Brita Usa Case Study

Topics: Bottled water, Drinking water, Water purification Pages: 7 (2135 words) Published: April 1, 2007
1.0Introduction and Case Background

Water quality issues, especially with regards to drinking water, have garnered much attention recently in our post September 11 social climate, but attitudes towards drinking water were not always rooted in fears of a doomsday scenario. As the Brita USA case study illustrates consumer awareness and concern for clean, good tasting, and safe drinking water led to tremendous growth in the bottled water industry beginning in the mid to late Eighties.

Perhaps as an effect of the designer and brand label consciousness consumer atmosphere, that existed in the late Eighties, buying water in a bottle started to be the thing that you did. Paying a dollar for "pure mountain spring" water began to be the choice option, rather than standing in line to drink from the public fountain. In a short time many consumers, not just early adopters, began to buy bottled water. As bottled water moved from the classes to the masses, consumers began to be more concerned with price and questioned the worth of paying a dollar for water. This reasoning created opportunities for those who could fill consumers' need for low cost, good tasting, and clean water (while maybe still conveying a small sense of superiority.) Table 1 illustrates the size of the bottled water market in 1999 – still only an 8% segment of the total 44.5 Billion gallon beverage industry. These figures also reflect a near doubling in volume from 1988 unit sales. Table 1 | Estimated Bottled Water Segment Size in 1999

Percent BuyingGallonsAppx. Spent
Still Water45%1,530,000,000 $ 1,530,000,000
Carbonated Water27%918,000,000 $ 2,754,000,000
Bottled Service (est.)28%952,000,000n/a

Est. Total Bottled Water Consumption3,400,000,000 Gallons
Est. Cost of Bottled Still Water$0.0078 per oz.
Est. Cost of Carbonated Water$0.0234 per oz.

In 1988 the Clorox Company purchased the rights to the Brita water filtration pitcher from a small German company, Brita GmbH. In exchange for a 3-4% royalty on total sales and exclusive sales of filters, Brita GmbH allowed Clorox to design and sell its own pitchers in the U.S. under the Brita brand name. By 1999 the Brita water filtration pitcher had sold more than 17 million units and when combined with its captive filter sales it was generating close to $200 million in revenues per year. Also by 1999, the Brita pitcher had a market penetration of 13%-15% and held the top position in the water purification industry with 70% share of the $350 million industry.

Our case analysis will focus on Brita's decision to diversify, or not, into the faucet mounted filter business. After 10 years of near dominance in the water filtration industry, Brita was under attack from an upstart company, PUR, who was positioning to gain market share by focusing on the faucet mounted technology to deliver filtered water. Brita faced several alternatives. Should they ignore the faucet mounted filter and focus on maintaining filter sales? Should they compete with their own faucet mounted filter and potentially cannibalize their pitcher sales? Our paper will investigate these questions and explore additional issues which will aid in the development of our recommendations and conclusions. We will need to understand the financial metrics related to the decision making, such as how much profit came from filter sales; how long people kept pitchers and continued buying filters, and how much revenue was possible from the faucet systems? Additionally, we need to explore what the market was doing and where it was going in 1999. Could Brita maintain its marketing emphasis on taste alone? What did consumers want in 1999 - convenience, taste, speed, safety, capacity, or a combination of all? Did trends exist in 1999 that could have indicated consumer attitude shifts regarding drinking water? Finally, could Brita have combined all these aspects to predict future competition and...
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