The recent conflict in Iran has caused a notable 11% increase in the price of bottled water in India, as the costs of plastic bottles and caps have surged. This price hike has nullified the benefit of a previous water tax reduction announced by Prime Minister Narendra Modi a few months ago.
Access to clean water is considered a luxury in India, a nation with a population of 1.4 billion, where reports indicate that 70% of groundwater is contaminated. In the competitive bottled water market valued at $5 billion, major players such as Bisleri, Coca-Cola, Pepsi, Reliance Industries owned by billionaire Mukesh Ambani, and Tata are vying for market share.
The industry is facing pressure as escalating oil prices are driving up the prices of polymers, a crucial material for manufacturing plastic bottles. Bisleri, the largest player in the Indian bottled water market capturing one-third of the market share, has raised its prices by 11%. A pack of 12 one-liter bottles now costs 240 rupees ($2.57), up from the previous 216 rupees ($2.32).
Angelo George, CEO of Bisleri, stated in a message to Reuters that the cost of packaged drinking water has surged to 20 rupees per liter due to a substantial increase in packaging material expenses, which have spiked by more than 70% in recent weeks. He expressed that the current situation is beyond anyone’s control.
The surge in oil prices, attributed to the Iran conflict, has led to a 50% increase in the cost of materials for plastic bottle production, reaching 170 rupees per kilogram. Additionally, the price of bottle caps has more than doubled to 0.45 rupees each. Other essential materials like corrugated boxes, labels, and adhesive tape are also experiencing price hikes.
This price escalation negates the benefits of Modi’s tax reforms from September, where the government reduced taxes on bottled water from 18% to 5%, prompting several companies to lower their prices in response. Parle Agro, a leading beverage company, has also raised the prices of its Bailley bottled water brand by approximately 11%, as confirmed by industry sources. The company chose not to comment on the matter.
Despite the price adjustments, Parle Agro’s website still acknowledges Modi for the tax reduction, which initially led to lower prices of its products, including bottled water. Nayan Shah, CEO of Clear Premium Water, mentioned that due to geopolitical events, he had to increase retail prices of his bottled water by 8% to 11%, emphasizing that a price revision was necessary in the current circumstances.