Aava Natural Mineral Water (A)

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

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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

Figure

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

Figure

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

Figure

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

Exhibit 11b: Promotional Campaign of Himalayan Natural Mineral Water

Figure

Source: www.blogspot.com.

Figure

Source: www.5.imimg.com.

Exhibit 12: The Qua Product Portfolio

Figure

Source: www.blogspot.com.

Exhibit 13: Product Portfolio of Parle Bisleri

Figure

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

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