The company is also test marketing water purifiers of the institutional and commercial segment, and will soon introduce them in the market
Air-conditioning major Blue Star has upped the ante on its water purifier business and has set an ambitious target of 10% market share by 2021. According to a company executive, its current market share is 1% being a very new entrant with sales of over 50,000 units in the first year of launching operations towards the end of 2016.
B Thiagarajan, joint managing director of Blue Star Ltd, said, the company has made good progress in this segment and is making significant investments in this space. "We are targeting to reach a market share of around 10% in about three years. The immediate plan is to consolidate presence in this segment with an enhanced range of products and deeper distribution reach in fiscal 2019," he said.
The company is also test marketing water purifiers of the institutional and commercial segment, and will soon introduce them in the market. "The smaller plastic bottles are likely to be banned and only one-litre bottles will be allowed. I understand packaged water players are fighting for 750 ml bottles as well. Offices will thus move to purified water and that's the market we want to tap into with our institutional/ commercial products. These products are not in the 10% market share that we are targeting for this business," said Thiagarajan.
Pegged at around Rs 4,200 crore, the residential water purifier industry in India is growing at a compounded annual growth rate (CAGR) of 15% to 20%. While a host of new players entered the space in the last few years, the market continues to be dominated by a handful of key players viz. Eureka Forbes, Kent RO, Hindustan Unilever's Pureit and Luminous among others.
"The industry may reach Rs 4,500 crore in the next few years. We expect Rs 450 to Rs 500 crore in revenues from the water purifier business," said Thiagarajan on the sidelines of launching a range of products in the electric devices category with select models offering Immuno Boost technology.
Selling around 2.6 million units annually, 85% of the water purifier industry (value terms) in India is electric using technologies like RO, UV, RO+UV and its variants. The balance is gravity-based purifiers (non-electric) with players like Tata Swachh, Whirlpool, Kent and HUL Pureit.
"Non-electric is a shrinking market. It can only remove some sediments. It won't be able to solve the problems of dissolved solids or bacteria. You'll need micro-filters to purify water in the true sense," said Thiagarajan, adding that existing market players with gravity-based purifiers are fast vacating the space.
Blue Star has earmarked Rs 35 crore in advertising and promotional spends towards building visibility and awareness for its water purifier range in the current fiscal. In addition to various below the line (BTL) activities to promote the range in the market, it will use a mix of television, print and digital. "Our original plan was TV, digital and print but we are now switching the priority to TV, print and digital. This is because we have witnessed a major spike in sales whenever we have had print advertisements," said Thiagarajan, adding that the company is staying away from celebrities and cricket while focussing on general entertainment and newspaper.
On the distribution front, the company is working on increasing the presence to over 3,500 outlets in the current year. The products are currently available in 125 towns with over 250 channel distributors/dealers including e-commerce channels and modern trade in over 2,000 retail points.
Interestingly, the company has also created specific models that are online exclusive. "To mitigate the pricing issues when selling on e-commerce platforms, we have models that are only sold online. However, there are players who buy the non-online products and sell it on e-commerce platforms by discounting, which is not in our control," said Thiagarajan.
The new range of Blue Star water purifiers being introduced in the market includes 35 models spread across nine series. The pricing for RO variants ranges from Rs 10,900 to Rs 44,900 while its Rs 7,900 to Rs 8,900 in the UV range.
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