COMPETITION IN THE BOTTLED WATER INDUSTRY
I.POINT OF VIEW
NESTLE, COCA-COLA, PEPSI, DANONE
II. CASE SUMMARY
The objective of this discussion paper is to provide an overview of the bottled water market situation. Bottled water is the most dynamic market of all the food and beverage industry. The term bottled water doesn’t refer to one single product and the same designation can be used to qualify different products, depending on countries. Five major types of bottled water can be identified:
SPRING WATER- must have been captured borehole or natural orifice of a spring that naturally flows.
ARTESIAN WATER- could be extracted from a confined aquifer (water bearing underground layer of rock or sand) where the water level stood at the top of aquifer.
SPARKLING WATER- was required to have natural carbonation as it emerged from the source, although carbonation could be added to return the carbon dioxide level to what was evident as the water emerged from the source.
MINERAL WATER- stated that such water must have at least 250 parts per million of the total dissolved solids and its standards required water labeled as purified to have undergone distillation. Deionization or reverse osmosis to remove chemicals such as chlorine and fluoride.
DRINKING WATER- required no additional processing beyond what was tap water and could not include flavoring or other additives.
The bottled water industry is very dynamic: numerous bottled water companies compete on this market. Although they can be extremely different, it is possible to identify three major categories of bottled water companies. Smaller or larger firms that were created to run and market one specific brand of bottled water. Some of them are century-old and family-owned, but most of them have now grouped or are under control of major multinational food companies, in particular Nestlé and DANONE. ¯ Sodas or soft drinks companies now turn to the very promising bottled water market. Coca-Cola and PepsiCo, for example, take advantage of their large world-wide network of bottlers to sell purified water. ¯ Companies providing tap water, with extensive know-how in water purification now turn to a more lucrative distribution of water. Suez-Lyonnais des Beaux and Vivendi, for instance, develop water services, such as home and office delivery of carboy water. The world bottled water market represents an annual volume of 89 billion liters (section and is estimated to be worth US$ 22 billion. Western Europeans are the world’s major bottled water consumers (85 liters/person/year), but the most promising markets are in Asia and the Pacific, with an annual increase of 15% for the period 1999-2001. The average world consumption grows by 7% each year. 75% of the world market is still controlled by local actors. Evian is n°1 in the world for still water, with 1’441 million liters sold in 1999.Bottled water is a particularly competitive market, hence companies need to develop diverse marketing strategies, such as accessing new markets by owning or developing partnership with regional brands, developing new products (e.g.: flavored water) or by-products (e.g.: cosmetics) and developing services (e.g.: home and office delivery of carboy water).Bottled water consumption reflects a certain way of life (section 5). There is a long tradition in Europe for drinking bottled water. Nowadays, this habit has reached t he rest of the world. Why do consumers choose to drink bottled water? In many cases, bottled water is an alternative to tap water. Consumers think it tastes better than tap water (no chlorine taste), they perceive it as being safer and of better quality. T hey also look for security: food scandals in industrialized countries and water-borne diseases in developing countries have a great impact on their attitude. Bottled water is perceived as pure and safe, although it is not necessarily the case. Consumers care for their health and their well-being:...