A Survey of The highA Survey of The high--end bottled end bottled water industrywater industry

Presented by:

Jennifer PageJeff Morgan

Monica CullenMarketing 535 final project.

Summer 2005

History of the IndustryHistory of the Industry

1760

1845

1855

1863

1976

1980

1999

1997

1963

France USA

Historical GrowthHistorical GrowthEstimated Wholesale Dollars of the US Bottled Water Industry

$0.00

$1,000.00

$2,000.00

$3,000.00

$4,000.00

$5,000.00

$6,000.00

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

YEAR

Dolla

r Am

ount

s

Non-sparklingDomestic SparklingImportsTotal

Source: International Bottled Water Association

Current PerspectiveCurrent Perspective

Bottled water is a highly competitive $9.8 Bottled water is a highly competitive $9.8 billion industrybillion industryHas become a battle of the giantsHas become a battle of the giantsCoke, Pepsi and Nestle control 50% of the Coke, Pepsi and Nestle control 50% of the marketmarketOnly high end for differentiation with a Only high end for differentiation with a majority of the market driven to the lowmajority of the market driven to the low--endend

DifferentiatorsDifferentiators5 basic types of water5 basic types of water

1. 1. ArtesianArtesian –– well water well water tapped into aquifer tapped into aquifer 2. 2. MineralMineral –– contains natural contains natural mineralsminerals3. 3. PurifiedPurified –– processed, processed, treated, filtered municipal treated, filtered municipal waterwater4. 4. SpringSpring –– from from underground springunderground spring5. 5. SparklingSparkling –– Contains Contains carbon dioxide naturally or carbon dioxide naturally or addedadded

NonNon--Confidential SourcesConfidential Sources

Due to the Due to the many many differences differences

companies companies use name use name or label to or label to

showcase the showcase the sourcesource

Marketing Water ContentMarketing Water ContentBrands use mineral Brands use mineral content to content to differentiate their differentiate their product.product.

Included in the labelIncluded in the labelTDS (total dissolved TDS (total dissolved solids)solids)pH (Percent pH (Percent Hydrogen)Hydrogen)

Penta Water boasts that it’s the world’s cleanest water – with no mineral content.

PackagingPackagingPackaging is important for highPackaging is important for high--end bottled end bottled water brands as differentiatorswater brands as differentiators

Keys: allure of packaging and functionalityKeys: allure of packaging and functionalityTrying to build an image Trying to build an image –– a reason for a reason for consumers to spend a little more on water.consumers to spend a little more on water.

Shape, size, color, type of cap, label and Shape, size, color, type of cap, label and materials are all used to differentiate.materials are all used to differentiate.

Product PlacementProduct PlacementTraditional advertising is Traditional advertising is often ineffectiveoften ineffectiveHighHigh--end Bottled water end Bottled water rely on rely on ““creative creative marketingmarketing””

•• Product Placements Product Placements in movies, in movies, television showstelevision shows

•• Celebrity Celebrity endorsementsendorsements

Bottled water has been Bottled water has been used in gift baskets to used in gift baskets to celebrities at the Oscarscelebrities at the Oscars

Fiji water on the set of Friends

Swimmer Amanda Beard with Penta water

CoCo--Branding Branding –– Cause MarketingCause Marketing

Another creative draw Another creative draw is to use the bottled is to use the bottled water for a cause.water for a cause.Ethos (recently Ethos (recently acquired by Starbucks) acquired by Starbucks) –– is committed to is committed to brining clean water brining clean water around the worldaround the worldAthena Athena –– gives 100% of gives 100% of net profits to breast net profits to breast cancer researchcancer research

Water CoutureWater CoutureMuch of the upperMuch of the upper--end water market is end water market is being decided in trendy bars and fine being decided in trendy bars and fine restaurantsrestaurants

Water marketers are training Water marketers are training ““water water sommelierssommeliers”” to match the perfect water to match the perfect water with the cuisine.with the cuisine.

Matched by the classifications of the water: Matched by the classifications of the water: Bold, classic, light, effervescent or stillBold, classic, light, effervescent or still

Water bars are springing up in the US Water bars are springing up in the US ––so far in New York and LAso far in New York and LA

Local MarketLocal Market

Water is distributed to the Portland market Water is distributed to the Portland market through: distributors, food brokers, through: distributors, food brokers, specialty distributors and water producers.specialty distributors and water producers.Brand availability in Portland of the top 10Brand availability in Portland of the top 10

Rank Brand % of U.S. Market PDX Distribution

1 Aquafina 11.3% Pepsi-Cola Bottling Co. of Portland

2 Dasani 10.0% Coca-Cola Bottling Co. of Oregon

3 Poland Spring 7.8% Unavailable in PDX: Nestle regional brand

4 Arrowhead 6.6% Columbia Distributing (Nestle regional brand)

5 Deer Park 4.3% Unavailable in PDX: Nestle regional brand

6 Crystal Geyser 4.0% Mt Hood Beverage Co.

7 Ozarka 2.8% Unavailable in PDX: Nestle regional brand

8 Zephyrhills 2.6% Unavailable in PDX: Nestle regional brand

9 Ice Mountain 2.5% Unavailable in PDX: Nestle regional brand

10 Evian 1.7% Distributed through Coca-Cola Sour

ce: B

ever

age

Wor

ld M

agaz

ine

Local RetailLocal Retail

On the retail side of distribution, slotting On the retail side of distribution, slotting fees are more important than packagingfees are more important than packagingRetailers want to carry more variety in Retailers want to carry more variety in highhigh--end, but there are low margins in end, but there are low margins in bottled waterbottled water

Due to the price sensitivityDue to the price sensitivityAlso dominance by Also dominance by DasaniDasani (Coke) and (Coke) and AquafinaAquafina (Pepsi)(Pepsi)

Local Bars and RestaurantsLocal Bars and Restaurants

In a small sample of Portland bars, it In a small sample of Portland bars, it was found that consumer was found that consumer expectations dictate what is offered.expectations dictate what is offered.

Requests usually are for Requests usually are for AcquaAcqua PannaPannaand San Pellegrino and San Pellegrino

As demand for higher end water As demand for higher end water increases, it wonincreases, it won’’t be long before t be long before other brands are offeredother brands are offered

RecommendationsRecommendationsHighHigh--end bottled water still offer the greatest end bottled water still offer the greatest growth possibilities.growth possibilities.Premium bottled water entrants will need to Premium bottled water entrants will need to educate the customer on the water differences educate the customer on the water differences to alleviate some of the confusion.to alleviate some of the confusion.Bottled water manufacturers should find a niche Bottled water manufacturers should find a niche and stay with it.and stay with it.

•• KEY: DIFFERENTIATIONKEY: DIFFERENTIATIONTremendous area for growth will be in the Tremendous area for growth will be in the mineral water segment.mineral water segment.Securing distribution channels will be highly Securing distribution channels will be highly important.important.

A Survey of The highA Survey of The high--end bottled end bottled water industrywater industry

Presented by:

Jennifer PageJeff Morgan

Monica CullenMarketing 535 final project.

Summer 2005