Iran war disrupts India’s bottled water market ahead of summer

Rising costs linked to the ongoing conflict involving Iran are beginning to affect India’s bottled water industry, with manufacturers warning that supply disruptions could soon push up prices in one of the world’s fastest-growing packaged water markets.

Industry representatives say the $5 billion market is facing increasing pressure just weeks before the peak summer season, when demand for bottled water typically rises sharply across the country. Higher global oil prices and disruptions in supply chains have increased production costs for key packaging materials such as plastic bottles, caps, labels and cardboard boxes.

According to the Federation of All India Packaged Drinking Water Manufacturers’ Association, nearly 2,000 smaller bottled water manufacturers have already raised prices charged to distributors by about one rupee per bottle. The increase represents roughly a 5 percent rise and could be followed by an additional 10 percent hike in the coming days if costs continue to climb.

Retail prices have not yet seen major changes, as larger companies are currently absorbing some of the higher costs to avoid immediate increases for consumers. In many parts of India, customers typically pay less than 20 rupees, or about 20 US cents, for a one-liter bottle of packaged drinking water.

Apurva Doshi, secretary general of the manufacturers’ federation, said the industry is experiencing growing uncertainty. “There is chaos and within the next four to five days this will start impacting customer prices,” Doshi said.

Industry groups say the sharp rise in oil prices has pushed up the cost of polymer, a material derived from crude oil that is widely used to manufacture plastic bottles. The price of plastic bottle material has climbed by around 50 percent to about 170 rupees per kilogram. The cost of bottle caps has also increased significantly, more than doubling to around 0.45 rupees each. Corrugated packaging boxes, printed labels and adhesive tape used in production have also become more expensive.

Access to clean drinking water remains a challenge in many areas of India. Researchers estimate that about 70 percent of the country’s groundwater is contaminated, leaving many people dependent on bottled water for safe drinking supplies.

Several large companies compete for a share of the market, including Bisleri, Kinley produced by Coca‑Cola, and Aquafina from PepsiCo. Other players include businesses linked to Indian conglomerates led by billionaire Mukesh Ambani and the Tata Group.

The impact is also being felt in the premium mineral water segment, which has grown quickly in recent years. Industry research firm Euromonitor estimates that natural mineral water represents a $400 million market in India. The segment accounted for about 8 percent of the bottled water market last year, up from only 1 percent in 2021.

One premium brand, Aava, has already increased prices for its resellers by 18 percent. The company sources mineral water from the foothills of the Aravalli Mountains.

Shiroy Mehta, chief executive of the company, said many manufacturers are absorbing nearly half of the rising costs to maintain business relationships. He described the situation as difficult for the beverage industry as it prepares for the summer demand surge.

Notices sent by some producers to distributors warn that the continued rise in raw material prices has made it difficult to maintain existing product prices. Manufacturers say the industry could face further adjustments if supply pressures persist in the coming weeks.