

Implication:-

The Govt. has also got into the action by imposing stringent legislations regarding wastewater

treatment. There is also a compulsory requirement of Environment Clearances from Pollution

Control Boards at the Centre and the states. The recent Supreme Court directive to move

polluting units out of Delhi is also likely to act as an impetus to future sales of water

treatment equipment. Also at the same time, many existing treatment plants would need to be

replaced or upgraded to meet with more stringent standards. This norms directly affect to

quality of the water when norms was liberal at that time people not got quality product but

now due to political interferences all player produce quality product and also norms increase

entry barrier in the industry.

Tax Policy:-



Govt. also reduce the excise duty from 16% to 8%. The Rs 1,600-crore packaged bottled

water industry may grow at over 25 per cent from 2008 after reduction in Excise duty on

packaged drinking water will encourage more regional players to enter the business, thereby

fuelling growth in industry currently dominated by few players like Coca-Cola’s Kinley,

Pepsi’s Aquafina and Bisleri, apart from regional brands.

This may also result in a reduction in the prices of branded packaged waters by 10-15 per

cent from next year. In order to promote clean and hygienic packaged water, the food

processing industry wants VAT to be in the range of 0-4 per cent. The proposal is meant to

encourage regional companies to start bottled water and packaging plants.

“Since packaged drinking water fulfills the basic needs of the consumer outside the house

and is an essential item of consumption, the duty should be drastically cut,” CB Gupta,

advisor, Federation of Indian Chamber of Commerce and Industry (Ficci), said.

“If the duty is brought down, the Rs 1,600-crore packaged drinking water industry is

expected to go up by 25-50 per cent,” said Samir Barde, director, Confederation of Indian

Food Trade and Industry (Food wing of Ficci).

Consequence: - By way of taxation, if it will reduce then what happen. There may be

reduction in prices of packaged water. Nowadays, people threaten from psychological pricing

that today people worth bottled water at Rs. 15 and more so, that reduction of tax will result

into 10-15% reduction in price of bottle i.e. people not habitual for psychological pricing and

they are very price conscious.

Product Labeling Requirement

The labeling of the product should have following provisions & the features

Label should have

customer brand name

the name of the product category

name and address of the manufacturer

net weight or volume

the batch number



the name of source or place of origin of the product

the date of packaging

the date of expiry

direction for storage

treatment for disinfection

the license or certification from the concerned authority

Company’s background

(Source: - www.ibwa.com )

Implication:- Via this political rules all players provide total detail of product to the

customer, because of increase in health consciousness among people. When it is strict then

player not cheat with the customer.

Minimum Wage Act

According to minimum wage Act, 1948 the company must have to pay minimum wage 67.43

Rs. Per day. The Payment of Wages Act, 1936 was enacted to regulate payment of wages to

workers employed in Industries and to ensure a speedy and effective remedy to them against

illegal deductions and/or unjustified delay caused in paying wages to them.

Industrial safety Regulation

The World Health Organization (WHO) publishes Guidelines for Drinking-water Quality

which many countries use as the basis to establish their own national standards. The

Guidelines represent a scientific assessment of the risks to health from biological and

chemical constituents of drinking-water and of the effectiveness of associated control

measures. WHO recommends that social, economic and environmental factors be taken into

account through a risk-benefit approach when adapting the Guideline values to national

standards. As the WHO Guidelines for Drinking-water Quality are meant to be the scientific

point of departure for standards development, including bottled water, actual standards will

sometimes vary from the Guidelines. It should also be noted that water used for making

edible ice should be subject to the same drinking-water standard and include specific sanitary

requirements for equipment for making and storing ice. For water in car buys, similar sanitary

requirements for dispensing devices need to be observed.


http://www.ibwa.com/


4.1.2 ECONOMIC FACTOR

Economic factors affect the purchasing power of potential customers and the firm's cost of

capital. The following are examples of factors in the macro economy.

Per Capita income and consumption

Per Capita Income Per Capita Consumption

Rs. Growth % Rs. Growth %

2002- 03 20996 2.2 13352 1.1

2003-04 22413 6.8 13918 4.2

2004-05 23890 6.6 14413 3.6

2005-06 25696 7.6 15422 7.0

2006-07 27784 8.1 16279 5.6

2007-08 29786 7.2 17145 5.3

Source: Economic Survey 2007-08, Chapter 8

per capita income and consumption

2.2

6.8 6.67.6 8.1

7.2

1.1

4.23.6

75.6 5.3

0

2

4

6

8

10

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

year

grow

th

income growth(%)consumption growth(%)

The consumption and income of the people are increasing. After increasing in income people

consume more as compared to the past year so it increase consumption of bottled water and



people also spend money after their welfare, it increase the rate of spending money on behalf

of their primary need. After increase income people lifestyle also change and it affect

consumption of bottled water.

GDP Growth V/s Aava Company Growth

GDP vs Aava growth

9.2

8.58.4

25

36

15

8

8.2

8.4

8.6

8.8

9

9.2

9.4

2006 2007 2008

year

Gro

wth

0510152025303540

Aav

a G

row

th(%

)

GDP Growth(%)

Aava Growth

Source : www.rbi.org.in, Macroeconomic and Monetary Development,

annual statement on monetary policy, First Quarter Review 2008-09

Aava Company has tremendous growth from its starting. The company is growing with the

growth of GDP. The company is growing at 25%in last year. So that we can expect that

company is grow more in future.

Labor Cost

Treatment and purification account for the next major cost. Even with the state-of-the-art

treatment system with reverse osmosis and membranes, the cost of treatment is a maximum

of 25 paise a litre (Rs.0.25/litre). Therefore, the cost of producing 1 liter of packaged drinking

water in India, without including the labour cost, is just Rs.0.25. In a nutshell, in

manufacturing bottled water, the major costs are not in the production of treated and purified

water but in the packaging and marketing of it.


http://www.rbi.org.in/


The cost of a bottle, along with the cap and the carton, is the single biggest cost - between

Rs.2.50 and Rs.3.75 for a one-liter bottle. For water sold in big plastic jars (20-50 liters),

which are also reused, or in pouches, this cost is much lower. It is precisely owing to this that

companies sell water at even Re.1 a liter in a 20-50 liter jar and still make profits. Labor and

establishment and marketing costs are highly variable and depend on the location and size of

companies. Informal discussions with industry members reveal that the gross profit of this

industry can be as much as between 25 and 50 per cent.

Implication:- we have already seen that labor cost is totally variable and depend on location,

in urban area labor cost is higher so ultimately increase in production cost compared to rural

area in which we get labor at low price and increase profitability. When inflation rate increase

then automatically labor charges also increases in market it directly affect labor cost in

production.

Tourism and tourist places.



Indian government focus on tourism places and also invite tourist of foreign and all foreign

people use bottled water, government ban on pouches water for reducing pollution of plastic

it increases the market of bottled water. Above all factor increase tourist.

Interest Rate:

Interest Rate

13.25

10.75

7.5

9.7510.75 10.25

0

2

4

6

8

10

12

14

2000 2002 2004 2006 2007 2008Years

Pe

rce

nta

ge

SOURCE-MONARCH FINPROJECTS LTD



Companies will expand and increase use of debt as a result of the low borrowing rates. Aava

can borrow money for investing in products as the interest rates are low. It can use the

borrowing on research of new products or technology. As researching for new products

would cost less the Aava Company will sell its products for less and the people will spend as

they would get cheap products from Aava. Here Aava is very small company and it is

financially weak. So that company must borrow money from bank.

Growth in interest rate (bank wise)

Bank Growth

ICICI Bank 4.40%

SBI 18.80%

HDFC BANK 27.20%

AXIS BANK 59.20%

PNB 14.60%

BOB 15.30%

LIC HOUSING FINANCE 24.90%

4.1.3 SOCIAL FACTOR

Health Consciousness

As the water supplies today are stretched to meet the demands of the ever increasing

population, more and more people in the urban areas are looking towards bottled drinking

water to meet some of their demands. While safety and health remain the most important

considerations they aren’t always founded on facts. Hence arise the need for having specific

standards, especially in the wake of certain water related disasters.



Life Expectancy Rate(%)

6364 64

65

69 69

6061626364656667686970

2003 2004 2005 2006 2007 2008

Year

Ag

e

Source : ='http://www.indexmundi.com/g/g.aspx

WHO publishes Guidelines for Drinking Water Quality based on which countries have their

own national standards, Though stricter standards are applied for control in Packaged

Drinking Water, it is not always easy to maintain such standards because of long periods and

higher temperature of storage. Also there is no agency to detect fraud at the level of

manufacture or distribution

Keeping the above considerations in mind it is necessary to formulate policies which do not

separate it from health and develop an integrated food and Water resource management.

About 25% of bottled water sold is simply re-processed/used municipal (city) water. While

there have been few comprehensive studies, one analysis several years ago found that about

22 percent of brands that were tested contain, in at least one sample, chemical contaminants

at levels above strict state health limits. If consumed over a long period of time, some of

these contaminants could cause cancer or other health problems at rates higher than those

considered tolerable by the regulatory body setting the standards.



Demographical Transformation of India

(In USD) POPULATION (MILLION)

Annual Household Income 2001-02 2005-06 2009-10(E)

Rich (Above 115,000) 2 9 20

High Income (57,000 – 115,000 9 17 33

Consuming class (23,000 – 57,000) 48 74 120

Working class (10,200 – 23,000) 221 285 404

Needy (Below 10,200) 726 710 613

DEMOGRAPHIC TRANSFORMATION OF INDIA

2 948

221

9 1774

285

20 33

120

404

726 710

613

0

100

200

300

400

500

600

700

800

Rich (Above115,000)

High Income(57,000 –115,000

Consuming class(23,000 –57,000)

Working class(10,200 –23,000)

Needy (Below10,200)

ANNUAL HOUSEHOLD INCOME (IN USD)

PO

PU

LA

TIO

N (

IN M

ILLIO

N)

2001-022005-062009-10(E)

As it can be seen from the above graph that, due to liberalization, privatization &

globalization (LPG), now in India many MNC’s & other private companies has created many

opportunities for employment in the country which lead to increase in annual household

income & it will have direct effect on the lifestyle of Indian people.



Life style Trend

consumer expenditure on food (us$ million)

144,356.90164,905.10

182,089.90

221,046.20250,331.60

0.00

50,000.00

100,000.00

150,000.00

200,000.00

250,000.00

300,000.00

2004 2005 2006 2007 2008

year

Mil

lio

n(U

S$)

Source : World Economic Factbook

In 21st century, life style of the people are changed and they follow the western culture. They

require more safety, cleanliness. Now people are more spend on food and beverages

expenditure of his disposable income.

Increase in Youth Age People and Elders

Population Demographic Shift

Age % of population 1997 2002 2007

Under 15 years 37.20% 33.50% 30.00%

Between 15-59 years 56.10% 59.30% 62.30%

Above 60 years 06.60% 06.90% 07.50%


http://www.euromonitor.com/World_Economic_Factbook


AGE BETWEEN 15-59 YEARS

56.1

59.3

62.3

52

54

56

58

60

62

64

1997 2002 2007

PE

RC

EN

TA

GE

(Source: Planning Commission Projection data)

In above chart we can see young people in India is increasing rapidly. Earlier the young

working peoples are 56.1% out of total population and nowadays it is 62.3%. Young people

out of total population. The average young age in India is 25 upto year 2025. It shows a great

opportunity for water bottled water industry. There is a large population of the age range

known as the baby boomers. Since many are reaching an older age in life they are becoming

more concerned with increasing their longevity.

Increasing Population Growth and literacy rate.

India is a second largest in population so it increases the demand of all products also people

are literate so they all drink safe water so here Bottled water player grabs this market.

Population Growth Rate

1.441.4 1.38

1.61 1.59

1.2

1.3

1.4

1.5

1.6

1.7

2004 2005 2006 2007 2008

Years

Gro

wth

Rat

e

Source: <a href='http://www.indexmundi.com/g/g.asp>



Literacy Growth Rate

48.3 48.3 48.3

47.8 47.8

47.4

47.6

47.8

48

48.2

48.4

2004 2005 2006 2007 2008

Years

Gro

wth

Rat

e

Source: <a href='http://www.indexmundi.com/g/g.aspx

Organized packaged water industry provides unique employment opportunities to the locals

under following segments:

Geological Engineers (Water Diviners):

Mechanical / Electrical Engineers

Chemical Engineers

Chemist

Microbiologists

Researchers

Marketing & Distribution

(Source:- http://www.merinews.com/catfull.jsp?articleID=137322 )


http://www.merinews.com/catfull.jsp?articleID=137322


4.1.4 TECHNOLOGY FACTOR

It creates opportunities for new products and product improvements and of course new

marketing techniques- the Internet, e-commerce.

Fully Automated and Hygienic Plant

The Aava water plant is the first of its kind in India, it is a fully automatic, washable,



technology (class 10,000) within the automatic filling, capping and sealing system ao





purity.







Sand Filtration Machine

There are 63 different chemical, microbiological and other tests. Aava does not go through

certain processes that other Packaged drinking water like Activated Carbon Filtration,

Softening and RO purification. The new Osmonics E-Series Ozone Generators feature a

durable flat plate ceramic cell construction that provides stable ozone output at higher

concentrations (from 6 to 10 per cent by weight), while efficiently producing up to 3 ppd (57

g/hr) of ozone.



4.2 PORTER’S FIVE FORCE MODEL

4.2.1 RIVALRY AMONG EXISTING COMPETITION (EXTREMELY HIGH)

Rivalry among existing competitors YES(+) ~ NO(-)

1 The industry is growing rapidly. 2 The industry is not cyclical with intermittent overcapacity. 3 The fixed costs of the business are a relatively low portion of

total costs.

4 There are significant product differences and brand identities

Between the competitors.

5 The competitors are diversified rather than specialized. 6 It would not be hard to get out of this business because there are

no specialized skills and facilities or long-term contract

commitments, etc.

7 customers would incur significant costs in switching to a

Competitor.

8 product is complex and requires a detailed understanding 9 competitors are all of approximately the same size

The players in the bottle water industry have one of the most competitive rivalries in any

industry. In India the market is dominated by the two international giants, Bisleri and Kinley,

with market shares respectively of 40%, and 23%, leaving little room for others to grow.

Aava can still manage to be profitable in a cutthroat industry, and we plan to position it

strategically in order to do so.

The bottle water industry is a reasonably attractive industry to be in, and with its 19 years of

established presence, Aava is not well positioned to leverage that history so as to attain a

competitive edge. Aava’s current focus is one of a lackluster “if it ain’t broke, then don’t fix

it” attitude, that stems from its history of centralized power base and tall and unprofessional

organizational structure.



More number of unorganized player in market.

o Out of 1800 player only 20% are organized.

o 200 brands compete in market.1

In bottled water market most of the brands are unorganized because people are price

conscious and prefer easy availability of bottled water so unorganized player increase the

competition among the player. So that every one try to grab the sales.

Impact of any one company’s action is very high on other competitors of industry.

Switching cost for buyer almost or nearer to zero. So buyer can transfer his/her purchase

from one product to another.

1



4.2.2 THREAT FROM NEW ENTRANTS (HIGH)

THREAT OF NEW ENTRANTS YES(+) ~ NO(-)

1 Do large firms have a cost or performance advantage in your

segment of the industry?

2 Are there any proprietary product differences in industry. 3 Are there any effect on established brand identities in your

industry?

4 Do customers incur any significant costs in switching suppliers? 5 Is a lot of capital needed to enter your industry? 6 Is serviceable used equipment expensive? 7 Does the newcomer to your industry face difficulty in accessing

distribution channels?

8 Does experience help to continuously lower costs? 9 Does the newcomer have any problems in obtaining the

necessary skilled people, materials or supplies?

10 Does product or service have any proprietary features that

give lower costs?

11 Are there any licenses, insurance or qualifications that are

difficult to obtain?

In this industry, it is considerably difficult and costly to set up the factories and bottling

plants required. Also, for a new entrant, it would be extremely difficult if not impractical to

infiltrate the established distribution network of the current players like Bisleri, Aquafina etc.

Furthermore, it would be quite a good task to change the hard and fast perception of millions

of consumers, making it a favorable point for this industry. The fastest growing and most

attractive beverage category in the world. Annual growth rate more than 38%. retaliation

Buyer needs and requirements increase in market.



o Due to the concerns over the safety of tap water.

o An increased focus on health and fitness.

o The hectic on-the-go lifestyles of consumers.

o Attracted by the convenience, purity and portability.

Above all points are attract more number of player in market for satisfy the need of the

market and many non organized player are enter in market for capturing untapped market.

Enhance waters offered higher margins.

In bottled water the cost of production and raw material is not high. One liter bottled produce

in 3 to 5 Rs and sell in market at more than 10 Rs so manufacturer get maximum profit in this

segment.

4.2.3 BARGAINING POWER OF BUYERS (HIGH)

Bargaining Power of buyers YES(+) ~ NO(-)

1 Are there a large number of buyers relative to the number of firms in the business?

2 Do industry have a large number of customers, each with

relatively small purchases?

3 Does the customer face any significant costs in switching suppliers?

4 Does the buyer need a lot of important information? 5 Is the buyer aware of the need for additional information? 6 Customers are not highly sensitive to price. 7 Identity of Buyer adds prestige to the seller’s list of customers, 8 Provide incentives to the decision makers. 9 Not Compulsory to purchase some specific brand

There are an extremely large number of buyers as compared to companies in the industry, and

these buyers often purchase this industry’s relatively low priced products on a habitual,

impulse, or convenience basis, thus making it favorable for the industry.



Product Differentiation

In market manufacturer not provide any differentiation in product so buyer bargain more in

one product.

Price sensitivity

When buyers are more price sensitive then it increase bargaining power of buyer

Purchased in low quantity.

All Buyers are purchase in low quantity like 1 liter or 2 liter so they not bargain with

manufacturer.

Importance of quality and performance.

When people are more conscious about health and safety then all are not bargain with quality

product.

Product Information.

People do not have full data of all brands so they do not compare with other brands and

bargain with dealers



4.2.4 BARGAINING POWER OF SUPPLIERS (LOW)

Bargaining power of suppliers YES(+) ~ NO(-)

1 Inputs (materials, labor, supplies, services, etc.) are standard

rather than unique or differentiated

2 Company can switch between suppliers quickly and cheaply. 3 Many potential suppliers. 4 Company business is important to supplier’s business 5 Cost of purchases has no significant influence on overall

costs.

Most of the raw materials required in the bottle water industry are non-specialized

commodity products, such PET bottles, Cup Cap carbonated water, glass bottles, plastic and

cans. There is less supplier of PET bottle available in market. This indicates that suppliers are

non-specialized, allowing companies in the industry to switch between suppliers without

losing any strategic alliance or significant cost advantage. Furthermore, it is also considerably

difficult for any one supplier of the bottle water industry to integrate forward into the

concentrate manufacturing and bottling businesses. Preform purchased from Reliance

industries, Jamnagar, Chemco, suraj beverages and also from Alasca Net and purchase

machine from Shyam blowing, label from barflex, Delhi. Company produce PET bottle its

own. Here company make backward integration due to this company does not want depend

on supplier for bottle. Company bring water from Aravalli. For that company does not want

to depend on water supplier. There are many suppliers of perform like RIL, Parle

International, Chemco etc.

4.2.5 THREATS FROM SUBSTITUTES (MEDIUM)



Threats of Substitutes YES(+) ~ NO(-)

1 Substitutes have performance limitations that do not completely

offset their lowest price. Or, their performance is not justified

by their higher price.

2 The customer will incur costs in switching to a substitute. 3 Your customer has no real substitute. 4 Your customer is not likely to substitute.

The threat of substitutes, although mediocre, still poses a considerable threat to the overall

profitability of the industry, and that is because in recent times a health craze has taken over

all respects of life, worldwide. Therefore, it would signify a heavy reduction in the

consumption of water due to many substitute available in market like Purifier, Vending

Machine, water pouches, Alcoholic drink etc. this substitutes are readily available.

Switching cost almost zero. All customers are easily switched over substitute product of

bottled water without any extra expense so the threats of substitute product are stronger in

bottled water market and substitute has better performance.

Overall Industry Rating

Overall Industry Rating

LOW MODERATE HIGH

1 Threat from new entrants

2 Bargaining Power of

Buyers

3 Threat of substitutes 4 Bargaining Power of

Suppliers

5 Rivalry Among Competitors

4.3 SWOT ANALYSIS



4.3.1 INTERNAL FACTOR EVALUATION

STRENGTH

Best packaging bottle water awards

If Innovation was to get a distinct and newer description, the credit would must go to Aava

Natural Mineral Water. It is the first and the only Indian Finalist and Winner of the Silver

Award at the Bottled Water World Awards, held recently in Mexico. On the Aava bottle

water there is company description, Manufacturing Date, Size, ISO 14001-2004 mark,

License Number, Price, Batch Number etc. The key to good design lies in making it

attractive. Aesthetics and functionality played a crucial role in our effort at zeroing in for the

perfect design for the Aava bottle water. Aava bottle launch with unique cup and it is the first

time in India, meeting the need of the elderly and young people who may it find difficulty to

drink from the bottle.



Aava is packaged in an environment that adheres to the toughest international certification

standards, guaranteeing that the water contained in every bottle of Aava has the same natural

purity and unaltered mineral composition.

Non-Acidic Water

“Aava” has perfectly balanced minerals nothing less nothing more."

.

Acidity Meter as tested on INDIKROM papers (strips) from GlaxoSmithkline

Pharmaceuticals Limited.

«------------------------- Acidic «---- Neutral----» Non -

Acidic-------------------------------------»

2 4 6 7 8 9 10 10.5

Aquafina Oxyrich Himalayan Aava

Kinley -

Bisleri

Home Filtered

Water

Source : www.tradersinn.com

In a world where every alternate food item claims to be fortified, nothing about Aava is

artificial. Nature has endowed Aava with a unique mineral composition that is beneficial to

health. Aava Natural Mineral Water is directly obtained from protected natural sources,

thus ensuring thats the water is naturally pure. It therefore need not be put through all the

chemical and other purification processes that Packaged Drinking Water necessarily goes

through.



Best Drinking Water of Today

MINERALS AAVA HIMALAYAN EVIAN

PH LEVELS 7.93 7.3 (on bottle) 7.2

TDS 305 350 (on chart) ?

CALSIUM 20.8 49 (on chart) 78

MAGNESIUM 7.6 35 (on chart) 24

SODIUM 19.9 20 (on bottle) 5

FLORIDES < 0.2 0.9 (on chart) ?

CHLORIDES 45.2 8 4

NITRATE Nil 4 3.8

NITRITE (M. P. L - 0.02) Nil 0.01 ?

PESTICIDE NilMore than permissible

limit (source - NDTV)?

Ozonisation

(Legally not allowed in Natural

Mineral Water since it leaves

Bromides in water)

No OzonisationOzonised

(As per their website)?

BICARBONATE 145 263 357

PH Level (Acid)

The Himalayan waters PH level vary form 7.7 to 7.3 which brings them dangerously close to

water becoming acidic, compared to that “AAVA” is constant at 7.93 making it absolutely

non acidic and liter.

Calcium

It is a well known fact that calcium is good for bones but is also a know fact that excessive

calcium causes kidney stones and therefore across the world FDA’s allow upto 100 mg per

litre as the maximum permissible limit. “AAVA” at absolutely well balanced 20.8mg per liter

proves the superiority of being good and also being safe compared to Himalayans content of

calcium 49mg per liter.



Magnesium

It is excellent for brain power (Sourced Reader’s Digest) but as usual anything excess is not

good. It is also good for heart. It prevents heart from Cardinal Vascular disease. Excessive

Magnesium can cause Diarrhea, nausea, cramps, muscle weakness, and heart abnormalities.

Nitrate

This extremely dangerous ingredient is very harmful for children as well as pregnant women.

Pesticides

Pesticides are extremely harmful for human body and can cause cancer.

Bromide

It can cause eye and mucous membrane irritation and can lead to odour nuisance.

Fluoride

Excessive fluoride can cause fluorisis, a disease in which excessive floride in the blood

causes bones to become brittle. Excess fluoride affects our teeth and bones both. Excessive

fluoride has even been linked to increased lead absorption. This means that if a child is

exposed to lead and has fluoride, he/she can suffer severe lead poisoning. (We all know about

the terrifying effects of lead poisoning.)

Fully Automated and Hygienic Plant




technology (class 10,000) within the automatic filling, capping and sealing system

AO that Aava’s original mineral composition as well as the purity of the air and water

is maintained at all times.





purity.


water a day and another 1000 ‘Family-pack’ 20 ltr & smaller jars.


WEAKNESS

Lack of promotion, advertising,

Aava Bottle water does not spend much on advertising while other company like aquafina,

bisleri, kinley spend crore of rupees in advertising and promotion. They give advertisement in

Newspaper, Magazine , TV. While there is no advertisement of Aava in TV channel, etc. Due

to this there is a lack of awareness of Aava bottle water.Aava become failed to communicate

with people. There is a big interval between two advertisement. They give advertisement in

different newspaper every time.



Top 5 Mineral Water Brand along with advertisers on TV during 2007 Year

Brand Advertiser %shareManikchand Oxyrich Dhariwal & Doshi Indus Ltd. 35%Aquafina Mineral Water Pepsi CO. 29%Bisleri Parle-G 20%Seagrams Imperial Blue Seagram 23%Old Admiral Aqua Pura Radico Khaitan Ltd. 3%

Source : TV AdEx (January 2008)

Lack Of Distribution Channel

Aava bottle provide its product only limited to Ahmedabad and Gandhinagar area and

provide only its institutional clients. We do not see its product out of this city. On the other

hand bisleri, Aquafina and Kinley are available at any place. Mr Mehta stressed on the

inevitability of skilled manpower so as to ensure an even quicker growth. Aava company start

from last two year so they are not much financially strong like bisleri, aquafina which are

present in the market for a long period of time.

Lack of proper positioning:

Aava Water is originally natural mineral water but they are compete with their product with

packaged drinking water like bisleri, Aquafina, Kinley etc. So due to lack of proper

positioning they can not differentiate its product from other competitors. If they positioning

as mineral water, they can more successful in market and capture the market share.



No Formal Organization Structure

There is no formal organization structure in Aava company. There is a problem of delegation

of authority. There is only one person who is engaged in activities of production, marketing

and all the major activities. Aava is a highly un organized company

Poor Customer Relationship Management :

Aava company can not maintain good relationship with its customer. They do not provide

goods to its client due to lack of distribution channel. Due to this problem company loose Taj

Hotel and IIM (Ahmedabad).



INTERNAL FACTOR EVALUATION

Key Internal Factors Weight Rating Weighted Score

Strength

Best Packaging Bottle water 0.19 1 0.19

Non-Acidic water 0.13 2 0.26

Best drinking water of Today 0.09 4 0.36

Fully Automated & Hygienic Plant 0.11 3 0.33

Weakness

Lack of promotion & Advertising 0.18 1 0.18

Lack of proper Positioning 0.12 2 0.24

Lack of Availability in the remoter area 0.10 4 0.40

No Formal Organization Structure 0.08 5 0.40

TOTAL 1.00 2.46

Aava received a total score of 2.46 in the internal evaluation. This signifies that the company

has a weak internal system and is not able to effectively manage any of their strengths in a

meaningful manner. Also of their weaknesses, it is worthy to note that their weak distribution

setup and advertising had the most weightage. Therefore, from our internal factor analysis we

can form two possible strategies. One is the formation of a structured and competent

distribution network through the enabling of sales force teams. An alternate path would be to

outsource the function to an existing distribution company and over time develop the

organization required for an internal distribution setup. Company make clear positioning and

make decentralize organizational structure

4.3.2 EXTERNAL FACTOR EVALUATION



OPPORTUNITY

Untapped Market.

In India, the per capita bottled water consumption is still quite low - less than five litres a

year as compared to the global average of 24 litres. Bottled water market focuses only on

urban area but not focus on rural area because in past rural area people not that much

conscious about health and safety also the distribution cost was high. Today more than 50%

market covered in rural area through pouches so here a big opportunity for bottled water

player.

Change in lifestyle.

Bottled water shows the status among society and this reason increase the consumption of

bottled water product. Also rich people are increase demand of bottled water in market.

Increasing Population Growth and literacy rate

India is a second largest in population so it increases the demand of all products also people

are literate so they all drink safe water so here Bottled water player grabs this market.

Population Growth Rate

1.441.4 1.38

1.61 1.59

1.2

1.3

1.4

1.5

1.6

1.7

2004 2005 2006 2007 2008

Years

Gro

wth

Rat

e

Source: <a href='http://www.indexmundi.com/g/g.asp>



Literacy Growth Rate

48.3 48.3 48.3

47.8 47.8

47.4

47.6

47.8

48

48.2

48.4

2004 2005 2006 2007 2008

Years

Gro

wth

Rat

e

Source: <a href='http://www.indexmundi.com/g/g.aspx>

Demographical Transformation of India

(In USD) POPULATION (MILLION)

Annual Household Income 2001-02 2005-06 2009-10(E)

Rich (Above 115,000) 2 9 20

High Income (57,000 – 115,000 9 17 33

Consuming class (23,000 – 57,000) 48 74 120

Working class (10,200 – 23,000) 221 285 404

Needy (Below 10,200) 726 710 613

DEMOGRAPHIC TRANSFORMATION OF INDIA

2 948

221

9 1774

285

20 33

120

404

726 710

613

0

100

200

300

400

500

600

700

800

Rich (Above115,000)

High Income(57,000 –115,000

Consuming class(23,000 –57,000)

Working class(10,200 –23,000)

Needy (Below10,200)

ANNUAL HOUSEHOLD INCOME (IN USD)

PO

PU

LA

TIO

N (

IN M

ILLIO

N)

2001-022005-062009-10(E)



As it can be seen from the above graph that, due to liberalization, privatization &

globalization (LPG), now in India many MNC’s & other private companies has created many

opportunities for employment in the country which lead to increase in annual household

income & it will have direct effect on the lifestyle of Indian people.

Awareness on health

People are more conscious about their health and safety so they not use tap water or any other

water which is available without any purification process. This factor affects the total demand

of bottled water market in India.

Life Expectancy Rate(%)

6364 64

65

69 69

6061626364656667686970

2003 2004 2005 2006 2007 2008

Year

Ag

e

Source: <a href='http://www.indexmundi.com/g/g.aspx>

Commercialization

Due to increase in urbanization commercialization also increasing like offices, meeting

places, conference halls and business parties this all are increase consumption of bottled

water in India so all factor create opportunity for bottled water player.



Tourism and tourist places

Indian government focus on tourism places and also invite tourist of foreign and all

foreign people use bottled water, government ban on pouches water for reducing

pollution of plastic it increases the market of bottled water. Above all factor increase

tourist.

Market Growth

In 2011, the market is forecast to have a value of $86,421.2 million, an increase of 41.8%

since 2006 and the market is forecast to have a volume of 174,286.6 million liters, an

increase of 51% since 2006. Market is growing at 60% CAGR.



Total Million Cases

44.555.6

68.1582

97112.9

129.9

0

20

40

60

80

100

120

140

2002 2003 2004 2005 2006 2007 2008

60% CAGR

83Source: Advertising express May 2008, - pg- 55

Research from Zenith International highlight that growth in volume will more than double

growth in volume will more than double growth in value within the next five years. So while

bottled water production in India is set to climb by a whopping 70% to around 3 billion liters

by 2011, the value increase is limited to a rise of only 35% to $880 million. Allocation for

Rajiv Gandhi Drinking Water Mission is proposed to hike to Rs.73bn from Rs.65bn.

Urbanization.

The fact that most of this population growth will be accounted for by urban areas will add to

the existing water crisis in the cities. By 2050, 48% to 61% of India's population will be

living in urban areas.

Extraordinary application of product

Before few year people use tap water in cooking but now people use bottled water or purified

water in cooking it increase the use of bottled water.

Lack of pure drinking water over the country

Size of Middle Class and Growth



There are 445 million middle income earners and they earn $2000 - $4000 annually and

influence of foreign media play an important role in increasing demand.

Per Capita GDP Increasing

GDP (Per Capita PPP)US $

25402900 3100

34003800

2700

0

1000

2000

3000

4000

2003 2004 2005 2006 2007 2008

Years

US

$

Source:www.indexmundi.com

It shows GDP on a purchasing power parity basis divided by population. It is increasing year

by year. So that people can purchase more amount of goods and more disposable income.

Increase in Youth Age People and Elders

Population Demographic Shift

Age % of population 1997 2002 2007

Under 15 years 37.20% 33.50% 30.00%

Between 15-59 years 56.10% 59.30% 62.30%

Above 60 years 06.60% 06.90% 07.50%



AGE BETWEEN 15-59 YEARS

56.1

59.3

62.3

52

54

56

58

60

62

64

1997 2002 2007

PE

RC

EN

TA

GE

(Source: Planning Commission Projection data)

In above chart we can see young people in India is increasing rapidly. Earlier the young

working peoples are 56.1% out of total population and nowadays it is 62.3%. Young people

out of total population. The average young age in India is 25 upto year 2025. it shows a great

opportunity for water bottled water industry.

Joint Venture with Evian Firm

The two year old company has been valued at around of Rs.180 Crore by Ernst and young.

Danone of Evian Fame has already signed a non disclosure agreement and mulled a joint

venture with Aava. Invitation galore have poured in for Aava for equity participation and its

pristine water to bottle for other companies. Evian mineral water in India through a

distribution tie up. So Aava get benefit of good financial position of Evian and brand name of

company.

Only one as natural mineral water in western region

Aava is only one natural mineral water in western region. Other brand which provide natural

mineral like Himalayan etc. they are in south and east region. So they can take advantage of

its product. There are 10 natural water license in India, most of them based in North.

THREATS



Government interferences

The Govt. has also got into the action by imposing stringent legislations regarding wastewater

treatment. There is also a compulsory requirement of Environment Clearances from Pollution

Control Boards at the Centre and the states. The recent Supreme Court directive to move

polluting units out of Delhi is also likely to act as an impetus to future sales of water

treatment equipment. Also at the same time, many existing treatment plants would need to be

replaced or upgraded to meet with more stringent standards.

Pollution norms

Government and NGO try to stop pollution and define criteria for pollution. In bottled water

industry major pollution is bottle & water. When the government make strict norm then it is

threats for producer to maintain all norm.

(Source:-www.bottledwater.org)

Substitute

In beverages market many substitute products available and for specially bottled water many

substitute are available at lower rate so it is a major threats for bottled water player. The main

threat is Pouched drinking Water. Now there is vending machine, fruit juice, coconut etc.

they give better performance compared to bottle water.

Regional Brand

The bottled water market is growing at the rate of 40% per annum and is expected to cross Rs

1000 crores within a few years. This segment is one of the most developed ones in India.. It

has been estimated that there are around 200 brands of bottled water in India, of which 80%

are local brands.

EXTERNAL FACTOR EVALUATION

Key External Factors Weight Rating Weighted Score

Opportunities

Untapped Market 0.17 1 0.17



Awareness of Health 0.13 2 0.26

Market Growth 0.10 1 0.10

Urbanization 0.11 3 0.33

Increase in Youth Age 0.13 3 0.39

Threats

Government Interferences 0.08 4 0.32

From big player (Bisleri, Kinley) 0.12 2 0.24

Substitution. 0.10 1 0.10

Regional Brand 0.06 4 0.24

TOTAL 1.00 2.15

Aava received a score of 2.15 in the external factor evaluation. This means that they are not

currently well equipped to take advantage of opportunities in the external environment, nor

defend against potential threats. Of the key external factors, the opportunity of health

conscious trend in lifestyles got the highest rating because this has become a huge market

which most major players in the industry are already tapping into with their diet products.

Bisleri , Kinley had the backing of a massive marketing and advertising campaign that clearly

communicated their position and proposition to consumers. Aava’s weak branding choices

regarding its natural mineral water reflect this ineffectiveness in communicating to end-users.

This mistake coupled with ineffective marketing has put Aava in this situation.



Here Aquafina has greater advantage of low cost as compared to Aava. The main cost of

packaging and bottle are very high as compared to other. But due to this company sustain in

the market. Aava company achieve best packaging bottle water award 2007.


4.4 Cost Structure

Cost of Cup Cap 0.32

Cost of label – 0.40

Cost of bottle – 1.50

Other CostPreform – 1.80Electric and labor – 0.60Corrugated box – 0.80Transportation cost – 0.15Treatment cost -0.10Selling and marketing expense – 0.33

Selling Price – 15 Rs.

Other Cost: Treatment cost:0.25Carton cost:0.50Transportation cost:0.25Total cost (Excluding Labor, Marketing, and Tax):4.25Selling Price :12

87


4.5 KEY SUCCESS FACTOR

4.5.1 Marketing & distribution

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.

Aava has a huge logistics advantage. Its only licensed mineral water in the West, South and

central India – others being in the Himalayan range. Pan India distributions top our list of

priorities. Aava has an efficient distribution network to fill the vacuum for good natural water

felt in south and West India.

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.2

According to Research of TAM Media Research,

Mineral Water advertising grew by 28% in 2007 as compared to previous year.

71% rise in advertising spend on Television in 2007 as compared to previous year

Mineral advertiser spend on advertisement in summer.

Mineral Water Advertisement peak in summer

05

10152025303540

Jan

ua

ry

Fe

bru

ary

Ma

rch

Ap

ril

Ma

y

Jun

e

July

Au

gu

st

Se

pte

mb

er

Oct

ob

er

No

vem

be

r

De

cem

be

r

Months

pe

rce

nta

ge

2006

2007

Source : AdEx – A Division of TAM Media Research

In the first phase of the launch of the new brand, availability will also play the key role in

attracting the customers. It is suggested that the entrepreneur decides the availability of the

product at A-class, or B-class, or C-class retail outlets or mass availability of the product

(aggressive marketing). Since, the perception of the product is also directly related with is

availability so it is suggested that the strategy for the availability of the product be designed

2



according to the target market and the perception and positioning the entrepreneur is

targeting.

Aava started from last two years. So it takes some time to take the advantage of its natural

mineral water. Nowadays, Aava can not spend much amount on advertising like Other

companies like Bisleri, Aquafina, Kinley etc.

4.5.2 Pricing

The pricing strategy should be in line with the going rate market prices of the different local

brands. Since a new brand has to face a lot of competition from the market, it is suggested

that the price ceiling should not be crossed whatever price strategy be adopted. Aava natural

mineral water price is low as compared to other natural mineral water company like

Himalayan. Himalayan’s price on one liter is 20 Rs. And on the other hand price of Aava

mineral water is 15 Rs. Per liter.

4.5.3 Packaging Differentiation

Product packaging and presentation is one of the main dynamics, which control the flow of

target customers towards the product. Packaging should be inline with the industrial norms.

Packaging may also vary with the understanding of the target market. It is suggested that the

bottles of 0.5 liter and 1.5 liter capacity should be used. Bottles should be clear. The bottle

should give a reflection of light sky blue color, which is considered a natural symbol of the

water. This color also adds a tinge of purity. The water should give a shiny and a glossy

reflection. The opening of the bottle should be large enough to accommodate outflow and

inflow of water. The bottles should be placed in special racks and strand meant for bottled

water at retail outlets, which will be having a unique color and a unique design. The color and

the design will create a positive perception for the new brand. The wrapper of the bottle is

suggested to be on four-color printing and should have the following information in addition

to the logo of the company.



o Certificate mark of the Indian Standards & Quality Control Authority

o Water Specification

o Expiry Date (Best Before Date)

o A brief intro of the company with the address

o Website address of the company

o Brand Name / Trade Name

o Net volume in System International / Metric system

o Batch number or code number





License Number, Price, Batch Number etc

.

4.5.4 Contracting With Institution

All players do contract with Multiplex, Restaurant, and conference hall and get success in

capturing market for bottled water. Aava Company make contract with ICICI when England

come to India for One-Day series.



LIST OF CLIENTS:

Air India from 6 Airports

Four Season Hotel Group

Ramada Group Tea

ITC Welcom Group, NAroda

Fortune Landmark, Ahmedabad

Flight Kitchen Ambassador

IIM (Ahmedabad)

Hotel TAJ Umed

Hotel CAMA

Fun Cinemas

Wide Angle Cinemas

CCI club Mumbai

Ambani School Mumbai

Jet Lite

Indigo Restaurant



4.6 COMPETITIVE PROFILE MATRIX

Critical Success Factor Aquafina Bisleri Aava

Weight Rating Weighted

score

Rating Weighted

score

Rating Weighted

score

Market Share 0.25 3 0.75 4 1.00 1 0.25

Distribution 0.25 3 0.75 4 1.00 1 0.25

Customer

Loyalty

0.15 2 0.30 3 0.45 2 0.30

Product

Quality

0.20 3 0.60 3 0.60 4 0.80

Packaging

Differentiation

0.15 2 0.30 3 0.45 4 0.60

Total 2.70 3.50 2.40

Implication:

Aava received a score of 2.40 in the competitive profile matrix. This Low figure is

representative of Aava’s inability to leverage its competitive advantage of unique tasting

flavors successfully. This inability stems from the company’s lack of effective

communication of their offering and its uniqueness. This is one of the major mistakes

companies make when following a differentiation strategy, they assume that consumers will

recognize the difference that they offer. This is exactly the mistake that Aava has made.

The areas where Aava has taken a beating are in market share and distribution. From a

strategic viewpoint however, distribution is the area which Aava should target in the short run

if they hope to achieve any type of success. Advertising programs that are basically demand-

building exercises are useless if the product has little market reach and is not meeting the

created demand. Therefore, before concentrating on marketing activities in the hopes of

increasing market share, Aava needs to strategically outsource their distribution setup to a

distribution company such as bisleri, Acquafina, with the expertise in how to effectively

increase a company’s reach into the market. In due time the company should build up its own



sales teams so as to make distribution a core competency of theirs. Yet they should trust an

established distribution company in the short-run to improve its product availability.

4.7 BCG Matrix



Player Brand Name Market share Relative market

share

Parle Bisleri 40% 1.60

Coca Cola Kinley 25% 0.63

PepsiCo Aquafina 10% 0.25

Tata Himalayan 8% 0.20

Aava Aava mineral water 0.15% 0.00375

(Source:- http://www.gits4u.com/water/water16.htm)’

Aava’s position and its strategy:-


BCG MATRIX

95

http://www.gits4u.com/water/water16.htm


From the above BCG matrix, we can identify the situation where Aava will plot in the

Question mark. Under this position, the bottled water is in the growing market but have low

market share and still buyers yet to be buy it. The demands will very high but low returns

due to low market share. Due to late entry Aava have to face this kind of problem.

Aava should take different kind of strategy just like:-

Aava should take the advantage to get the market having the special natural mineral water

and they need to increase their market share quickly. The best way to handle the question

mark situation is to invest heavily in the business. As Aava is natural mineral water, they

must have to focus on positioning strategy. They had given the distribution ship to Trader’s

Inn but if possible they should focus on their own distribution channel.

Recommending new strategy

Focus on product positioning for capturing more market share.

Make offensive strategy to build market share.

Serve niche market to compete with regional player

Grow via merger or Acquisition with regional player

Try to compete with natural mineral water player

Brand image has significance role. So, by promoting they can increase brand

image.

Pan India Distributions

Mr. Mehta’s expansion plan is “A Pan – India distribution tops our list of priorities. Aava is

keen that it reaches all our customers, especially since it has an all India presence due to

contracts with Air-India, Spice Jet and other prestigious clients. Aava is looking forward to

put in place an efficient distribution network to fill the vacuum for good natural mineral

water felt in South and West India.



Now due to merge with Evian they get financial support and brand name of Evian. They

make agreement of Rs.20 Crore.



4.8 A NINE-CELL MATRIX

Competitive strength WeightBisleri

Rank/scoreKinley

Rank/scoreAquafina

Rank/scoreHimalayanRank/score

AavaRank/score

Relative Market share 0.20 10/2 7/1.4 4/0.8 3/0.6 2/0.4

Availability 0.25 7/1.75 8/2 5/1.25 6/1.5 4/1

Brand Image & Reputation 0.20 9/1.8 7/1.4 7/1.4 5/1 5/1

Product Quality 0.25 8/2 7/1.75 6/1.5 6/1.5 9/2.25

Distribution Channel 0.10 8/0.8 7/0.7 7/0.7 5/0.5 6/0.6

1= Very unattractive 1.00 8.35 7.25 5.65 5.10 5.25

10=very Attractive

Industry Attractiveness Weight Rank ScoreIndustry growth rate 0.20 8 1.6Health consciousness 0.20 7 1.4Life style 0.15 6 0.9Profitability 0.25 8 2Urbanization 0.10 6 0.6Competition 0.10 8 0.8 1.00 7.3



Kinley

Bisleri Aquafina Aava Himalayan

6.7

3.3

6.7 3.3


1 Invest/Grow 1 Invest/Grow 2 Hold/Maintain

1 Invest/Grow 2 Hold/Maintain 3 Harvest/Divest

2 Hold/Maintain 3 Harvest/Divest 3 Harvest/Divest

99

High

Medium

Low

Ind

ust

ry A

ttra

ctiv

enes

s

Strong Average Weak

Competitive strength/Market position


The GE Nine Cell matrix is the combine of competitive strength and industry attractiveness.

For this case industry attractiveness is very high but the competitive position is very low as

compared to other player. That’s why Aava is in the average competitive position. Only due

to product quality and the packaging style they are ahead of Himalayan. For recommendation

the Aava should focus on penetration and brand awareness. Ultimately they should invest in

distribution channel and advertising etc.



4.9 STRATEGIC POSITION AND ACTION EVALUATION

(SPACE) MATRIX

RATIONALE BEHIND THE ALLOCATION OF SCORE TO INDIVIDUAL FACTOR

COMPETITIVE ADVANTAGE

Product Quality

“Aava” has perfectly balanced minerals nothing less nothing more."

.

Acidity Meter as tested on INDIKROM papers (strips) from GlaxoSmithkline

Pharmaceuticals Limited.

«------------------------- Acidic «---- Neutral----» Non -

Acidic-------------------------------------»

2 4 6 7 8 9 10 10.5

Aquafina Oxyrich Himalayan Aava

Kinley -

Bisleri

Home Filtered

Water

Source: www.tradersinn.com




thus ensuring that the water is naturally pure. It therefore need not be put through all the


through. Aava Natural Mineral Water is only natural water provider in western India.


http://www.tradersinn.com/


Market share

Player Brand Name Market share

Parle Bisleri 40%

Coca Cola Kinley 25%

PepsiCo Aquafina 10%

Tata Himalayan 8%

Shelpee Aava mineral water 0.15%

The above table shows that Parle’s Bisleri is the market leader and pioneer in bottled water

business and it has 40% market share, Coca Cola’s Kinley is a challenger and having a 25%

market share, Pepsi’s Aquafina has a 10% market share and follower in bottled water though

it is a multinational company. Tata’s Himalayan has a 8% market share and Shelpee’s Aava

mineral water has 0.15% market share. Aava has very meager market share because of severe

competition from the national players.

Brand Image

Brand image is poor because of new entry (just 2 years). It has no brand heritage and

promotional activities are deprived.

Product Life Cycle

Product life cycle is an introductory stage so it will take time to gain competitive advantage

from this.

FINANCIAL STRENGTH

Capital Available:



Aava take the loan from the Bank of Baroda for running the operation activities and now

company will going to merge with Evian bottled water of France to make contract of

20crores, so company has sufficient capital but compare to competitors, they weak. But for

future growth they need more capital.

Ease of exit from the market

Aava can easily exit from the market because they do not make high investment but it is very

hard for other competitors like Bisleri, Kinley etc, because they are doing business from long

period of time. They make a huge investment in water business.

Risk involve in the Business

In this bottled water industry company has to follow the government norms, quality

standards, minimum wage act and also from the new entry. In this industry quality is the most

important factor. And Aava is number one in quality. If company can not maintain this

quality in future, they can face a lot of problem.

Return on investment

The main attractiveness of this industry is high profitability. The company’s production cost

of one liter bottled water is 6 Rs. And its selling price to distributor is 7.50 Rs. of one liter

bottle. It means there is 25% Profit.

INDUSTRIAL STRENGTH

Barriers to entry

Product is such that differentiation is not possible and investment is low to start the business

so entry barriers is less.

Growth Potential



Industry is in growth stage and market is untapped. Vast opportunity is there and industry is

growing at 38%.

Access to Finance

The finance is easily available sue to high profitability of business. so it is good to start

business.

Consolidation

There are 80% markets is unorganized and so there are many consolidations occur in the

industry.

ENVIRONMENT STRENGTH

Inflation

There is not much effect of inflation on bottled water business because water is a generic

product and primary need of human being.

Technology

It creates opportunities for new products and product improvements and of course new

marketing techniques- the Internet, e-commerce.

Demand Elasticity

Demand of bottled water is depend of the life style of the people, health conscious people,

and literacy level.

Taxation



The company face to pay 30% tax on mineral waters and aerated waters and excise duty is

8% and there is 0-4 % VAT on bottle water industry.

ASSUMPTION:

- By definition, the CA and IS values in the SPACE matrix are plotted on the X axis.

- CA values can range from -1 to -6.

- IS values can take +1 to +6.

- The FS and ES dimensions of the model are plotted on the Y axis.

- ES values can be between -1 and -6.

- FS values range from +1 to +6.

Competitive Advantage Industrial Strength

Product Quality -1 Barriers to Entry +3

Market share -2 Growth Potential +5

Brand Image -4 Access to Finance +4

Product Life Cycle -4 Consolidation +5

Average -2.75 Average +4.25

Financial Strength Environment Strength

Capital Available +2 Inflation -4

Ease of exit from the Market +3 Technology -2

Risk involve in the Business +2 Demand Elasticity -3

Return on Investment +4 Taxation -3

Average +2.75 Average -3



This particular SPACE matrix tells us that Aava natural mineral water company should

pursue a competitive posture. Aava natural mineral water company has a competitive

advantage but it has a limited financial strength. It needs to use its internal strengths to

develop a market penetration and market development strategy. Aava Natural Mineral Water

will maintain and enhance competitive advantage by product improvement and

differentiation, improve marketing effectiveness, and enhance financial resources. This can

include product development (planning to launch 200ml water for especially for aviation),

integration with other companies (Aava natural mineral water going to merge with Evian),

acquisition of competitors, and also concentrate on its main natural mineral water product.



4.10 VALUE CHAIN ANALYSIS

A value chain is a chain of activities. Products pass through all activities of the chain in order

and at each activity the product gains some value. The chain of activities gives the products

more added value than the sum of added values of all activities. It is important not to mix the

concept of the value chain with the costs occurring throughout the activities.


Trader’s Inn

Packaging, Labeling & Dispatch

Filtration

Bottle MaterialLabeling MaterialTaranga Aravalli Range

Retailer

Final User

Final User


PRIMARY ACTIVITIES

Inbound logistics

It is the business process that defines the movement of materials from suppliers and vendors

into production processes or storage facilities. The water source is coming from the Aravalli

range at the Taranga. The pure water is provided with the spring of taranga and having the

appropriate composition of the required natural mineral water. They also have to take care

about total material quality and also transportation information is required to manage well.

Operation

The process include how to process the water the from the different kind of purification

process just like filtration and all kind of purification. Here, the main advantage of the Aava

natural mineral water is of no process of reverse osmosis(RO) and ultra violet(UV) because

the process to clean the water with the help of chemical and related ingredient which is

somewhat harmful to the human body the process includes:-

There are various processes employed to purify the water and various combinations of the

processes mentioned below are incorporated to ensure that final composition of the product

confirms to latest BIS norms. Apart from the 20 long years of natural purification, just to be

triply sure, Aava is put through certain other purification procedures:

Pressure Sand Filtration:

This is to remove all suspended matters and turbidity from the raw water.

Micron Cartridge Filtration Unit:

Micron Cartridge filtrations ensure that the water has absolutely no suspended solids. It goes

through Absolute Filtration to remove the minutest bacteria and microbes if present in the

water, although this is more a precautionary measure.



And yet to be absolutely certain, that the natural mineral water you receive is pure and fittest

for your consumption, the water is subject to 77 different chemical, microbiological and other

tests.Aava is Natural Mineral Water originating from the holy hills of Taranga, a part of the

world’s oldest mountain range, the Aravallis.The number of purification processes water goes

through, does not necessarily show how pure it is. It does however imply how poor the

quality of the raw water may be. Aava does not need to go through certain processes that

Purified Drinking water is put through such as: Activated Carbon Filtration because the water

is naturally organically stable and healthy and odorless.

Absolute Filtration

Removes the minutest bacteria and microbes, if present in the water. Although is more

precautionary measure. The water is passed through international systems that certify it as

being 100% microbiologically clean. The water is put through 77 different tests before being

bottled to ensure that it is free from harmful chemicals or microbiological organisms. Aava

does not need to go through certain processes that Packaged Drinking Water is put through,

such as :

ACTIVATED CARBON FILTRATION:

SOFTENING:

RO PURIFICATION

Water Treatment plan

Though BIS has set a vide range of parameters to confirm to BIS-13428: 2004, and BIS :

14543:2004, a palatable and safe water poses a big challenge for water treatment

professionals due to varied parameters of bore well across India , since these are the major

source of raw water for the industry.

The water treatment plant focuses on the removel of microbial contaminants that cause

typhoid, dysentery, and cholera epidemics. The treatment results in offering the consumer

with absolutely safe ad pure drinking water.



Rinsing, Filling and capping machinery

Though BIS has not put any restriction on manual filling, humid Indian conditions makes the

product susceptible to external contamination due to unhygienic conditions. Therefore,

automation in post processing stage is strongly recommended. Monoblock machines, capable

to rinse, fill & cap covered in one single enclosure is recommended as this ensures quick

packing hence less chances of contamination through air.

Monoblock machines offer small footprints and quick transport distance between filling and

closing for highly secured production. As they outperform functions that normally require

employment of several other machines, Monoblock machines are effectively crafted with

modular designs that efficiently help to change over to different functions, product sizes and

shapes. The frequency converter helps to control the production speed.

Since PET has static charge, it attracts lot of contaminants from the atmosphere and thorough

rinsing is required. As jet rinsing ensures proper cleaning of PET bottles, the risk of external

contamination is minimized. These machines reduce the chance of product contamination by

capping containers as soon as they are filled. Direct transfer also reduces the chances of

spilling. This speeds up entire process giving the consumer absolutely pure water.

Coding and Packing Machines

Date of manufacturing

Batch number

Best Before

After coding the bottle has to pass through shrink tunnel, box strapping machine for dispatch

to the market.

Outbound logistics

It is the business process that defines the movement and storage of products from the end of

the production line to the end user. It includes the bottled water tank is filled with the product

and it is dispatch to the market. In this process there are two types of the clients where they



need to be reached that is individual customer and institutional customer. So the channel of

distributing the product is different from the both the way. Here, finished product will be

marketed through the distribution ship of Trader’s Inn and after that they will provide bottled

water to the retailer and then final user. Total information of the transformation will be their

to reach the target.

Marketing and sales

Same way the marketing and selling is done as above said that is from both the way

individual customer and institutional customer. They have also marketing manager and sales

staff which is looking after entire marketing and sales department. Here they are providing

their product advertisement in the news paper but the comparison they are lacking in

promotion. Demand forecasting and fulfillment of the demand is possible only due to proper

information but they are also lacking in this part.

Services

Services includes after sales service and replacement services. But in the case of Aava bottled

water they are not providing any replacement services. But they had not faced any

replacement kind of problem in their entire three year. Also they are continuously checking

the product quality by testing. This is nothing but the social responsibility which is looking

for the health of the society.



SECONDARY ACTIVITIES

Firm infrastructure

The company is situated at Hansol, Ahmedabad. The firm is fully equipped with 10

computers, one lab, 10 Rikshaws for distribute.

Human resource management

There are 50 Employee in Shilpee Enterprise. It Include:


Assistant Manager – Mr. Rajeshbhai Padaliya







Salary Structure

Assistant Manager – 15000 Per Month

Account department – 9000 per Month

Creative Department – 12000 Per Month

Laboratory Chemist – 9000 Per Month

Employee in Production department – 3000 Per Month

Sales Department – 10000 Per Month



Technology development




technology (class 10,000) within the automatic filling, capping and sealing system so





purity.







Procurement

They bring water from hills of Taranga, apart of the world’s oldest mountain range,

the Aravallis.

They purchase PET bottle from Jay Plast

They purchase filtration machine from Hi-Mec Machine, perform from Reliance

Industries Ltd, Jamnagar, Parle International, chemco and also from 3- start Alasca

net.

They purchase blowing machine from shyam blowing company.



4.11 7–S MCKINSEY MODEL

SHARED VALUE

Company Vision:

“To be the best and leading provider of natural mineral water in India, and by continually

challenging present conventions and always staying a step ahead of the competition.”

For achieving this vision how other factors are useful like structure, style, staff, skill etc.

ORGANISATIONAL STRUCTURE:

The firm needs to tear-down and restructure an organizational hierarchy which has not

‘evolved’ on a ‘need to’ basis, but instead, erect one that is ‘strategically structured to enable

the organization to best carry out it’s Tactical and Operational Level operations in accordance

with the Strategic objectives of the firm.



Person PositionMr, Behram Mehta Co- Founder of AavaMr.Rajesh Padaliya Assistant ManagerJagin Tivedi(Jay Plast) Production of PET bottleMudra Communication Promotion and design of bottleYamini Gupta and Shekhar Pandey Account Management TeamSajit Surendran and Mehul Chokshi, Tina Mehta

Creative Team

The firm needs to tear-down and restructure an organizational hierarchy which has not

‘evolved’ on a ‘need to’ basis, but instead, erect one that is ‘strategically structured to enable

the organization to best carry out it’s Tactical and Operational Level operations in accordance

with the Strategic objectives of the firm.

Aava must restructure it’s inflexible and highly unorganized organizational structure, into a

meticulously planned, well coordinated, supportive more flatter hierarchy with lesser

hierarchical levels and comparatively greater span of control, encouraging more delegation of

authority, leading to greater job satisfaction, enrichment and career development, paving the

way to a Learning Organization. information, Incentive, Control & Strategic Plan.

CORPORATE CULTURE AND LEADERSHIP STYLE

The elements of Culture and Leadership Style stand to be of prime importance in the success

of any organizations intended Strategy and consequently is one of the primary deciding

factors in whether or not the actual implementation of the Intended Strategy is a success or

failure. For these are the Direction Givers, the Guiding lights that escort an organization to its

ultimate intended goal. Any organization, whether it wishes or not, develops a culture and

this culture in actuality shapes the future of the firm. Since this culture constitutes of people’s

beliefs, behaviors and attitudes, like isolated individuals these too may be conflicting and

destructive setting in motion a culture that pulls the organizations distinct functions in

opposite directions. A destructive culture will, in simple words, put the organizations own

forces at war with each other. Therefore, we are of the belief that a cultural revolution is a

‘must’ for Aava to revamp itself in the slightest of ways. All restructuring fits, whether

involving Functional or Administrative elements are dependent upon the ‘people’ that will

carry them out and if these people are not geared towards a fair, constructive, healthy,



motivating and enriching culture, the best of developed strategies will fail in the worst of

ways. Also, one of the most crucial deciding factors when it comes to shaping culture is the

aspect of ‘leadership’, because it is this Leadership that is responsible for setting in motion

the aspirations, the benchmarks of excellence. It is this Leadership that is responsible for

igniting emotions and creating the drive in the People Force of an organization. It is this

elemental phenomenon that fires up an organization’s engine and sets it on the path to

constructive competitiveness, synergistic activities and ultimately gives it a competitive

advantage like no other. It’s very own core being. It’s people.

STAFF

The Human Resource Team will be responsible for using the most modern techniques to

devise the most appropriate Incentive plan, to mobilize motivation throughout the ranks of

the Manpower force because incentive and management systems are among the most

important sources of influence available to the management to mobilize motivation and push

the force towards the achievement of strategy. No less important is the very selection of

managers who share and possess skills that are needed to achieve the intended strategy, yet,

this process of selection seems deceptively easy in theory when in practical it is equally

difficult because there are nearly always pressures not to fire or demote people and to

promote those that are ‘next-in-line’ rather than those that are more capable of carrying out

the needed task at hand. Similarly, incentive compensation typically focuses on the short-run

rather than strategic performance. For these reasons, we believe that the firm at this point in

time requires an Entrepreneurial Manager. Equally essential is putting in place, ‘checks’

throughout the hierarchal levels, which are capable of quickly identifying any and all

compromised operations and pin-pointing the exact location to rectify the problem while also

laying responsibility for the compromise where it belongs, holding responsible that are

rightly responsible. This must cascade through each and every hierarchical level with no

exceptions, making any negative elements like blame shifting very difficult to do. There are

50 people staff in Hasol Plant at Ahmedabad including Account team, Microbiologist,

Gatekeeper, manager etc..



There are 50 Employee in Shilpee Enterprise. It Include:


Assistant Manager – Mr. Rajubhai Padaliya







SKILL





License Number, Price, Batch Number etc. The key to good design lies in making it

attractive. Aesthetics and functionality played a crucial role in our effort at zeroing in for the

perfect design for the Aava bottle water. Aava bottle launch with unique cup and it is the first

time in India, meeting the need of the elderly and young people who may it find difficulty to

drink from the bottle.

The Himalayan waters PH level vary form 7.7 to 7.3 which brings them dangerously close to

water becoming acidic, compared to that “AAVA” is constant at 7.93 making it absolutely

non acidic and liter.

It is a well known fact that calcium is good for bones but is also a know fact that excessive

calcium causes kidney stones and therefore across the world FDA’s allow upto 100 mg per

litre as the maximum permissible limit. “AAVA” at absolutely well balanced 20.8mg per litre

proves the superiority of being good and also being safe compared to Himalayans content of

calcium 49mg per litre.






thus ensuring that’s the water is naturally pure. It therefore need not be put through all the


through.

SYSTEM

Production system

The Aava Bottle Water plant is the first of its kind in india. It is a fully automatic, washable,

air conditioned, hygienic plant. The plant even adheres to pharmaceuticals standards, and use

the “Clean Room” technology within the automatic filling, capping and sealing systems so


maintained at all times. Aava natural mineral water is untouched by human hands at all

points.

STRATEGY

Mission

To develop, implement and improve the Integrated water Safety and Quality Management

Systems in a culture of continual improvement which:

Provides framework based on HACCP, CODEX Alimentarius and CGMP for

safeguarding the consumer health.

Supports the use of scientific knowledge, risk analysis and controls in the

enhancement of hygiene conditions and practices.



For that company is targeting to the health conscious people and they believe in its product.

Right now company is targeting. Company adopts differentiation strategy by good packaging

and through natural mineral water.

With the market just turning the bend to ‘saturation’, it is entering a phase of intense

competition with all major players diversifying their ranges and even businesses into a

versatile range of products to put in place more infantry on the battle ground to use to their

advantage in this war of brands.

PAN INDIA DISTRIBUTIONS

Mr. Mehta’s expansion plan is “A Pan – India distribution tops our list of priorities. Aava is

keen that it reaches all our customers, especially since it has an all India presence due to

contracts with Air-India and other prestigious clients. Aava is looking forward to put in place

an efficient distribution network to fill the vacuum for good natural mineral water felt in

South and West India.

.



CHAPTER - 5

RECOMMENDATION

Company’s organization structure is very highly decentralized. So that company must

centralize its department and give responsibility to other people. So the manager

concentrate on making strategies and plans etc.

Aava has strength of natural mineral water and packaging style. So, they should focus on

their strength. But they are compete with package water. They have no clear positioning.

Distribution channel play an important role in this kind of product. But Aava does not

have sufficient distribution network. For selling and marketing Aava should improve their

distribution network and trying to cover other area of Gujarat.

Aava is not focusing on promotion as compared to other. They are giving advertisement

in news paper but they are not regularly giving ad in news paper. They use different news

paper every time. There is a lack of faith in people’s mind.

There is lack of Customer Relationship Management. Just like IIM Ahmedabad and

Grand Bhagwati etc many player relation ship broken due to improper customer relation

ship management.



CHAPTER - 6

BIBLIOGRAPHY

BOOKS

Arthur A Thompson, A J Strickland, John E Gamble, Arun Kumar Jain: “Crafting & Executing strategy Concept & Cases”, 14th Edition, Tata McGraw Hill Publishing Co. Ltd New Delhi, 2006, Chapter No.3 “Analyzing a Company’s External Environment” Pg. No. 45 to 85

Prashan Chandra, “Project”, 6th Edition, Tata McGraw Hill Publishing Co. Ltd New Delhi, 2006, Chapter No.3 Pg No. 27 To 30

“Human resources & personnel management” by K Ashwaththapa, published by Tata McGraw-Hill Publishing Company Limited.

“Marketing Management” by Philip Kotler, The millennium Edition, published by Prentice Hall Of India

MAGAZINE

India Today

Brochure Of Aava Company

Advertising Express

Marketing Master Mind

Business today

Pitch

Business India

Facts for you



REPORT

May 2008, Advertising express- pg- 55

Beverage Marketing Corporation Report, 2007

Beverage Marketing Corporation Report-American Beverages Report

Report by World Bank

Review of PepsiCo Chairman, Business Standard

Budget: 2008-09

Economic Survey 2007-08, Chaper No.8

RBI Review

Ad Ex Jan-jun’2007

Beverages marketing corporation

FICCI report

Ministry Of Tourism

MONARCH Fin Project

WEBSITE

www.Indiastar.com

www.aavawater.com

www.tradersinn.com

http://www.epa.gov/



http://www.nestle-watersna.com , http://www.finewaters.com

www.indiastat.com

http://www.wateryear2003.org


http://www.wateryear2003.org/

http://www.indiastat.com/

http://www.finewaters.com/

http://www.nestle-watersna.com/



http://www.epa.gov/

http://www.tradersinn.com/

http://www.aavawater.com/

http://www.Indiastar.com/


www.financialservices.frost.com

http://www.bottledwater.org.au/scripts/cgiip.exe/WService=ASP0003/ccms.r?

PageId=5001

www.bottledwaterindia.web

http://www.hinduonnet.com/fline/fl2307/stories/20060421006702300.htm

www.aquafina.com

www.himalayanspringwater.com

www.ibwa.com

www.bottledwater.org

www.indiabudget.nic.in

http://www.indexmundi.com

http://www.indexmundi.com/g/g.aspx?v=71&c=in&l=en

World Economic Factbook

International Marketing Data and Statistics

Future Demographic

www.censusindia.gov.in


http:/www.b2bindia.co.in/indianione.exchange/mineral_water_plant

www.ampac.com

www.greatwaternow.com

http://www.naukrihub.com/india/fmcg/overview/bottled-water

http://investorideas.com/IiI/News/080706.asp

www.fnbnews.com

http://www.merinews.com


http://www.financialexpress.com/old/fe/daily/20001227/fst27023.html

www.waterstocks.com

World Consumer Lifestyles Databook


SEARCH ENGINE

www.google.com


http://www.google.com/


http://www.euromonitor.com/World_Consumer_Lifestyles_Databook

http://www.waterstocks.com/

http://www.financialexpress.com/old/fe/daily/20001227/fst27023.html


http://www.merinews.com/

http://www.fnbnews.com/



http://www.greatwaternow.com/

http://www.ampac.com/


http://www.censusindia.gov.in/

http://www.euromonitor.com/Future_Demographic

http://www.euromonitor.com/International_Marketing_Data_and_Statistics

http://www.euromonitor.com/World_Economic_Factbook

http://www.indexmundi.com/g/g.aspx?v=71&c=in&l=en

http://www.indexmundi.com/

http://www.indiabudge.nic.in/

http://www.bottledwater.org/

http://www.ibwa.com/

http://www.himalayanspringwater.com/

http://www.aquafina.com/

http://www.hinduonnet.com/fline/fl2307/stories/20060421006702300.htm

http://www.bottledwaterindia.web/

http://www.bottledwater.org.au/scripts/cgiip.exe/WService=ASP0003/ccms.r?PageId=5001

http://www.bottledwater.org.au/scripts/cgiip.exe/WService=ASP0003/ccms.r?PageId=5001

http://www.financialservices.frost.com/


www.yahoo.com

www.msn.com

www.scribd.com


http://www.scribd.com/

http://www.msn.com/

http://www.yahoo.com/

micro analysis of aava bottle water

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