Rising Costs of Bottled Water in India Amid Global Tensions
Impact of Global Events on Local Markets
The ongoing conflict involving Iran has unexpectedly influenced the bottled water market in India, leading to a notable increase in prices. According to a report, bottled water costs have surged by approximately 11% due to rising expenses associated with plastic bottles and caps. This price hike has effectively negated the advantages of the recent tax reductions introduced by Prime Minister Narendra Modi.
In a nation of 1.4 billion, access to clean drinking water remains a significant issue, with studies indicating that nearly 70% of groundwater is contaminated. Major players in the $5 billion bottled water sector, including Bisleri, Coca-Cola, PepsiCo, Reliance Industries, and Tata Group, are feeling the pinch.
The root of the problem lies in escalating oil prices. As crude oil costs rise, the price of polymer, a crucial component for producing plastic bottles, has also increased sharply.
Bisleri, India's leading bottled water company, which holds about one-third of the market share, has raised its prices by 11%. A pack of 12 one-liter bottles now retails for Rs 240, up from Rs 216.
Angelo George, CEO of Bisleri, stated, "The price of packaged drinking water has risen to 20 rupees per liter, driven by a significant increase in packaging material costs, which have surged by over 70% in the last two weeks." The cost of plastic used for bottles has jumped by 50% to Rs 170 per kg, while cap prices have more than doubled to Rs 0.45 each. Additionally, packaging materials such as boxes, labels, and adhesive tape have also seen price increases.
This surge in costs has reversed the benefits of the government's earlier tax cut, which had reduced the GST on bottled water from 18% to 5%, resulting in lower prices for consumers.
Other companies are following Bisleri's lead. Parle Agro has increased prices for its Bailley bottled water brand by about 11%, as reported by industry insiders. Nayan Shah, CEO of Clear Premium Water, noted that his company has also adjusted prices by 8% to 11% due to global market conditions, stating, "A price revision has become unavoidable."