Competition in the Bottled Water Industry in 2006

The rising popularity of the bottled water in United States was attributed because of the following reasons:-

Concerns over the safety of municipal drinking water Increased focus on fitness and health Hectic on the go lifestyle of American Consumers Convenience, purity and portability Dissatisfaction with tap water and carbonated beverages

The strategies which were followed because of the fierce competitive rivalry as the world bottled water sellers went for market share and volume gains:-

Develop low cost production Distribution capabilities Use differentiation strategies New product attributes Innovative product Variations Lowered prices in developed market Acquiring smaller sellers to gain footholds in rapidly growing emerging market

Transition from soft drinks to bottled water was basically because of the concerns about sugar consumption other nutrition, fitness issues and concerns over quality of tap water.The strategies adopted by the companies in 2006 were:-

Home and Office Deliveries(HOD) Convenience and portability of water bottled in single serving PET containers that could be

purchased chilled from a convenience store and drunk immediately Product differentiation

Bottled water in 2-litre 1-litre Smaller single-serving PET bottles 5 gallon containers 2.5 gallon containers

High emphasis on healthy life styles and improved consumer awareness of the need for proper hydration led many consumers to shift traditional beverages preferences

Bottled water was positioned as which improved the appearances of the skin and gave them more energy

Basically there were concerns over the tap water because:-

Chemical taste of water Included the use of chlorine and other chemicals such as fluoride

Although tap water was no less healthy than bottled water but the major concerns were because of the chemical taste of tap water

Bottled water in US were required to meet standards from both EPA (Environmental Protection Agency) and FDA (Food and Drug Administration)

Distribution and Sales of Bottled WaterThe strategies followed by the companies were:-

Easily Available:- Consumer could purchase in nearby locations in US where food was also available

Distribution varied depending on the producer and the distribution channel Water was distributed to large grocers and wholesalers directly Pepsi and Cola’s vast beverage distribution system made it easy Always negotiated contracts with sports stadiums, universities and school systems

Suppliers if the IndustryCompanies selling purified water merely purchased tap water from municipal water system. As a result sellers of purified water were able not only to pay less for water they bottled, but also to avoid spring water’s in bound shipping cost of 5 to 15 cents per gallon since arrived at the bottling facility by pipe rather than by truck

Key Competitive Capabilities in bottled water IndustryBottled water seller needed to have efficient distribution systems to supermarket, wholesale clubs and convenience store channels. The strategies involved were:-

Efficient distribution systems Maximize no. of deliveries per driver- since distribution included high fixed costs for ware

houses, trucks, handheld inventory tracking devices and labor Provide on-time deliveries Offer responsive customer service to large customers Low production costs- Price competition

Recent TrendsPrice competition was avoided through 2004 but now largest sellers began to offer considerable discounts on 12 and 24 bottle multi packs. The strategies involved were:-

Offer considerable discounts Purchasing smaller regional brands Acquiring bottled water producers Entering into joint ventures to increase penetrations of selected emerging and developed

markets Expand into international market by allowing foreign bottling franchisees to license the brand Introduced variations of their products that included flavoring, vitamins, carbohydrates,

electrolytes and other supplements Promoting mental stimulation, physical rejuvenation and overall improved health

CompetitorsThere were many players into the bottled water industry. The names of few are NESTLE WATERS, DANONE WATERS, COCA-COLA, and PEPSICO.

NestleThe strategies employed by the companies were:-

Acquiring of established local brands Wide range of portfolio

2 global brands 5 International premium brands 68 local brands

Innovations Two innovative calorie-free flavors Packaging innovations to differentiate its bottled water brands

New design to appeal to children New PET containers to revitalize the prestigious brand which was experiencing sales decline HOD( Home & Office Delivery) Acquisitions and JV to develop market leading positions in countries Whole sale pricing advantage as compared to competitors

Groupe DanoneThe strategies employed by the company were:-

Acquiring established brands of bottled water industry Entering into JV’s to strengthen its distribution network Partnership with companies to accelerate its development of market opportunities

Coca-Cola CompanyWith 300 brands worldwide, the Coca-Cola Company was the world’s leading manufacturing marketer. The company produced soft drinks, juice drinks, sports drinks, water and coffee and was best known for Coca-Cola, world’s most valuable brand.

The company relied upon their vast global distribution system. The company introduced Dasani in 1999, which was supported by $15 million advertisement which they raised to $20 million in 2005.Their marketing expertise and vast distribution system and joint venture with Danone waters allowed Coca-Cola to position Dasani as a upper-midpriced product

The company later added strawberry and grape flavors to Dasani Line. Fruit flavored Dasani proved to be successful in market in 2006. They also introduced Dasani Sensations and Powerade Option.

After the international launch of Dasani, the company voluntary recalled the bottles because they were tainted with bromate- a cancer causing agent.

PepsiCoThe strategies followed by the companies were:-

They believed it would be easier to produce national brand of bottled water that could utilize the same water purification facilities in Pepsi bottling plants that were used to produce the company’s brands of soft drinks

By stripping all chlorine and other particles out of tap water Product lines were developed around customer type and lifestyle Packaging was marketed to image-driven consumers Company’s strategy involved offering a continuum of healthy beverages from unflavored

Aquafina to nutrient-rich Gatorade They acquired Mexico’s largest bottler, Pepsi-Gemex.