Marketing the Glacier -Evian

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Although widely considered a global success, sales growth and market share have been dwindling in the U.S. for Danone’s popular Evian bottled water brand. With the emergence of cola giants Coke and Pepsi’s bottled water brands, Dasani and Aquafina, the U.S. market share of Danone’s Evian brand has decreased by 50%. With only a 3.5% market share in 2001, CEO Franck Riboud was faced with making the strategic decisions for boosting the market presence on Evian in the U.S. In implementing a strategy for Evian’s future in the U.S., Riboud looked at one of its most formidable opponents in the unique U.S. bottled water market – Coca-Cola. In the first of two dramatic agreements with one of its primary competitors, Danone announced an agreement in April 2002, for the cola giant to take over the Evian brand in North America. According to analysts at J.P. Morgan, under this agreement Coke will have a master distribution rights to Evian, and will handle all promotional and customer marketing, in-store merchandising, bottler sales, and food service sales. Danone will still manage sourcing, retain control of Evian’s brand image and advertising strategy. Although financial details of the agreement were not disclosed, Bloomberg reported that there the agreement includes incentives for Coke’s efforts to boost demand and is based on a target of five percent to ten percent annual sales growth. (We estimate that this translates into a potential return of $8.5 to $17 million annually given that Evian accounted for about twenty-two percent of Danone’s U.S. water sales of approximately $780 million in 2001.) If the incentives produce an average increase in sales of $12 million, it would represent an increase of less than one percent of total sales for Danone. Danone’s second major agreement came in June 2002, again with Coke. Danone and Coke announced a joint venture for the production, marketing and distribution of Danone’s local and regional branded retail bottled spring and...
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