Case
Teaching Notes
Supplementary Resources
Abstract
Launched in 2005, Aava natural mineral water is one of the key brands in the natural mineral water market in India. It had sales of over Rs. 15 crore (150 million) in 2012 and it is the second largest brand and a volume leader in the natural mineral water category. The case discusses the dilemma faced by its Managing Director and his team in light of the emerging competition. The company needs to take important decisions related to customer segment selection, product mix and introduction of new product offerings.
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2024 Sage Publications, Inc. All Rights Reserved
Resources
Exhibit 1: Growth of the Bottled Water Market in India
Year | Production (in million cases) |
1990–91 | 2.00 |
1991–92 | 2.60 |
1992–93 | 3.50 |
1993–94 | 4.70 |
1994–95 | 6.50 |
1995–96 | 8.50 |
1996–97 | 11.50 |
1997–98 | 15.50 |
1998–99 | 20.00 |
1999–00 | 26.00 |
2000–01 | 33.00 |
2001–02 | 44.50 |
Source: Centre for Industrial and Economic Research (CIER), Industry Status Profiles (2003).
Exhibit 2: Salient Features of Packaged Drinking Water and Natural Mineral Water
Packaged Drinking Water | Natural Mineral Water |
This type of water in its raw form can be sourced from any place. | Natural mineral water is acquired straight from its protected natural source. |
The water is made potable through various purifying processes such as distillation, deionisation, reverse osmosis (RO), etc. | Natural mineral water is free from any chemical processing. |
In the RO process, healthy minerals that are present in the water are also removed. | Natural mineral water is a pure, balanced, healthy drinking water. Its unique natural mineral composition does not require any kind of processing, which is responsible for the removal of healthy minerals present in the water. |
The biggest drawback of RO water is wastage. For instance, nearly two litres of waters may be wasted in purifying or processing one litre. | As there is no large scale processing required in this type of water, there is no water wastage. |
It can have an artificial taste and it is demineralised | It is seen as more natural, tasty and healthy for human consumption. |
Source: Company records.
Exhibit 3: Organisation Structure at Aava
Source: Company records.
Exhibit 4: Raw Material Source and Area of Operations of Natural Mineral Water Brands in India
Company | Brand | Origin | Market Presence in India |
Mount Everest Mineral Water Ltd. (Tata Global Beverages) | Himalayan | Sirmaur, Himachal Pradesh | Pan-India |
Narang Hospitality Pvt. Ltd. | Qua | Himalayan Foothills, Uttrakhand | North and West India |
Sheelpe Enterprises Pvt. Ltd. | Aava | Aravali Mountains, Taranga Hills, Gujarat | South and West India |
Parle Bisleri | Vedica | Uttrakhand (Foothills of the Himalayan Mountain Range) | Pan-India |
G. C. Beverages Pvt. Ltd. | Natural Springs | Solan, Himachal Pradesh | North India |
Dharampal Satyalpal Group | Catch | Kullu Mountain Range, Himachal Pradesh | North India |
Narang Hospitality Services (Narang Group)* | Evian | Swiss Alps, France | Pan-India |
Narang Hospitality Services (Narang Group)* | Perrier | Vergèze, Southern France | Pan-India |
* Narang Hospitality Services (Narang Group) is the distributor for the brands Evian and Perrier in India.
Source: Company records.
Exhibit 5: Packaging Variants of Aava
Source: Company records.
Exhibit 6: Sales Contribution for Aava from Various Client Categories
Particulars | Sales Contribution (in percent) |
Aviation Sector (Airlines) | 65 |
Institutional Sales (Star hotels, prominent caterers, resorts, clubs, entertainment zones, restaurants, multiplexes, etc.) | 23 |
Institutional Clients and Domestic Households (which formed bulk water buyers) | 5 |
Modern Retail | 7 |
Source: Company records.
Note: The above sales contribution signifies the number of bottles sold by Aava to various clients out of the total number of litres produced by the company. The sales figures are for the financial year 2011–2012.
Exhibit 7: SKU-wise Sales of Aava
No. of Bottles per Box | No. of SKUs Sold | Boxes Sold | |
200 ml | 24 | 29,956,368 | 1,248,182 |
500 ml | 20 | 1,721,600 | 86,080 |
1 ltr | 12 | 1,633,497 | 136,125 |
1.5 ltr | 9 | 313,908 | 34,879 |
20 ltr jars | — | 160,000 | — |
Source: Company records.
Note: Figures in the exhibit are for the financial year 2011–2012.
Exhibit 8: Fixed Manufacturing and Other Costs of Aava
Particulars | 200 ML Bottles | 1 Litre Bottles | 20 Litre Jars | ||
Electricity, labour, and other miscellaneous expenses per unit | 0.50 | 0.50 | 0.90 | 0.90 | 5 |
Interest cost on capital employed @ 4% of selling price and MRP on 200 ml, 1 ltr, and 20 ltr jars, respectively | In Ahmedabad | In Mumbai | In Ahmedabad | In Mumbai | In Ahmedabad |
0.16 | 0.17 | 0.8 | 1.2 | 2.4 |
Source: Company records.
Notes:
• All figures are for the year 2011–12 and are shown in INR
• The interest cost mentioned above on 200 ml bottles is calculated on the selling price of each SKU; for a 1 litre bottle, it is calculated on the MRP
• Some numbers in the exhibit have been disguised to protect the confidentiality of company records, but the ratio of original figures remains unchanged
Exhibit 9: Geographical Distribution of Bottled Water Market in India
Source: Company records.
Exhibit 10: Packaging Variants and Price of Leading Bottled Water Brands in India
Brands | Particulars | |||
Packaging Variants | MRP/Selling Price (in INR) | Sales Turnover (in INR) | ||
Aava | In Ahmedabad | In Mumbai | 80 million | |
200 ml (Aava-mini) 500 ml 750 ml (sports bottle) 1 ltr 5 ltr 10 ltr 20 ltr | 4** 15 15 20 30 30 60 | 4.25** 12 25 30 — — | ||
Himalayan | In Ahmedabad | In Mumbai | 220 million | |
500 ml 1 ltr 1.5 ltr 2 ltr | 18 35 — — | 25 45 — — | ||
Qua | 1 ltr | 45 | 80 million | |
Vedica | 500 ml 1 ltr | 20 40 | NA | |
Catch | 100 ml 200 ml 500 ml 1 ltr 1.5 ltr 25 ltr | 35 | 120 million | |
Natural Springs | 200 ml 500 ml 1 ltr 1.5 ltr 20 ltr | 30 | 60 million | |
Evian | 1 ltr | 110 | NA | |
Perrier | 1 ltr | 114 | NA |
Source: Company records.
Note:
• The prices shown in INR is for the year 2009–10.
• NA in the exhibit refers to not available.
• Rates with ( ** ) are the selling price for institutional sales while the rest indicate the retail MRP rate.
• Bottles of less than 10 litres are generally disposable.
Exhibit 11a: Himalayan Natural Mineral Water Product Portfolio
Source: www.cloudfront.net.
Source: www.himalayanmineralwater.com.
Source: www.cargocollective.com.
Exhibit 11b: Promotional Campaign of Himalayan Natural Mineral Water
Source: www.blogspot.com.
Source: www.5.imimg.com.
Exhibit 13: Product Portfolio of Parle Bisleri
Source: pbs.twimg.com.
Exhibit 14: Sales Revenue and Annual Growth Rate of Aava
Year | 2006–2007 (5 months) | 2007–2008 | 2008–2009 | 2009–2010 |
Sales Revenue (in INR) | 4,000,000 | 16,000,000 | 40,000,000 | 80,000,000 |
Annual Growth (in percent) | — | 400 | 250 | 200 |
Source: Company records.
Exhibit 15: Logistics and Distribution Network of Aava Across Various Cities
City | Network |
Ahmedabad | Company served its clients directly. |
Surat | Company served major clients directly; however, it had a separate distributor for some geographical areas. |
Jamnagar | Company had its own warehouse, vehicles, manpower and distribution facilities and served its clients directly without any distributors. |
Anand, Nadiad, and Baroda | Company served clients from these cities directly from the Ahmedabad company headquarters. |
Mumbai | Company had its own warehouse, vehicles, manpower and distribution facilities and served its clients directly without any distributors. |
Pune | Managed by the Mumbai Depot of Aava. |
Delhi | Company had a small set-up in Delhi to serve a select set of elite and VIP clients. |
Goa | Company had its own warehouse, vehicles, manpower and distribution facilities and served its clients directly without any distributors. |
Delhi | Company warehouse. Delivery vehicles and labour were contracted, and they made the deliveries. |
Udaipur (Rajasthan) | Company served major clients directly; however, it had a separate distributor for some geographical areas. |
Delhi, Mumbai, Jaipur, Goa, Pune, Bangalore, Hyderabad, Trichy, Cochin, Trivandrum, Chennai Airports | Six company-owned trucks were used for direct deliveries of products to various airports in India. |
Source: Company records.
Note: The details of distributors mentioned above for various cities are for serving Aava’s retail and small institutional clients only.
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2024 Sage Publications, Inc. All Rights Reserved