Parle Agro is back in the soda market with the relaunch of Bailley soda. Bailley soda will be available in 600 ml and 300 ml PET bottles, priced competitively at Rs 14 and Rs 9 respectively. The pricing for the HORECA (hotel restaurant and café) segment, where the product is sold in crates of 24, will be different — at Rs 250-260 a crate of 24 Bailley PET bottles (600 ml), it will be marginally more expensive than a crate of RGB (returnable glass bottles) that sells for Rs 140.
This is not the first time the company has dabbled in the soda category. Way back in 1998, the company had launched Bailley soda, only to quietly withdraw it two months later from shop shelves. Bailley water, however, launched in 1993 continued to serve the market. Packaged water was reintroduced in a new avatar in 1997 and this year it is the turn of the soda.
The pullout of the brand from the market were in line with an internal restructuring exercise. Says Nadia Chauhan, joint managing director & chief marketing officer, Parle Agro, “The market for bottled water and soda is dominated by a large number of local players and it was not feasible to operate like a national player. During our restructuring, we ramped up the number of production units across the country.”
Increasing the production footprint to 50 units allowed the company to curtail logistics cost and increase retailer margins for its water business. By end of the year, Parle Agro proposes to have 70 production units for the Bailley water brand.
Bailley soda is currently produced at its sole facility in western India “But in the future Bailley soda can tap into the facilities of the water business,” notes Chauhan. KPMG analyst (consumer markets) Anand Ramanathan believes with the extension into soda the obvious synergy will be distribution, as a result of which per unit cost will reduce.
Compared to the Rs 2,400-crore packaged water business in India, Parle Agro estimates the soda market in India (organised PET) is a mere 5 million units valued at Rs 100 crore. The RGB segment of the soda market, pegged at Rs 750 crore (45 million units) is much larger, because of its price advantage. However, the possibility of breakage, restricted storage and the hassle of returning bottles are bringing about a shift in consumer preference to PET bottles. In urban markets particularly, the growth rate in the PET bottles segment of the soda market is higher than the RGB segment because it scores on convenience.
Cola giants Pepsi and Coca-Cola with their brands Lehar soda and Kinley soda dominate the soda market. Also fighting for a share of the throat are a bevy of alcohol brands such as Kingfisher soda and SAB Miller’s Foster’s soda that serve the dual purpose of keeping the liquor brands top of mind, as beer, wine and hard liquor manufacturers are banned from advertising in the mass media. Analysts say a low entry barrier has facilitated the entry of several local players in the industry — namely, Sirocco (Pune), Shotz (Madhya Pradesh) and Sosyo (Gujarat).
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According to Chauhan, since carbonated water or soda is usually mixed with alcoholic drinks and other beverages, it is important that it does not lose its fizz quickly. To ensure that its soda is stronger and has a longer life, the company has invested in innovative packaging where the bottle design allows maximum gas retention.
To begin with, Bailley soda will be retailed at wine stores, general stores and modern trade, in the markets of western India. Gradually, the brand will be rolled out across the country. The company is looking to reach one lakh outlets in the next six months. The thrust area will be the HORECA segment which accounts for more than 40 per cent of the sales in the category. Sampling at modern retail will be a key factor in driving awareness.
With the relaunch of Bailley soda, it will be interesting to see how Parle Agro brings back the fizz in its beverage portfolio — the largest contributor in the company’s Rs 1,500 crore turnover.