India’s packaged drinking water industry sees bottle, cap costs climb after Middle East conflict

The US-Israel-Iran war is sending shockwaves through India’s $5 billion packaged water market just as summer approaches, a Reuters report said. Rising supply costs linked to the conflict are forcing manufacturers to raise prices on plastic bottles, caps, labels and cardboard packaging.

About 2,000 smaller bottled water companies have already increased rates for resellers by around 1 rupee per litre, a 5% hike. The Federation of All India Packaged Drinking Water Manufacturers’ Association predicts prices could climb another 10% within days. Retail prices, however, have so far remained stable, with most one-litre bottles selling for less than 20 rupees.

Plastic and packaging costs soar

The report notes that surging oil prices are driving up polymer costs, the key material in plastic bottles. Prices for bottle material have jumped 50% to 170 rupees per kilogram, while caps now cost over 0.45 rupees each. Corrugated boxes, labels and adhesive tape are also significantly more expensive, adding pressure across the supply chain.

Bottled water remains essential

With 70% of India’s groundwater reportedly contaminated, bottled water is a lifeline for the country’s 1.4 billion residents, the report said. Major players in the market include Bisleri, Coca-Cola’s Kinley, Pepsi’s Aquafina, Reliance and Tata. These firms are absorbing much of the cost increase for now, Reuters reported.

Premium water sees sharper hikes

The natural mineral water segment, valued at $400 million, is expanding rapidly, particularly among India’s wealthier consumers. Premium water made up 8% of the bottled water market last year, up from 1% in 2021. The report highlighted Aava, which sources water from the Aravalli foothills, raising reseller prices by 18% amid rising costs.