In this case study, we will stand for Nestle Waters and compose an analysis about bottled water industry in United States at strategic business unit level (SBU)
During 1996 to 2001, the United States had became the world’s largest market for bottled water, the annual consumption had increased with 9.2% compound average growth rate, from 3,495.1 (1996) to 5,425.3 (2001) million of gallons. Mainly bottled water can be divided into 2 types, bulk water and PET contained water, during 1990 s to early 2000s, consumption of PET contained water had increased dramatically with an average annually growth rate, 29.1% between 1998 and 2001. The market had became dominated by a few international food and beverage producers like Coca-Cola, PepsiCo, Nestle, and Groupe Danone, but also included some small regional sellers that were required to develop either low-cost production and distribution capabilities or differentiation strategies keyed to some unique product attributes.
b) Macro environment:
America’s gross domestic product growth rate had remained a healthy increase trend during the period of 1995-2000, since 9/11 happened in 2001; America had joined the war with Iraq and Afghanistan which had potentially influenced the GDP growth rate and since American are spending less money on daily use purpose. (Economic) There’s an increased focus on fitness and health which had improved consumer awareness of the need for proper hydration, it had led many consumers to shift traditional beverage preferences toward bottled water. (Social demographic) Due to the tap water pollution scandals during 1990s to early 2000s, more customers are shifting their preference from tap water to bottled water; all the bottled water producers in U.S. were required to meet the standards of both the EPA and the FDA which set a strict testing standard for all bottled water producer, also according to FDA’s standard of Identity, bottled water producer need to include source water information on their product label. (Political)
During the 90s, the percentage of households owning computers had increased sharply from 15percent to 45 percent, which in return it had resulted a widespread of internet and easier access to online information, a brand new marketing channel had been created. With the increasing development of production technology, bottled water production efficiency had increased. (Technological) China joined World Trade Organization in 2001 which made China the manufactory of the world, cheaper bottle and manufacturing machine could be input from China. (Natural environment)
Nestle Waters’s main competitors are the leading food and beverage producers such as:
Groupe Danone owned three of the world’s four best-selling brands of bottled water, especially Evian, which had been positioned as an upper-mid-priced product. Targeting customers who are extremely care about improving their appearance and health conditions (Targeting customers) Groupe Danone was the largest seller of bottled water by volume, which means the operational cost could be relatively lower than other branded bottled water; after embarked on a partnership with the Rachid Group and Coco-Cola, it had secured its own distribution channel and accelerated its development of market opportunities in America. (Strength) Due to the absence of a strong distribution channel, Groupe Danone has to rely on Coca-Cola’s distribution channel and shares only 49% ownership of the joint venture. (Weakness)
The Coca-Cola Company:
The Coca-Cola Company was the world’s leading manufacturer, marketer, and distributor of beverage concentrates, through the strong distribution network, Dasani, Coca-Cola’s bottled water can be distributed to any retail channels where Coke is available. Also the company owned independent bottler which would lower the cost of the bottled water manufactured....