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Himalayan climbs up the price ladder

By Dinesh Jain | Vjmedia Works | July 30, 2014

NourishCo, the Tata-PepsiCo JV, extends the brand to sparkling water to take on foreign brands with price edge

The Tata-PepsiCo joint venture, NourishCo, will launch a new sparkling-water variant of its brand, Himalayan, next month. This would be its first extension after the Tata Group's acquisition of the brand seven years ago. Twenty six per cent of Mount Everest Mineral Water Company, the owner of Himalayan, was acquired in 2007 by Tata Global Beverages (Tata) for Rs 115 crore. Tata subsequently increased the stake to 50 per cent in Mount Everest, merging it earlier this year.

Himalayan, in the interim, which came as part of the deal in 2007, was inducted into NourishCo as part of Tata's JV commitment to PepsiCo. The 50-50 JV was set up in 2010 with the intention of pushing products on the health & wellness platform. Apart from Himalayan, Tata has also brought Tata Water Plus, a fortified water product, under the JV. PepsiCo, on its part, introduced Tata Gluco Plus, a glucose drink, under the JV.

NourishCo CEO Harsh Rai says that the move to launch the new variant, called Sparkling Himalayan, would give it access to the very premium end of the Rs 8,000-crore bottled water market (which includes national as well as regional brands), largely dominated by imported products such as Nestle's Perrier and the Italian brand San Pellegrino. This segment is barely 5-8 per cent of the overall market.

"Sparkling Himalayan will be priced at Rs 90 a litre. Typically, a 330-ml imported sparkling water brand costs around Rs 200-300. Our competitive pricing should help us ramp up sales for the new product," he says.

The mother brand, Himalayan Natural Mineral Water, which is available for Rs 50 a litre, and sits at the mid-end of the bottled water market that is estimated to be about 20-25 per cent of the overall market, is available in 59 cities, says Rai. There are plans to take it to more places in the coming months.

"We are using the PepsiCo distribution network to push Himalayan into modern as well as traditional trade and into hotels, restaurants. Sparkling Himalayan will also be pushed into modern and traditional trade, but the accent will be on targeting premium outlets, such as high-end traditional trade outlets, where imported products are stocked. For Sparkling Himalayan, we will target upscale hotels, fine-dining restaurants as part of its distribution push. We will launch the product in Mumbai and Delhi before taking it to other markets," Rai says.

Besides the domestic market, the Himalayan portfolio will also find its way overseas, into the US and UK markets, this year.

NourishCo had already launched Himalayan in Starbucks outlets in Singapore last year. The company is studying the West Asian region for a possible roll-out in the future.

The push that NourishCo is giving to Himalayan has a larger objective attached to it.

Tata, the JV partner, according to company executives, hopes to increase revenues from the water vertical from the current 2 per cent to 10 per cent in the next five years. Tata's managing director, Ajoy Misra, in the past, has said that the company will look at all growth levers, that is, both organic and inorganic, to increase its presence in the area.

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