Tell us about your early days in the beverage sector…
My father set up Parle Bottling in 1949, and it started with a product called Gluco Cola. The advertising campaign was done by the great R K Laxman in 1950. The marketing concepts were really clear then.
At that time one had either a 'cola' and 'cola champagne'. The latter was more fruity.
We ran into trouble with Coca-Cola because they always sued anyone using the word 'cola' and so they sued us. We won that case because there is a historic case between Pepsi and Coca Cola in Canada which went on for 22 years. Pepsi won the case as the judgement said cola is not a name but a product description.
Then they decided to go after us on Gluco Cola sounding like Coca-Cola on phonetic grounds. We got fed up by that time. Our business was to run a soft drink company and not to call a Queen's Counsel (QC) in London every time there was an issue. We couldn't afford a QC. At that time, trademark wasn't a developed subject.
So anyways, we changed our name to Parle Cola. That sort of broke Laxman's lovely advertising. It didn't take off but fortunately, as the litigation continued, we launched Gold Spot. The name came from a sweet called 'Gold Star Peppermint'. Then we launched other products such as Masala Soda, Kismat (Pineapple flavour).
When did you buy Bisleri?
We bought the Italian company in 1967. It was named after its founder, Fellici Bisleri. The reason why we bought it was not mineral water.
We had many products except a soda-water product. Also, we had no brand under which we could market soda. Generally, as a rule, you only have one brand for a product. So we used the company for introducing Bisleri Soda. The mineral water business continued but that part was really insignificant. We didn't really know what to do with the company. We just wanted the brand name.
What did you do with Bisleri then?
Bisleri had an accumulated loss. So we started Limca under the Bisleri company. We had in mind to call it Lemonade and there was a debate going on how to brand it. We wanted a green bottle because the lemon flavour deteriorated in sunlight. But green bottles weren't available. So we had developed a process called micro-encapsulation which gave the drink a cloudy look. In the beginning, people said it looked like soap water. We named it Limca, which became a great success.
How did you coin Limca?
Limca came from Limbu Ka (of lemon). Very simple. We are very simple-minded people.
Then came Maaza. In 1985 we signed up for franchises in Dubai and Kuwait. We were contemplating what would be our strength there, our USP. So we thought, why not sell a mango drink. The Arabs like mangoes just as we do. And we saw that in Dubai a lot of 250ml thin, long cans of fruit juice coming from Japan being sold in fairly large quantities.
So I caught hold of my friend (the Dukes Lemonade proprietor) and said, "Bhai, teach me how to make Dukes and I promise not to make it in India." But my friend didn't quite agree with it. So we had to do our own experiment and evolve a new flavour.
Then came the question regarding the name. We had a very international name but when we tried registering it overseas, it was rejected. So we decided to get a desi name.
Have you ever valued these brands?
I don't believe in the valuation of brands or even my home. The challenge is in creating and building brands. And they have proven their worth. Limca, Thums Up and Maaza are still big sellers even though they've been neglected for a long time.
Some say it was Coke's arrogance which led them to attempt killing the Thums Up brand?
No, I appreciate their problem. When I was managing the brands, I had Thums Up, Limca, Gold Spot, Citra and Maaza. I didn't have the money to promote all these brands.
If you divide a small advertising budget between all five then it would be a waste. It wouldn't have gone beyond a threshold and nobody would have heard you whispering.
Would you have done the same thing that Coke did?
I would. How can I have two colas? I appreciate why they were neglected because as the Coca-Cola company, you cannot have Thums Up as your No. 1 product. Does your budget have enough money for two colas or lemons or oranges? The point is how deeply these brands have been engraved in the minds of the people. After twelve years of neglect, now Coca-Cola has started advertising, and I am surprised that the patient is not dead.
But Limca, I feel, is still being neglected. It can be the number one in carbonated drinks because people here love nimbu, nimbu paani and nimbu soda (lemon, lemonade and lemon-soda).
Even in a difficult market such as Tamil Nadu, Limca worked very well when it was new. We were surprised. It took off famously right from Day One. Limca has a pan-India presence plus an easy name.
So, you then sold your beverages business and retained Bisleri and put all your energy in that. Can we say that?
I am a very lucky man. If left to Coca-Cola, our great McKinsey & Co and our great lawyers would have sold Bisleri too. Somehow, Bisleri was not important enough so it wasn't part of the discussion.
Thank God it didn't happen. I guess it is sheer luck.
I was in no mood really. I was depressed. I didn't like the idea of selling the soft drinks but there was no choice.
We had 62 bottling plants of which only four were ours. Rest were franchisees. And 80% of them wanted to go to Coke. What would I do with the loyal 20% of bottlers who would have suffered? It would have led to the premature death of the brand because it wouldn't have been available in the market anymore.
Plus, the franchise system, which we had painstakingly developed, would have been broken. At least this way it is alive and the three brands are there… still going strong. So there was no choice. We had to settle. But we didn't sell the company, just the brands.
So fortunately Bisleri was here and I put all my energy there. Thus since 1994 we started working on Bisleri and we are here today.
You never looked at taking Bisleri public?
For what? We have enough funds. Even for more expansion. Fifty percent of our funds are lying with Merrill Lynch.
But a burnout of funds is a possibility with big players such as Tatas entering the water segment..
Tatas can come and many others have come. But they need a distribution network which Tata Tea alone cannot do. They've made a beautiful looking bottle, great design but the quality of plastic is thin.
In the airline, you try and open this bottle, you'll have water all over your lap. It's paper thin. (Demonstrates this by opening a bottle.)
You also have mountain water. Normally mountain spring water sells at a premium…
Two years ago we bought a natural spring in Uttaranchal where we bottle the water. These are small markets with no meat in them.
It is like a pudina topping. It helps build a brand. Our objective with mountain water is to build the Bisleri brand further. To give it a high image and target a niche market. We are investing now so that as the market changes and premium products are in vogue, we'll be there. The premium being charged is double the price of normal mineral water.
Similarly with enhanced water, we hope to have the first-mover advantage.
Why did you decide to change the colour of packaging from blue to green?
The whole market had copied the blue colour and Bisleri had also become a generic word. So we decided to move from generic Bisleri to Bisleri the brand. Having too popular a brand is also a problem.
So we have tried to create a brand identity by going green knowing that our only competitors, Aquafina and Kinley, will not.
What about Baileys (owned by brother Prakash Chauhan)?
We don't call them competitors.
What about Himalayan water? Do you see them as a threat?
They are still not a competitor and not so significant. And fortunately, they have a pink-colour bottle. (Laughs)
What is the size of the market and how is it growing?
It's growing fast. The organised sector is pegged at Rs 2,000 crore. We have a 60% market share. But we only consider Kinley, Aquafina and us because numbers are hard to come by for others.
You mentioned about enhanced water. If mountain water is just a topping then where do you put enhanced water?
Enhanced water will be for those who are bored with plain water. Like we all used to wear white shirts but now you have designs, stripes, funny colours. So enhanced water will pick up. Soft drinks are under heavy fire and it is shrinking. So those companies are going to move away from soft drinks. See all of them pitching for mango drinks? See the amount of mango on display? It is out of proportion.
Looking back, any regrets?
No, no (waves his hand). It has been fun. The only regret is that Coca-Cola could have done some justice to our brands. I understand it is a problem selling two colas. But Limca conflicts with nothing. It is a beautiful brand and a
beautiful product. In Delhi, it is number one even today.
There was a dispute with Coca-Cola in the papers recently. What is the latest?
Coca-Cola as a company has been quite fair all this time. I don't know why they have done this thing of trying to register Maaza abroad. Worse is to defend that they can do it when in fact they've withdrawn the application. And once is OK. But making the same mistake twice is too much. So I am asking,
'What are you guys doing?' You bought Citra, you put it aside, you got Gold Spot, you put it aside. I don't understand why they are interested in Maaza. You've Minute Maid. Use it for mango.
When we made the deal with Coca-Cola at that time it was very clear. We were already operating in Europe, America, Middle East. So it was given to them for India and India only.