 "RO leads, but Kent thirsty for more")
It may seem like an irony. Mahesh Gupta did not have a water purifier at home in 1998 when he built one using the reverse osmosis (RO) technology after both his kids suffered from jaundice. He was not happy with the water purifiers that were available. The 60-year old chairman of Kent RO Systems had thought what was good for him would be good for others, and founded the company in 1999.
Since then, backed by a good product, global certifications and endorsement by actor Hema Malini, Kent has created a new category in water purifiers and is today a Rs 580-crore brand.
The water purifiers which account for 95 per cent of Kent's sales, have been tweaked over the years for the better (see box).
"Kent is available in 400 outlets in Delhi but it doesn't mean I have reached the customer. The problem with the product is that the customer doesn't have a need or desire to buy. I have to create the desire,'' says Gupta. The adoption cycle is slow, and the market would evolve slowly as there's more awareness. Once there's a large nucleus of RO owners, growth could be faster," says Gupta.
However, another of Gupta's challenge is reducing the service calls, which outside of Delhi, is outsourced. He says, "Unlike a TV or a washing machine, where service can wait for a day or two, in this category people want service in three-four hours so, service organisation should be able to respond within that period".
The company is growing at 30 per cent and leads the Rs 3,000-crore market for RO water purifiers with a 35-40 per cent market share.
Kent's success has led many other players to enter the segment: Pureit from Hindustan Unilever, Livpure from Luminous, Ion Exchange, and, of course, Eureka Forbes’ RO purifiers Aquaguard and Aquasure, which entered the market in 2005. Gupta attributes his success to a good product and technology. In Europe, for example, RO purifiers are installed under the kitchen sink, which
Gupta thought may not work in India (box).
Star appeal
In the first five years, Gupta had found it difficult to convince customers against a giant like Aquaguard (Eureka Forbes), which ruled the market with over 70 per cent market share with its UV purifiers. While Gupta's purifier was priced at Rs 20,000, UV purifiers were available for Rs 3,500, five-times less. The purifiers available in the market did not remove dissolved impurities like arsenic, fluoride or pesticides, which Kent did and made it its USP.
In 2005, Kent roped in Hema Malini, which helped it gain consumer attention. ''She was ideal for endorsing our brand as she was a housewife, popular, and appealed to the ladies,'' says Gupta. But it was not easy convincing Hema Malini. When approached in 2005, the actor agreed to endorse it only aftr using the product. ''In 2005 (turnover Rs 30-40 crore), we had no money to spend on a TVC. We started by using her photo in catalogues and print. Only in 2006, we could create a TVC,'' recalls Gupta.
This proved to be a turning-point for Kent, as it gained in volumes. It sells around 450,000 units a year in a 1-million-a-year RO market.
RO adoption hurdles
Yet, it has just scratched the surface. "What's 1-million-purifier market in a country with 60 million Internet connections or 145 million LPG connections? It's difficult to tell people that they are dying slowly (by consuming dissolved impurities present in water),'' says Gupta.
But Gupta does not want to play on fear in advertising Kent: ''I don't play on the fear-factor because I want to build an aspirational brand that lasts for a long time. You can use fear to build a concept; not a brand,'' says Gupta.
The penetration of water purifiers is 2 per cent and double that in urban India. Pricing is a deterrent as Kent's RO purifiers cost Rs 16,500. But Gupta feels the bigger problem is the unaware customer, whom the government just instructs to boil drinking water that does not remove dissolved impurities, impurities that have only increased with industrialisation and use of pesticides.
As ROs get popular and become a utility product, higher volumes can bring down prices. Today, Kent's marketing cost is 15 per cent and he pays a dealer margin of 20 per cent. ''As volumes go up, margins can come down. If it becomes a utility product, I don't need to advertise to sell,'' says Gupta.
Success factors
* In 1999, RO purifiers were not available
* Kent created a product & demand for it
* First to bring a wall-mounted RO purifier
* In 2005, Kent roped in Hema Malini
* Purifiers certified by WQA & NSF, USA
* In 2006, launched mineral RO purifier
* In 2013, launched no-wastage purifier that collects the impure water for recycling
Since then, backed by a good product, global certifications and endorsement by actor Hema Malini, Kent has created a new category in water purifiers and is today a Rs 580-crore brand.
The water purifiers which account for 95 per cent of Kent's sales, have been tweaked over the years for the better (see box).
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Kent has also launched other products such as a fruit & vegetable purifier, water softeners and air purifiers, but none of them have clicked. Gupta is not worried and feels they are simply ahead of time. But there is ground to cover in water purifiers too.
"Kent is available in 400 outlets in Delhi but it doesn't mean I have reached the customer. The problem with the product is that the customer doesn't have a need or desire to buy. I have to create the desire,'' says Gupta. The adoption cycle is slow, and the market would evolve slowly as there's more awareness. Once there's a large nucleus of RO owners, growth could be faster," says Gupta.
However, another of Gupta's challenge is reducing the service calls, which outside of Delhi, is outsourced. He says, "Unlike a TV or a washing machine, where service can wait for a day or two, in this category people want service in three-four hours so, service organisation should be able to respond within that period".
The company is growing at 30 per cent and leads the Rs 3,000-crore market for RO water purifiers with a 35-40 per cent market share.
Kent's success has led many other players to enter the segment: Pureit from Hindustan Unilever, Livpure from Luminous, Ion Exchange, and, of course, Eureka Forbes’ RO purifiers Aquaguard and Aquasure, which entered the market in 2005. Gupta attributes his success to a good product and technology. In Europe, for example, RO purifiers are installed under the kitchen sink, which
Gupta thought may not work in India (box).
Star appeal
In the first five years, Gupta had found it difficult to convince customers against a giant like Aquaguard (Eureka Forbes), which ruled the market with over 70 per cent market share with its UV purifiers. While Gupta's purifier was priced at Rs 20,000, UV purifiers were available for Rs 3,500, five-times less. The purifiers available in the market did not remove dissolved impurities like arsenic, fluoride or pesticides, which Kent did and made it its USP.
In 2005, Kent roped in Hema Malini, which helped it gain consumer attention. ''She was ideal for endorsing our brand as she was a housewife, popular, and appealed to the ladies,'' says Gupta. But it was not easy convincing Hema Malini. When approached in 2005, the actor agreed to endorse it only aftr using the product. ''In 2005 (turnover Rs 30-40 crore), we had no money to spend on a TVC. We started by using her photo in catalogues and print. Only in 2006, we could create a TVC,'' recalls Gupta.
This proved to be a turning-point for Kent, as it gained in volumes. It sells around 450,000 units a year in a 1-million-a-year RO market.
RO adoption hurdles
Yet, it has just scratched the surface. "What's 1-million-purifier market in a country with 60 million Internet connections or 145 million LPG connections? It's difficult to tell people that they are dying slowly (by consuming dissolved impurities present in water),'' says Gupta.
But Gupta does not want to play on fear in advertising Kent: ''I don't play on the fear-factor because I want to build an aspirational brand that lasts for a long time. You can use fear to build a concept; not a brand,'' says Gupta.
The penetration of water purifiers is 2 per cent and double that in urban India. Pricing is a deterrent as Kent's RO purifiers cost Rs 16,500. But Gupta feels the bigger problem is the unaware customer, whom the government just instructs to boil drinking water that does not remove dissolved impurities, impurities that have only increased with industrialisation and use of pesticides.
As ROs get popular and become a utility product, higher volumes can bring down prices. Today, Kent's marketing cost is 15 per cent and he pays a dealer margin of 20 per cent. ''As volumes go up, margins can come down. If it becomes a utility product, I don't need to advertise to sell,'' says Gupta.
Success factors
* In 1999, RO purifiers were not available
* Kent created a product & demand for it
* First to bring a wall-mounted RO purifier
* In 2005, Kent roped in Hema Malini
* Purifiers certified by WQA & NSF, USA
* In 2006, launched mineral RO purifier
* In 2013, launched no-wastage purifier that collects the impure water for recycling