India’s Transforming Drinking Water Landscape

Clean drinking water is an essential life resource and tap water in India is no longer considered safe to consume in a direct manner owing to rapid urbanization and industrialization. India’s growing packaged and purified drinking water sector poses a solution to this challenge. Over 40% of urban (metro & tier-1) Indian households have an RO purifier to treat their drinking water. At the same time, many households & residential societies rely on collectively managed, public or commercial RO, or regional/local bottled water plants, or buy packaged (bottled) water to meet their daily drinking water needs.

In 2024, the purified and packaged drinking water market in India was valued at around USD 40 billion. It is expected to grow at a CAGR of over 10% during 2025-2030. Lifestyle changes and rising health awareness are driving the pan-India demand for purified drinking water, especially in metropolitan, tier-1, and tier-2 cities. The trend of consuming premium, alkaline, black, functional drinking water is also on the rise and customers are willing to pay a premium for it. This means consumers want added nutrients such as vitamins, minerals, herbs, and other bioactive ingredients to their purified drinking water to receive health benefits beyond basic hydration.

Coming to the value chain of purified and packaged drinking water in India, raw water is collected from natural resources such as underground water, rivers, lakes, and artificial sources such as harvested rainwater. This raw water is then subjected to ‘ozonization’.

Raw water collected is purified with ozone to kill bacteria and other harmful microbes, replacing the earlier popular method of chlorination. The purified water is then filtered for sand and carbon to eliminate solid particles and the associated color and odor. Next, through the process of reverse osmosis (RO), soluble salts and solids are removed from the filtered water. Then, in the mineralization stage, essential minerals such as compounds of potassium and magnesium are added to processed water to improve its taste and nutritional value.

Before bottling, there is a final-and-last stage, where the water undergoes micron filtration and final ozonization to make it free of any micro particles and ensure hygiene & cleanliness. Major manufacturers in this segment are Bisleri, Rail Neer (IRCTC), Kinley (Coca-Cola), Bailey, Aquafina (PepsiCo), Himalayan, Vedica, Oxyrich, Tata Water Plus, and Patanjali Peya. This bottled mineral water then goes to distributors across India, who further supply them to local retailers for end-user consumption. Alternatively, end consumer orders bottled water online through mobile app (B2C/D2C) and delivery agents pick it from local distributor/warehouse to deliver it at the customer’s doorstep.

Emerging Trends: From Packaged Water to Functional Hydration

There are quite-a-few upcoming categories of packaged water (in India) that’s rendering it the tag of a functional hydration drink specific to the purpose. It’s the direct result of consumer preference for sustainability as well as health benefits. Black drinking water is a type of purified alkaline water with addition of scores of essential minerals (potassium, magnesium, calcium, fulvic acid etc.) rendering it a dark color. It offers health benefits such as hydration, detoxification, healthy skin, and better digestion.

Alkaline water has a pH value slightly greater than 7.0, which makes it mildly basic rather than neutral. It’s prepared either naturally by flowing through rocks or through artificial treatments such as ionization. It also contains good levels of various healthy minerals and removes dehydration, acid reflux, metabolic syndrome, and body toxins.

Vitamin-infused packaged water is another emerging category. It’s available with retailers, or you can even make it at home by adding fruits, herbs, vegetables etc. to water. Rich in vitamins such as A, B, C, D, E, and K, this purified water serves as a smarter alternative to soda, juice, and other sugary drinks. It provides benefits such as hydration, increased body immunity, better sensory functioning, healthy skin, and detoxification.

Even bottled water packaging is turning green and eco-friendly, courtesy both regulations as well as manufacturers and consumer’s preference. Paper packs (Papel, for example), tetra packs (Kagzi Bottles), and biodegradable bottles (Green Bio) are fast-replacing plastic bottles to this effect. Regional brand expansion is also being seen across India, as they have a deeper understanding of local supply chains. Example is Campa SURE by Reliance Retail which costs INR 15 a liter as against the INR 20 standard.

 

Business and Investment Opportunities

Setting up a regional bottled water plant in the locale where you have a better understanding of the consumer as well as the supply chains forms a great business investment area. You could leverage cost leadership to price your packaged water bottles below the standard rate (while ensuring the same quality) and gain a steadily rising market share. You would be starting from scratch, though, and would need a high initial investment for the manufacturing set-up.

You could also consider the regional franchise model of either manufacturing or being the dealer/distributor of a leading brand of packaged drinking water. While manufacturing franchise set-up would entail a high initial investment, distribution franchise would involve a lower upfront investment in setting up a local sales & marketing network. Different franchise models you could consider are bottling plant franchise, carrying & forwarding (C&F) agent, super stockiest, or direct distribution/dealership.

A related opportunity is that of contract manufacturing in case you hold prior expertise and interest in bottled water manufacturing. In this model, you produce bottled water for one or more leading brands while they get to focus on their core strategy and business. This model would involve the highest possible initial investment for you; however, you need not worry about demand generation and would just need to focus on the supply part.

Regional private-label opportunity makes the most sense for you in case you hold expertise in retail and/or own one or more operational retail outlets in a specific region. In this model, manufacturers supply bottled water to you which you market & sell as your own brand. This is the least possible investment model where you need to focus on demand generation as the supply side is already taken care of.

In case you have a proprietary functional drink, formula and have obtained the requisite government approvals to commercialize it, you can also get started on those lines. Last but not the least, you could venture into green, eco-friendly packaging for mineral water. It’s a hot area these days and some start-ups have already reaped into its first-mover advantage proposition. With rising tourism and hospitality in India, the market for packaged drinking water and functional drinks is set to expand from metros and tier-1 cities to tier-2 cities and tier-3 townships.

How ‘The India Watch’ Can Help

In case you found this article relevant in terms of your business goals, strategy and decision-making, consider having access to a well-researched, comprehensive industry report detailing Indian drinking water & functional drinks market opportunities, analyses & trends.

You need a professional expert, who knows the pulse of Indian drinking water & functional drinks markets, to research, analyze, and recommend the first few set of steps for you (such as the right sub-segment, the right time, the right place, the right people), before you lend your hard-earned capital to this space. With us, you get to test the viability of your business idea, also roll out the roadmap detailing the next very steps for your business.

At The India Watch, we collaborate with companies, investors, entrepreneurs, and business owners wanting to explore prospects in India's rapidly growing drinking water & functional drinks industry. We provide companies with data-driven insights and functional strategies to leverage this high-demand market.

We help you evaluate the industry size, calculate addressable market size, grasp the value chain from sourcing raw materials to acquiring end users, as also conduct detailed feasibility study to set up a drinking water or functional drinks venture in India. We offer value across a range of segments, whether you are establishing a new facility, increasing capacity, or investigating collaborations in drinking water/functional drinks market in India.

We prepare stakeholders to make informed choices through our market research, feasibility studies, consumer behavior research, investor pitch decks, and financial modelling services. We also map client acquisition methods, assess competition, and emphasize the applicable sustainability, policy, and regulatory frameworks. 

For further enquiries, reach out to us at info@theindiawatch.com or 8076704267. Let’s explore how we can create value together.