InvestorQ : Is it true that Tata Consumer Products plans to buy Bisleri and how would it fit in?
Lavanya Subramanian made post

Is it true that Tata Consumer Products plans to buy Bisleri and how would it fit in?

Anamika Sodhani answered.
2 weeks ago

If market reports are to be believed, the bottled water company Bisleri International could be the next big target of the Tata group. Bisleri International is owned by Ramesh Chauhan of Parle and the Tata Group has apparently made an offer to purchase a stake in Bisleri International. However, both the Tata group and Ramesh Chauhan have been tight lipped about the deal. This is interesting considering that Tatas already have a strong mineral water brand in the country under the brand name of Himalayan. It is actually about market spread.

Currently, Bisleri is a dominant player in the bottled water segment; not only in terms of size and national reach, but also in terms of bottling plant facilities on hand. Tatas want to use this inorganic acquisition to scale up the bottled water business of Tata group substantially. Here is the fit story. Bisleri has leadership in the entry and mid-segment while Tatas have a good presence in the premium segment. The deal will give a total spread for Tatas. It gets a readymade network across retail stores, chemist channels and institutional channels.

There are more edges to the Tata group from this acquisition. This acquisition gives the Tatas access to key high value consumption pockets like hotels, restaurants and airports. Bisleri also dominates the bulk water delivery business that caters to offices, housing societies, wholesalers etc. That is a large captive market that Tatas will gain. TCPL has already been on a brand expansion spree and this fits in perfectly into its plans. It has Tetley tea, Eight O' Clock coffee, Soulfull cereals, salt as well as packaged pulses.

For Bisleri it get to monetize its franchise and also to get a partner with deep pockets. Tatas get the 150 manufacturing plants of Bisleri as well as a network of 4,000 distributors with 5,000 trucks traversing India. Currently, Bisleri International has a 32% market share in the bottled water segment with the likes of Coca Cola’s Kinley and Pepsi’s Aquafina trailing them by a margin. It does look like the deal makes sense to both the parties to the deal. Bisleri gets the balance sheet and Tatas get the micro network

Bisleri had got feelers from Danone of France and Nestle of Switzerland. Even Reliance Retail was in talks with Chauhan for a stake in Bisleri International, which did not work out. After selling out to Coca Cola in 1993, Chauhan has decided that this time he would only sell the stake in his company to an Indian player. The next few weeks could be interesting. After all, it is a $2.43 billion business in India and the bottled water business is expected to grow at a 13.5% CAGR in the coming years. That is really something to fight for.