August 2009
Oman is generally considered very safe with regard to hygienic standards and quality products. However, bulk bottled water producers have a different story to tell.
Leading mineral water producers complain that fake companies in the outskirts of Muscat and the interiors are using their five-gallon polycarbonate bottles for selling spurious mineral water, endangering their reputation and the health of consumers. Customers do not realise that the water could be contaminated as it is bottled in unhygienic conditions.
Modus Operandi
The modus operandi of these fly-by-night operators is simple. Either they collect five-gallon returnable bottles of established brands or buy duplicate bottles in large numbers from Saudi Arabia and Dubai. The bottles are generally collected from people who are leaving the country or from junk dealers and then the stickers on the bottle are changed.
When these operators supply filled bottles to households, they get empty bottles of established brands in return and the process goes on and on. These fake companies concentrate their marketing in areas like Al Khoud, Barka, Ma'abela, Quriyat, Nizwa, Sur, Ibra, Sharqiya and Salalah regions. "They approach customers with a discounted price of 600bz (as against RO1 to 800bz for an established brand) for a five-gallon bottle and housewives who are not brand-conscious agree to buy it. It is mostly happening in areas where the education level and brand awareness are low," says Vijay Chopra, deputy general manager of National Mineral Water Company (NMWC), which sells 7,000-8,000 five-gallon water bottles a day.
There is a huge demand for water during the summer season that these companies take advantage of. "People are more interes-ted in readily available water at the best price during summer," adds Chopra.
D G Venugopal, marketing manager of Al Bayan Water, says that several of these fake units are based in Sur. Al Bayan, which sells 2,000 five-gallon bottles every day, is planning to set up another unit in Saham with a daily capacity of 5,000 bottles, he adds. Like LPG suppliers, bulk water producers generally accept a deposit for selling a five-gallon bottle for the first time and when the customers buy water after returning the first bottle, they have to pay only for the water. For instance, NMWC charges RO2.5 initially and subsequently the customer has to pay only RO1 per bottle.
Yet another problem, according to industry sources, is that the small units selling duplicate water use bottles for a longer period, extending even up to five years. This is against the normal practice of reputed companies to discard a returnable polycarbonate bottle after two years. Often, children play with or store their toys in the empty bottles supplied to residences before they are returned to the supplier.
Mineral water company sources reveal that their salesmen, who collect returnable bottles from foodstuff stores, have found several of their bottles with different stickers on them. "As many as 35,000 bottles of our company disappeared from the market in the last two years. It is a real headache for all bulk water producers," says Venugopal.
Chopra adds that their company has lost 10,000 bottles in the last one year. "We also have 4,000 bottles of different companies which are not in existence now. This shows the entry and exit of small players in the market."
In fact, foodstuff shop owners, especially in the interiors, as well as salesmen, are not careful while collecting returnable bottles from their customers.
Just to avoid this problem, major bottled water companies like NMWC and Oman Oasis Water have made agreements to exchange bottles unintentionally collected by the other's salesmen. Hypermarkets in the sultanate do not sell water in five-gallon returnable bottles due to inconvenience in managing sales. Moha-mmed Harazallah, general manager of Oman Refreshment Company, which produces Aquafina, says that his company does not face this problem since it is not into the bulk water business.
Mineral water company sources say that they have earlier lodged complaints with the Oman Chamber of Commerce and Industry (OCCI). However, they agree that effective action against these fake companies is difficult as when one company shuts down, another begins operations.
Also, these fly-by-night operators give only their mobile numbers and do not print their address on the bottle. Being small facilities, they resume operations after closing for a few weeks. "The government should take action against those who do not provide their address on the bottle," says Mohammed Ali, managing director of Al Bayan Water. "In Dubai, the fine for companies selling duplicate water is AED5,000."
In an apparent move to check this trend, bulk water producers started selling five-gallon water in non-returnable PET (poly ethylene terephthalate) bottles. For instance, Al Bayan launched its five-gallon water in PET bottles in June. It is available for 900bz to RO1 as against 700-800bz for a returnable bottle. "We have received a good response for our water packed in PET bottles and we are planning to launch another ten-litre bottle soon," says Ali.
Similarly, Salsabeel's five-gallon water is available in a non-returnable bottle at RO1.2, which is 200bz more than the cost of a returnable bottle. The disposable PET bottle is hassle free as customers do not have to deposit money for a bottle and they can buy it without returning an empty bottle.
Safeguarding standards
With great awareness on health and safety standards, the country has seen a surge in demand for bottled water. The size of the market has grown in leaps and bounds to reach 225mn litres per year, thanks to availability of the finest mineral water from the mountains.
In fact, the sultanate's geological diversity has helped home-grown bottled water producers to have a competitive edge over its rivals in both domestic and export markets. Some of the best springs are to be found in the Western Hajar mountains and bringing water from there is a costly affair. It is estimated that distribution cost accounts for as high as 30 per cent of total expense of companies that bring water from afar.
Industry sources urge urgent action against fake companies to check duplicate water as it is affecting the reputation of an established industry. Abdul Hameed al Ojaily, deputy director, health affairs department, Muscat Municipality, says that the municipal authority will take action against duplicate bottled water producers once they receive complaints. Sultan al Sawahi, head of complaints (Consumer Protection Department) at the Ministry of Commerce and Industry, revealed that he had noticed a difference in the taste of water sold by some outlets in Azaiba. "However, we have not received any consumer complaints so far," he adds.
Oman is generally considered very safe with regard to hygienic standards and quality products. However, bulk bottled water producers have a different story to tell.
Leading mineral water producers complain that fake companies in the outskirts of Muscat and the interiors are using their five-gallon polycarbonate bottles for selling spurious mineral water, endangering their reputation and the health of consumers. Customers do not realise that the water could be contaminated as it is bottled in unhygienic conditions.
Modus Operandi
The modus operandi of these fly-by-night operators is simple. Either they collect five-gallon returnable bottles of established brands or buy duplicate bottles in large numbers from Saudi Arabia and Dubai. The bottles are generally collected from people who are leaving the country or from junk dealers and then the stickers on the bottle are changed.
When these operators supply filled bottles to households, they get empty bottles of established brands in return and the process goes on and on. These fake companies concentrate their marketing in areas like Al Khoud, Barka, Ma'abela, Quriyat, Nizwa, Sur, Ibra, Sharqiya and Salalah regions. "They approach customers with a discounted price of 600bz (as against RO1 to 800bz for an established brand) for a five-gallon bottle and housewives who are not brand-conscious agree to buy it. It is mostly happening in areas where the education level and brand awareness are low," says Vijay Chopra, deputy general manager of National Mineral Water Company (NMWC), which sells 7,000-8,000 five-gallon water bottles a day.
There is a huge demand for water during the summer season that these companies take advantage of. "People are more interes-ted in readily available water at the best price during summer," adds Chopra.
D G Venugopal, marketing manager of Al Bayan Water, says that several of these fake units are based in Sur. Al Bayan, which sells 2,000 five-gallon bottles every day, is planning to set up another unit in Saham with a daily capacity of 5,000 bottles, he adds. Like LPG suppliers, bulk water producers generally accept a deposit for selling a five-gallon bottle for the first time and when the customers buy water after returning the first bottle, they have to pay only for the water. For instance, NMWC charges RO2.5 initially and subsequently the customer has to pay only RO1 per bottle.
Yet another problem, according to industry sources, is that the small units selling duplicate water use bottles for a longer period, extending even up to five years. This is against the normal practice of reputed companies to discard a returnable polycarbonate bottle after two years. Often, children play with or store their toys in the empty bottles supplied to residences before they are returned to the supplier.
Mineral water company sources reveal that their salesmen, who collect returnable bottles from foodstuff stores, have found several of their bottles with different stickers on them. "As many as 35,000 bottles of our company disappeared from the market in the last two years. It is a real headache for all bulk water producers," says Venugopal.
Chopra adds that their company has lost 10,000 bottles in the last one year. "We also have 4,000 bottles of different companies which are not in existence now. This shows the entry and exit of small players in the market."
In fact, foodstuff shop owners, especially in the interiors, as well as salesmen, are not careful while collecting returnable bottles from their customers.
Just to avoid this problem, major bottled water companies like NMWC and Oman Oasis Water have made agreements to exchange bottles unintentionally collected by the other's salesmen. Hypermarkets in the sultanate do not sell water in five-gallon returnable bottles due to inconvenience in managing sales. Moha-mmed Harazallah, general manager of Oman Refreshment Company, which produces Aquafina, says that his company does not face this problem since it is not into the bulk water business.
Mineral water company sources say that they have earlier lodged complaints with the Oman Chamber of Commerce and Industry (OCCI). However, they agree that effective action against these fake companies is difficult as when one company shuts down, another begins operations.
Also, these fly-by-night operators give only their mobile numbers and do not print their address on the bottle. Being small facilities, they resume operations after closing for a few weeks. "The government should take action against those who do not provide their address on the bottle," says Mohammed Ali, managing director of Al Bayan Water. "In Dubai, the fine for companies selling duplicate water is AED5,000."
In an apparent move to check this trend, bulk water producers started selling five-gallon water in non-returnable PET (poly ethylene terephthalate) bottles. For instance, Al Bayan launched its five-gallon water in PET bottles in June. It is available for 900bz to RO1 as against 700-800bz for a returnable bottle. "We have received a good response for our water packed in PET bottles and we are planning to launch another ten-litre bottle soon," says Ali.
Similarly, Salsabeel's five-gallon water is available in a non-returnable bottle at RO1.2, which is 200bz more than the cost of a returnable bottle. The disposable PET bottle is hassle free as customers do not have to deposit money for a bottle and they can buy it without returning an empty bottle.
Safeguarding standards
With great awareness on health and safety standards, the country has seen a surge in demand for bottled water. The size of the market has grown in leaps and bounds to reach 225mn litres per year, thanks to availability of the finest mineral water from the mountains.
In fact, the sultanate's geological diversity has helped home-grown bottled water producers to have a competitive edge over its rivals in both domestic and export markets. Some of the best springs are to be found in the Western Hajar mountains and bringing water from there is a costly affair. It is estimated that distribution cost accounts for as high as 30 per cent of total expense of companies that bring water from afar.
Industry sources urge urgent action against fake companies to check duplicate water as it is affecting the reputation of an established industry. Abdul Hameed al Ojaily, deputy director, health affairs department, Muscat Municipality, says that the municipal authority will take action against duplicate bottled water producers once they receive complaints. Sultan al Sawahi, head of complaints (Consumer Protection Department) at the Ministry of Commerce and Industry, revealed that he had noticed a difference in the taste of water sold by some outlets in Azaiba. "However, we have not received any consumer complaints so far," he adds.
By A E James
© businesstoday 2009
