TIRUCHY: Small scale mineral water manufacturers in Tiruchy have cut down operations by 20-30% due to a sharp rise in PET (polyethylene terephthalate) bottle costs, particularly in the one and two-litre segments, driven by higher input prices owing to the ongoing West Asia conflict.
Sources said small units, which earlier sold bulk water at Rs 7-Rs 10 per litre, are now selling at Rs 15 a litre which is on a par with larger brands. With summer and election demand set to rise, smaller units fear losing bulk orders due to reduced competitiveness.
Muthu Selvan, owner of Andavar Packaged Drinking Water, Tiruchy, said the cost of PET, a petroleum-derived raw material used in bottles, has shot up in the recent times.
“Along with rising cost of PET, prices of packaging inputs such as caps and shrink-wrap have also increased. Much of the raw material to make PET bottles is sourced from ports such as Chennai, Mumbai and Visakhapatnam while bigger firms have their exclusive bottle manufacture units near the ports helping them save on logistics. Initially we had to increase the price of 20-litre cans, but are now forced to increase the price of smaller bottles,” he said.
Selvan added that demand for smaller water bottles peaks from mid-March to May, but rising costs and increasing competition from new players -- about five annually in Tiruchy alone -- are affecting business. According to Tamil Nadu Packaged Drinking Water Manufacturers Association, around 120 packaged drinking water manufacturers operate across the delta districts.
V Sriraman, state vice-president of the association, said, “Preform resin prices have shot up from Rs 120 per kg last month to Rs 180. Shrink-wrap costs increased from Rs 128 to Rs 190 a kg, and caps from 35 paise to 51 paise per unit.
MSME players are the worst hit since they cannot compete with bigger brands in the 500 ml, 1-litre, and 2-litre segments. However, we remain competitive in larger cans where premium pricing prevails,” he said.
Compounding the challenges, electricity tariff has increased over the past three years --from Rs 6.5 per unit to Rs 9.5 per unit -- adding to operational costs.
With input costs continuing to rise, MSME mineral water manufacturers are staring at a difficult road ahead.