Bisleri and the Chimera of the Tata Group

28 Nov,2022

 

 

With apologies to none at all

By Vikas Mehta

 

Vikas MehtaChimera is a fire-breathing female monster with a lion’s head, a goat’s body and a serpent’s tail. A thing which is hoped for but is illusory.

 

One of the big news of the week was Bisleri being up for sale and for all practical purposes Tata Consumer Product seemed to be the obvious suitor. The reasoning for Tata being the best suitor for Bisleri is the story of Chimera.

 

I say obvious as the reaction and reasoning of the deal was more from the heart than sound business logic. A leading business daily which actually carried an interview with Ramesh Chauhan, the promoter of the brand (who incidentally, never confirmed the deal but just said that it’s in the works and Tata’s could be the destination for Bisleri), spoke about how the brand has had many suitors in the past but the promoter was holding off as he wanted someone who can nurture and grow the brand and Tata therefore is a natural fit.

 

Does that mean that other suitors like Reliance Retail, Nestle and Danone which were mentioned, will not nurture and grow the brand? Or it meant that others will acquire the brand to kill it so that their small brands will thrive and grow? Or maybe reading between the lines meant that given the Tata’s reputation to be a business house with a heart of gold and who care about their employees they will translate the same empathy on to the brand?

 

Frankly, I find this sort of conjecture and reasoning defying all logic. Business is about bottom line, financials, growth, shareholder value and return on investment. Sure, the social side of business is important but at the end of the day a business has to justify its investment in terms of returns. And growing a brand, making it more profitable will be the objective of most businesses.

 

Both Danone and Nestle have a presence in the premium segment of bottled water. Exactly like Tata Consumer Product which has Himalayan and Tata Copper Plus as premium offerings. So, for any one of them, Bisleri can be a great acquisition with a presence in the economy segment. And the legacy plus the momentum of the brand will ensure that any suitor amongst the three, be it Tata or Danone or Nestle will hit the ground running with this acquisition. More so, as the current management team will continue to oversee the brand in the near future. So, I cannot figure out why only Tata can nurture and grow it. It is obvious that Tatas reputation of being a fair, just company is colouring the assessment of the suitors.

 

Let’s also look at Reliance Retail. With Jiomart operational in more than 200 cities in India and Reliance Fresh retail presence being equally strong along with the much-touted acquisition of about 800 Future Group stores, RR is a great bet for Bisleri. RR is looking at private labels and has already nurtured Good Life in groceries, Snactac in snacks, Trikaya in fresh farm produce amongst others, while shopping for likes of Campa to add to its inhouse portfolio. Bisleri would seem to be an ideal addition to the same. And RR can make the brand much more visible in its own stores, websites and apps. Private labels give retaliers more margin and a brand like Bisleri would be a huge asset for RR. Why would the company not want to grow and nurture it? Seems its reputation of being sharply business oriented and its absence in the public mind for its charity work or its social side has made it unsuitable.

 

Tata also has Big Basket and given the success of Fresho and BB Royal, Tatas would also be raring to acquire Bisleri. But BB is a standalone and is not a part of Tata Consumer Products. And Tatas track record in integration has not been too good in the past. The superapp Tata Neu is struggling. The consumer feedback and the app performance has been bumpy. So, the recent track record of Tata is not at all encouraging. Therefore, it seems illogical in assuming that Tata can nurture and grow the brand and others cannot.

 

It is also not a coincidence that many marketing experts and gurus have suddenly started talking about sustainable packaging format for Bisleri. That is the Tata effect. Tata is a good, kind-hearted, responsible company. So, if it acquires Bisleri it must look at sustainable package. I find it strange, nay amusing, that suddenly with Tata in the news people have started worrying about Bisleri packaging. More than Tata, shouldn’t it be the responsibility of long time players like Nestle and Danone to be made more accountable for finding a sustainable packaging solution for bottled water? And shouldn’t the issue be more specific than just pinning category responsibility? For example, with the government already banning the use of one-time plastic should the marketing community not be asking for bottled water players like Bisleri to stop producing one time use 200 ml bottles? That’s a more practical approach than starting to expect Tata to wave a magic wand once they buy the brand.

 

Getting back to growing and nurturing, let’s look at the track record of Bisleri. For a brand which has been in the Indian market, with the current promoter for more than five decades, the brand has hardly innovated, remaining more or less a one product brand. It could have for example, entered adjacent categories like fruit juices or health drinks. It therefore sounds downright hypocritical to hear the promoter wanting to sell the brand to a company which is a good fit because it will grow and nurture a brand.

 

In my opinion, Tatas being a good fit for Bisleri is a very tenuous link. At best it is an attempt to appropriate the halo of the Tata name to raise the brand value of Bisleri so that the promoters can get a better valuation and in a worst case scenario it is desperately hoping that the deal with Tata will go through at the current estimated valuation as the others may not be willing to pay the asking price. The deal may well go through but the chimera that has been raised will obscure the real reason of the deal having gone through.

 

Vikas Mehta is a Dehradun-based business strategy consultant and educator. He writes on MxMIndia every other Monday. His views here are personal

 

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