Product: Nestle Pure Life (Bottled Water)

Industry OverviewPakistan’s bottled water industry is a rapidly growing segment of the

beverages sector. The country’s market is comparatively very small on a global

scale and was estimated at 33 million litres a year by end of 1991. However, with

swift increase in the number of bottled water producers during the last three

years, the country’s market is estimated to have grown to 70 million litres with per

capita consumption reaching half a litre. The bottled water market is presently

growing at a robust rate of 40% per annum. According to a study compiled in

2001 by Zenith International, specialist consultants for Asia Bottled Water

Association (ABWA), Pakistan registered the fastest growth of 140% in 2000

amongst the countries in Asia and Middle East region.

There are around 26 players operating in the bottled water sector.

According to industry sources, the number of bottlers scales up well above 70

during summer season due to increased demand for drinking water in summer.

However, the much publicized laboratory report published by the Pakistan

Council of Research in Water Resources (PCRWR) after conducting a survey of

26 brands in the Rawalpindi and Islamabad region declaring that ‘all the 26

brands available in the market are contaminated while 10 of them are unsafe for

drinking’, forced the Pakistan Standards and Quality Control Authority (PSQCA)

to make it obligatory for the companies to obtain license from the authority before

commencing operation. A total of 18 companies have so far been registered by

the PSQCA.

THE BOTTLED WATER INDUSTRY OF PAKISTAN

GLOBAL SCENARIO

‘Bottled Water’ is considered to be the smallest yet fastest growing and

most dynamic segment of the beverage industry. The world bottled water market

represents an annual volume of 89 billion litres and is estimated to be worth US$

22 billion. Western Europeans are the world’s major bottled water consumers

with per capita consumption of 85 litres, 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% per annum.

Global Bottled Water Market

The world total bottled water consumption grew from 19.186 billion gallons

in 1996 to 30.103 billion gallons in 2001registering a compound annual growth

rate of 9.4% during the period. The U.S., Mexico and Western European

countries are the leading bottled water consuming countries. However, Asia and

the Pacific regions have witnessed a remarkable growth in consumption during

the last five years. Table below depicts ten leading countries by consumption

along with CAGR during1996 – 2001:

ASIA – The fastest Growing Bottled Water Market

The bottled water industry is one of the fastest growing industries in Asia.

Zenith reports stunning growth of 45% since 1998 across 50 countries in Asia,

Middle East and North Africa. Total sales reached 25,270 million litres, more than

double the level of 1995. The region now represents 23% of global consumption

with market value at US$ 4,700 million. According to Zenith Research and

Development Director, ‘the Asian Market is still very young and it is anticipated

that

volumes will double again to over 50 million litres by 2005.

Per Capita Consumption of Leading Countries

Per Capita Consumption by leading countries during the years 1996 and

2001 is depicted in table below. It is evident from the table that West European

nations have the highest per capita consumption of bottled water. In 2001, global

average of per capita consumption of bottled water stood at 4.9 gallons against

3.3 in 1996.

Major Global Players

The bottled water market is a lucrative one, dominated by Swiss food giant

Nestlé, with a 16.8 per cent share, and France's Danone, which controls about

14 per cent. Nestle has found a growing market niche for bottled water in non

industrialized and developing countries where safe tap water is rare. In these

countries, its main product line is Nestle pure, a low-cost purified tap water with

added minerals. Nestle Pure Life has sold well in Pakistan and Brazil and have

some other bottled water products in China, Vietnam, Thailand, and Mexico.

Besides Nestle, giants of the global food and beverage industry have also

become purveyors of bottled water, including Coca-Cola, Pepsi and Proctor &

Gamble. With the entry of the big soft drink giants, market growth is expected to

accelerate further. PepsiCo is currently leading the way with its Aquafina line,

while Coca-Cola has launched a North American line under the name Dasani in

addition to its already established international label, Bon Aqua.

STRUCTURE OF PAKISTAN BOTTLED WATER INDUSTRY

Pakistan’s bottled water market comprises of two main segments i.e. the

retail market and the bulk market. The retail market supplies water in 0.5, 1.5, 3.0

and 5.0 litres capacity PET bottles whereas the bulk market makes Home and

Office (H&O) deliveries in 3 and 5 gallons made of Polycarbonate. There are

around 26 players operating in the bottled water sector. However, according to

industry’s sources, this number reaches well above 70 when small unknown

operators crop up during summer owing largely to the lax regulation and

ineffective monitoring of the sector. Nestlé’s Pure Life brand dominates the retail

market with a share of 50 per cent. Other well known brands include Sparkletts of

Hashwanis with a market share of 12 per cent, BSW brand of M/s Wah Valley

Corporation 5 per cent. The rest of the market is in the hands of small players.

There are an estimated 20 brands in the H&O delivery segment of bottled

water. Nestle dominates this segment also with an estimated market share of

over 50 per cent. To expand its H&O water delivery business countrywide, Nestle

acquired major share holdings in both AVA and Fontallia in 2001. While AVA is a

major player in the branded bottled water category, both in PET and H&O

service, Fontallia enjoys strong holding in H&O service in Karachi. In addition,

the Jerry Cane segment makes home and office deliveries in Karachi. This

segment is mostly unorganized supplying low quality water.

BOTTLED WATER MANUFACTURERS

Some of the well-known bottled water manufacturers are listed below

alongwith their brand names, installed capacities and production during 2002:

TARIFF STRUCTURE

The tariff structure for bottled / mineral water is covered under chapter 22

under the H.S. Code 22.01. Following is the tariff structure on various types of

bottled water:

Profit Margins in the Bottled Water Business

At average, it costs the bottled water companies approximately Rs 150 per

carton (12 bottles) of 1.5 litres capacity bottles. The companies average selling

price ranges between Rs 178.0–180.0 per carton including General Sales Tax

plus other taxes (total taxes 18.5 %). The profit margin for the companies at

average ranges between Rs 8.0 – 10.0 per carton. Taking into account the

market price of Rs 22.0 for 1.5 litre bottle, the price of carton containing 12

bottles comes to Rs 264/- giving a margin of Rs 80.0– 85.0 to the middle man. It

is evident from the approximate calculation that the middle man is making huge

profits from the bottled water business which can safely be assumed between Rs

50.0 – 55.0 per carton after factoring out the cost of transportation at the rate of

Rs 5.0 and retailers margin at the rate of 12.0 per carton.

The Quality Issue of Bottled Water

The bacterial and chemical contamination associated with bottled water is

a major global concern and has sparked many controversies even in the US and

Europe. In Pakistan, the issue of contaminated bottled water came to the fore

when Pakistan Council of Research in Water Resources (PCRWR) claimed in its

report that all the major brands available on the market were contaminated and

10 of them not fit for human consumption after conducting a survey in the

Rawalpindi-Islamabad region where it randomly collected 41 water samples of 26

brands from public utility stores and shops.

The source plays a vital role in the in the bottlers ability to produce the

desired quality of bottled water. Spring water and purified water are the two major

types of bottled water sold on the market around the world. While these two

products are generally viewed as high quality, they differ significantly in the

treatment required to obtain the end product.

Regardless of the source, the water must be inspected, tested and

certified by the authorities concerned. In addition, amounts of organics and in-

organics as well as the quantity of Total Dissolved Solids (TDS) help determine if

the source is practicable. A challenge for spring water bottlers is that the water

source must be an actual spring that can supply and sustain the quality and

quantity of water required. Purified water is a highly treated product and offers

the most consistent and high quality water to consumers worldwide. The U.S.

based Natural Resources Defense Council (NRDC) in its march 1999 study

concluded that ‘ yet in contrast to the market image of ‘pure spring water’ that is

projected by the industry, bottled water is not always safer than tap water and in

some case it is less so’. The study claimed that ‘one-third of the 103 brands of

bottled water it studied contained levels of contamination, including traces of

arsenic and E.coli. One-quarter of all bottled water is actually taken from the tap,

though it is further processed and purified to some degree, and in many

countries, bottled water itself is subject to less rigorous testing and lower purity

standards than tap water’. ‘One brand of 'spring water’, reported the NRDC ...

actually came from a well in an industrial facility's parking lot, near a hazardous

waste dump, and periodically was contaminated with industrial chemicals at

levels above FDA standards’. In terms of nutritional value, according to the

United Nations Food and Agricultural Organization (FAO), bottled water is no

better than tap water. The idea that bottled "spring" or "natural" water contains

near-magical qualities and great nutritive value is "false," declares a 1997 FAO

study on "Human Nutrition in the Developing World." "Bottled water may contain

small amounts of minerals such as calcium, magnesium, and fluoride, but so

does tap-water from many municipal water supplies."

All this reflects global controversies surrounding the quality, purity and

safety of bottled water. The issue of sub-standard quality of bottled water could

be more pronounced in the developing countries. The lax regulation and weak

monitoring infrastructure in countries like Pakistan makes the bottled water sector

extremely susceptible to the unscrupulous bottlers. The PCRWR report is an

indication of situation prevailing in the bottled water sector of Pakistan. The

sensitivity of the matter, keeping in view that water is the basic human necessity

and has a major bearing on the health of the society as a whole, be it the future

generation of the country or the major consumer community including

participants of seminars/conferences, foreigners, traveling passengers,

restaurants and residents of lodges and rest houses, forced the Pakistan

Standards and Quality Control Authority (PSQCA) to step into the scene and

formulate measures for strict monitoring of this vital sector.

The quality standards for bottled water have recently been formulated by the

PSQCA. Water standards PSS No 2102 for natural mineral water and PSS No

4639 for bottled drinking water have been declared mandatory for mineral and

bottled water manufacturers under the authority of PSQCA Act IV of 1996 of the

Government vide SRO: 638 (1)/2000,dated September 12, 2001.

The water quality standards are mandatory, and have become legally

enforceable from December 1. After December 1, all brands of bottled water

have to comply with the stipulated standards, failing which legal action could be

initiated against the non- complying bottled water manufacturers. The PSQC has

now made it obligatory for the companies to obtain license from the authority

before commencing operation. A total of 18 companies have so far been

registered by the PSQCA.

ORIGINS AND CATEGORIES OF BOTTLED WATER

Bottled Water is classified according to its origin. Within the

noncarbonated bottled water market, there are two primary products – Spring

Water and Purified Water. These two products account for the majority of the

industry’s sales and consumption. In addition, Artesian, Drinking, Mineral and

Well waters are also bottled and sold in the market but represent a small sales

percentage. While the label on the bottle does give some basic information

required by the monitoring authorities, the average consumer is generally

unaware of what type of water is inside the bottle. The US Food and Drug

Administration (FDA) has defined the following types of bottled water:

Artesian water:

Water from a well that taps a confined aquifer (a water-bearing

underground layer of rock or sand) in which the water level stands at some

height above the top of the aquifer.

Drinking water:

Water that is sold for human consumption in sanitary containers and

contains no added sweeteners or chemical additives. It may be rebottled tap

water treated at a municipal source and retreated by simple filtration.

Mineral water:

It is distinguished by a constant level and relative proportion of minerals

and trace elements (not less than 250 parts per million (ppm) of Total Dissolved

Solids TDS). These minerals and elements must occur naturally from the water

sources and cannot be added at the time of bottling.

Purified water:

Water that has been produced by distillation, de-ionization, reverse

osmosis (RO) or another process and meets the definition of purified water.

Spring water:

Water derived from an underground source from which water flows

naturally to the surface of the Earth. Spring water must be collected only at the

spring or through a borehole tapping the underground spring. Spring water can

be collected with an external force, but must be from the same underground

stratum as the spring and must have all the physical properties, composition and

quality before treatment.

The Origins of Bottled Water - Schematic

Bottled water may be used as an ingredient in beverages, such as diluted

juices or flavored bottled waters. However, beverages labeled as containing

"sparkling water," "seltzer water," "soda water," "tonic water," or "club soda" are

not included as bottled water under the FDA's regulations, because these

beverages have historically been considered soft drinks.

TREATMENT METHODS OF BOTTLED WATER

Bottled water is treated by different methods. Bottled water that has been

treated by distillation, reverse osmosis, or other suitable process and that meets

the definition of "purified water" can be labeled as "purified water." Some of these

methods are briefly described below:

Distillation:

In this process, water is turned into a vapor. Since minerals are too heavy

to vaporize, they are left behind, and the vapors are condensed into water again.

Reverse Osmosis:

Water is forced through membranes to remove minerals in the water.

Absolute 1-micron filtration:

Water flows through filters that remove particles larger than one micron in

size, such as Cryptosporidium, a parasitic protozoan.

Ozonation:

Bottlers of all types of waters typically use ozone gas, an antimicrobial

agent, to disinfect the water instead of chlorine, since chlorine can leave residual

taste and odor to the water.

RECOMMENDATIONS

• The PSQCA should set strict limits or industry guidelines (equivalent to

international standards) for contaminants of concern in bottled water,

including arsenic, bacteria, E.coli and other parasites and pathogens, and

synthetic organic chemicals, including chemicals such as phthalate, which

can leach from plastic.

• The PSQCA should adopt rules for bottled water testing, to control microbial

and chemical contaminants, to protect water sources, to ensure the reporting

of test results and violations to concerned federal authorities, to certify

operators of water bottling plants, and to require the use of certified

laboratories. In addition, PSQCA should do monitoring of the quality of

bottled water sold across the nation and should publicly release the results.

• The bottlers, keeping to their words that bottle water is so pure, should

disclose contaminants, the exact water source, treatment, and other key

information on the bottle labels. This would not only prove that the image

they are projecting for their bottled water is true but also satisfy the right-toknow

requirements of the consumer.

• The PSQCA bottled water program must be better funded. A one rupee per

bottle fee on bottled water needs to be charged to fund regulatory programs,

testing, and enforcement of standards.

Company ProfileHistory

1866-1905

The key factor, which drove the early history of the enterprise that would become

The Nestlé Company, was Henri Nestlé's search for a healthy, economical

alternative to breastfeeding for mothers who could not feed their infants at the

breast.

In the mid-1860s Nestlé, a trained pharmacist, began experimenting with various

combinations of cow's milk, wheat flour and sugar in an attempt to develop an

alternative source of infant nutrition for mothers who were unable to breast feed.

His ultimate goal was to help combat the problem of infant mortality due to

malnutrition.

He called the new product Farine Lactée Henri Nestlé. Nestlé's first customer

was a premature infant who could tolerate neither his mother's milk nor any of the

conventional substitutes, and had been given up for lost by local physicians.

People quickly recognized the value of the new product, after Nestlé's new

formula saved the child's life and within a few years, Farine Lactée Nestlé was

being marketed in much of Europe.

Henri Nestlé also showed early understanding of the power of branding. He had

adopted his own coat of arms as a trademark; in his German dialect, Nestlé

means 'little nest'. One of his agents suggested that the nest could be exchanged

for the white cross of the Swiss flag. His response was firm: "I regret that I cannot

allow you to change my nest for a Swiss cross .... I cannot have a different

trademark in every country; anyone can make use of a cross, but no-one else

may use my coat of arms."

Meanwhile, the Anglo-Swiss Condensed Milk Company, founded in 1866 by

Americans Charles and George Page, broadened its product line in the mid-

1870s to include cheese and infant formulas. The Nestlé Company, which had

been purchased from Henri Nestlé by Jules Monnerat in 1874, responded by

launching a condensed milk product of its own. The two companies remained

fierce competitors until their merger in 1905.

Some other important firsts occurred during those years. In 1875 Vevey resident

Daniel Peter figured out how to combine milk and cocoa powder to create milk

chocolate. Peter, a friend and neighbor of Henri Nestlé, started a company that

quickly became the world's leading maker of chocolate and later merged with

Nestlé. In 1882 Swiss miller Julius Maggi created a food product utilizing

legumes that was quick to prepare and easy to digest.

His instant pea and bean soups helped launch Maggi & Company. By the turn of

the century, his company was producing not only powdered soups, but also

bouillon cubes, and sauces and flavorings.

1905-1918

The Company formed by the 1905 merger was called the Nestlé and Anglo-

Swiss Milk Company. By the early 1900s, the Company was operating factories

in the United States, Britain, Germany and Spain. In 1904, Nestlé added

chocolate to its range of food products after reaching an agreement with the

Swiss General Chocolate Company.

Condensed-milk exports increased rapidly as the Company replaced sales

agents with local subsidiary companies. In 1907, the Company began full-scale

manufacturing in Australia, its second-largest export market. Warehouses were

built in Singapore, Hong Kong, and Bombay to supply the rapidly growing Asian

markets.

Most production facilities remained in Europe, however, and the onset of World

War I brought severe disruptions. Acquiring raw materials and distributing

products became increasingly difficult. Fresh-milk shortages throughout Europe

forced factories to sell almost all their supplies to meet the needs of local towns.

Nevertheless, the war created tremendous new demand for dairy products,

largely in the form of government contracts. To keep up, Nestlé purchased

several existing factories in the United States. By war's end, the Company had

40 factories, and its world production had more than doubled since 1914.

1918-1938

The end of World War I brought with it a crisis for Nestlé. Government contracts

dried up following the cessation of hostilities, and civilian consumers who had

grown accustomed to condensed and powdered milk during the war switched

back to fresh milk when it became available again. In 1921, the Company

recorded its first loss. Rising prices for raw materials, the worldwide postwar

economic slowdown, and deteriorating exchange rates deepened the gloom.

Nestlé's management responded quickly, bringing in Swiss banking expert Louis

Dapples to reorganize the Company. He streamlined operations to bring

production in line with sales and reduced the Company's outstanding debt.

The 1920s also saw Nestlé's first expansion beyond its traditional product line.

The manufacture of chocolate became the Company's second most important

activity. New products appeared steadily: malted milk, a powdered beverage

called Milo, a powdered buttermilk for infants, and, in 1938, Nescafé.

The Brazilian Coffee Institute first approached Louis Dapples in 1930, seeking

new products to reduce Brazil's large coffee surplus. Eight years of research

produced a soluble powder that revolutionized coffee-drinking habits worldwide.

Nescafé became an instant success and was followed in the early 1940s by

Nestea.

1938-1944

The effects of the onset of World War II were felt immediately by Nestlé. Profits

dropped from $20 million in 1938 to $6 million in 1939. Neutral Switzerland

became increasingly isolated in a Europe at war, and the Company transferred

many of its executives to offices in Stamford, Connecticut.

The first truly global conflict ended forever the traditional Company structure. To

overcome distribution problems in Europe and Asia, factories were established in

developing countries, particularly in Latin America.

Ironically, World War II helped speed the introduction of the Company's newest

product, Nescafé. After the United States entered the war, Nescafé became a

staple beverage of American servicemen serving in Europe and Asia. Annual

production levels reached one million cases by 1943.

As in World War I, production and sales rose in the wartime economy: Nestlé's

total sales jumped from $100 million in 1938 to $225 million in 1945. As the end

of the war approached, Nestlé executives found themselves unexpectedly

heading up a worldwide coffee concern, as well a company built upon Nestlé's

more traditional businesses.

1944-1975

The close of World War II marked the beginning of the most dynamic phase of

Nestlé's history. Throughout this period, Nestlé's growth was based on its policy

of diversifying within the food sector to meet the needs of consumers. Dozens of

new products were added as growth within the Company accelerated and

outside companies were acquired.

In 1947, Nestlé merged with Alimentana S.A., the manufacturer of Maggi

seasonings and soups, becoming Nestlé Alimentana Company. The acquisition

of Crosse & Blackwell, the British manufacturer of preserves and canned foods,

followed in 1950, as did the purchase of Findus frozen foods (1963), Libby's fruit

juices (1971) and Stouffer's frozen foods (1973).

Meanwhile, Nescafe continued its astonishing rise. From 1950 to 1959, sales of

instant coffee nearly tripled, and from 1960 to 1974, they quadrupled. The

Company's total sales doubled twice in the 15 years after World War II. The

development of freeze-drying led to the introduction, of Taster's Choice instant

coffee, in 1966.

Finally, Nestlé management reached the decision to diversify for the first time

outside the food industry. In 1974, the Company became a major shareholder in

L'Oréal, one of the world's leading makers of cosmetics

1975 - 1981

After the agreement with L'Oréal in 1974, Nestlé's overall position changed

rapidly. For the first time since the 1920s, the Company's economic situation

deteriorated as the price of oil rose and growth in the industrialized countries

slowed. In addition, foreign exchange rates deteriorated with the French franc,

dollar, pound sterling, and mark all losing value relative to the Swiss franc.

Finally, between 1975 and 1977, the price of coffee beans quadrupled, and the

price of cocoa tripled. As in 1921, the Company was forced to respond quickly to

a radically changed marketplace.

Nestlé's rapid growth in the developing world partially offset a slowdown in the

Company's traditional markets, but it also carried with it the risks associated with

unstable political and economic conditions. To maintain a balance, Nestlé made

its second venture outside the food industry by acquiring Alcon Laboratories,

Inc., a U.S. manufacturer of pharmaceutical and ophthalmic products.

Taking such a step in a time of increased competition and shrinking profit

margins required boldness and vision. Even more than the L'Oréal move, Alcon

represented a leap into unknown waters for Nestlé. But, as Group Chairman

Pierre Liotard-Vogt noted, "Today we find ourselves with a very wide range of

activities, all of which have one thing in common: they all contribute to satisfying

the requirements of the human body in various ways."

1981 - 1995

Under a new Chief Executive Officer, Helmut Maucher, Nestlé approached the

1980s with a renewed flexibility and determination to evolve. The Company's

strategy for this period was twofold: improve its financial situation through internal

adjustments and divestments, and continue its policy of strategic acquisitions.

Thus, between 1980 and 1984, the Company divested a number of non-strategic

or unprofitable businesses. At the same time, Nestlé managed to put an end to a

serious controversy over its marketing of infant formula in the Third World. This

debate had led to a boycott of Nestlé products by certain lay and religious

organizations. This issue is still alive in some quarters, but there is no longer any

significant boycott activity.

In 1984, Nestlé's improved bottom line allowed the Company to launch a new

round of acquisitions, including a public offer of $3 billion for the American food

giant Carnation. At the time, the takeover, sealed in 1985, was one of the largest

in the history of the food industry.

1996-future

The first half of the 1990s proved to be a favorable time for Nestlé: trade barriers

crumbled and world economic markets developed into a series of more or less

integrated trading areas. The opening of Central and Eastern Europe, as well as

China, and a general trend towards liberalization of direct foreign investment was

good news for a company with interests as far-flung and diverse as Nestlé. While

progress since then has not been as encouraging, the overall trends remain

positive.

Consolidation since 1996 has been demonstrated by the acquisition outright of

the Italian mineral water concern San Pellegrino (1997), the acquisition of

Spillers Petfoods of the UK (1998), and also with the decision to divest the

Findus brand in order to concentrate on high added-value frozen food products

(1999). Since then, Ralston Purina was acquired (2002) and the petcare

business is now joint world leader and known as Nestlé Purina PetCare. In the

same year, the former Perrier Vittel water business was re-named Nestlé Waters,

recognizing the fact that the dynamic bottled water business accounts for a

growing share of Group sales.

Nestlé opened the 20th century by merging with the Anglo-Swiss Condensed

Milk Company to broaden its product range and widen its geographical scope. In

the new millennium, Nestlé is the undisputed leader in the food industry, with

more than 470 factories around the world and sales of more than CHF 81 billion.

In July 2000, Nestlé launched a Group-wide initiative called GLOBE (Global

Business Excellence), aimed at harmonizing and simplifying business process

architecture; enabling Nestlé to realize the advantages of a global leader while

minimizing the drawbacks of size.

There have also been two major acquisitions in North America, both in 2002: in

July, Nestlé announced that the U.S. ice cream business was to be merged into

Dreyer's, and in August, a USD 2.6bn acquisition was announced of Chef

America, Inc. , a leading U.S.-based hand-held frozen food product business.

The Company's strategy will continue to be guided by several fundamental

principles. Nestlé's existing products will grow through innovation and renovation

while maintaining a balance in geographic activities and product lines. Long-term

potential will never be sacrificed for short-term performance. The Company's

priority will be to bring the best and most relevant products to people, wherever

they are, whatever their needs, throughout their lives.

Our BrandsQuality is the essential ingredient in all of our brands and the reason why millions

of people choose Nestlé products every day. Our consumers have come to trust

in Nestlé’s commitment to excellence and turn to Nestlé brands to maintain

nutritional balance in a fast paced world

Baby Foods

“Nutrition that suits the needs of your baby.”

Dairy Products

“From shelf-stable solutions to chilled dairy. “

Breakfast Cereals

“Start your day out healthy with Nestlé Breakfast Cereals.”

Ice Cream

“Discover the world of delicious Nestlé Ice Cream.”

Chocolate & Confectionery

“Delighting the senses with a range of tastes and textures”

Prepared Foods

“Preparing well-balanced meals is a snap with Nestlé. “

Beverages

“Drink to a healthy, active life with Nestlé beverages.”

Foodservices

“Providing food and beverage professionals with a wide range of solutions.”

Pet Care

“Nutrition, health and wellness for your pet.”

Bottled Water

“Capturing nature in its purest form.”

About Bottled Water

Nestlé began its entry into the water business in 1969 with a 30% stake in the

owners of the Société Générale des Eaux Minérales de Vittel. It acquired a

controlling interest in SGEMV in January 1992, and went on in May of the same

year to buy out the entire Perrier Group.

In 1992, Nestlé was the first company to dare to launch a mineral water, Valvert,

in five different countries at once. Its originality lied in the use of an all-new

plastic, P.E.T. (polyethylene teraphthalate), which is stronger and more elastic

than the PVC used since 1968. Besides, P.E.T. is recyclable.

By the end of 1997, the Group was present on every continent, and the purchase

of San Pellegrino gave it the leadership in the Italian market. In 1998, for the

first time in its history, Nestlé associated its name with a bottled water: Nestlé

Pure Life.

The brand was launched in Pakistan and soon appeared in Brazil, followed by

Argentina, Thailand, the Philippines, China, and Mexico in 2000. In 2001, India,

Jordan, and Lebanon followed, and in 2002, Egypt, Uzbekistan and the United

States.

Nestlé Pure Life is drinking water that has been treated and remineralized using

a standardized industrial process to ensure purity and quality and is marketed in

emerging countries.

A second product with the Nestlé name was launched in May 2000, this time in

six European countries: Nestlé Aquarel. A natural spring water currently from

nine different springs in France, Germany, Belgium, Hungary, Italy and Spain,

Nestlé Aquarel also uses the multi-source concept to satisfy new consumer

expectations, especially for water with a low mineral content that the whole family

can drink.

In April 2002, the Group changed its name to Nestlé Waters, a token of Nestlé's

decisive commitment to the bottled water market, which now represents 9% of its

sales. Today, Nestlé Waters is established in 130 countries and markets about

70 different brands. The Group is able to offer top quality brands and innovative

packaging to meet the individual needs of the water consumer all over the world,

whenever, wherever and however thanks to the wide variety of its offer in terms

of distribution and product.

Nestle Brands

What’s in the Nestlé name

The Nestlé brands are another strategic asset for Nestlé Waters. They originated

in the global need for a safe family drinking water with a pleasant taste,

affordable price and tailored to local preferences. This need gave rise to a new

multi-site production process for bottled water based on a simple idea: a single

brand of water produced at a variety of sites, thus reducing costly logistical,

warehousing and transport constraints – which are particularly high in the bottled

water sector – enabling consumers to enjoy the product at a more attractive price

under a strong brand identity.

Nestle Pure Life, Purity guaranteed

Launched in 1998 in Pakistan, Nestlé PURE LIFE has been the first illustration of

the multisite concept. First meant to answer to the needs of emergent countries'

people waiting for healthy water, Nestlé PURE LIFE is now present on every

continent in Canada, USA, Mexico, Argentina, South Africa, Saudi Arabia,

Jordan, Egypt, Lebanon, Turkey, Russia, Uzbekistan, Pakistan, China, Thailand,

Philippines, Bahrain and the United Arab Emirates. Launched in 2003 on north

American market, Nestlé PURE LIFE is to become the first global brand, the

most worldly distributed in 2010.

Product Packaging Sizes

Nestle has floated its water into market in different packaging sizes. Nestle Pure

Life is available in the size of 500 ml, 1 Liter, 1.5 liters and 3 liters pet bottles,

whereas the bulk market makes Home and Office (H&O) deliveries in 3 and 5

gallons water cartons. These are the packaging size available in the market by

nestle and they made their marketing strategies on the basis of these packaging

size, their marketing strategy and customers changes with the change in the

packaging size.

What is the Basic need they are satisfying?

The basic need which they are satisfying is the “Thirst”. Thirst was the need

identified by the marketers and then by using the concept of marketing that is to

satisfy the need in better way was implemented and then the final result was the

new product with the value addition that is the Nestle Pure life was developed

which is capturing good market share in Pakistan now.

From the research it has been showed that most of the population of Pakistan is

been using the tap water and satisfying their thirst with that tap water, but this is

the new product with value addition which is trying to capture the market of tap

water user with its value and benefits, even though the basic need what they are

satisfying same but the main thing is that the value they have added they have

find out new way of satisfying that particular need.

CompetitorsThey have two broad category of competitors, one are those which are producing

the same product and satisfying the same need those are all other bottled water

companies. While the others are those who are producing the substitute products

to satisfy same need. Let us discuss separately.

Competitor with same Product

There are 26 organizations working in Pakistan in the bottled water industry. All

these organizations are the competitors of Nestle Pure life. Nestle is the

commanding brand among all of them as it is haring the major portion of the

market. Nestlé’s Pure Life brand dominates the retail market with a share of 50

per cent. Other well known brands include Sparkletts of Hashwanis with a market

share of 12 per cent, BSW brand of M/s Wah Valley Corporation 5 per cent. The

rest of the market is in the hands of small players.

There are an estimated 20 brands in the H&O delivery segment of bottled

water. Nestle dominates this segment also with an estimated market share of

over 50 per cent. To expand its H&O water delivery business countrywide, Nestle

acquired major share holdings in both AVA and Fontallia in 2001. While AVA is a

major player in the branded bottled water category, both in PET and H&O

service, Fontallia enjoys strong holding in H&O service in Karachi. In addition,

the Jerry Cane segment makes home and office deliveries in Karachi.

This means that the major market of Pakistan is in the hand of Nestle and it is the

most popular brand of Pakistan in bottled water. This is a big real competitive

advantage for nestle, even that there are 26 competitors in market but nestle has

upper hand over all of them because of its “Brand awareness” and market share.

Only 3 companies are there who can give tough time to nestle because of its

market share, but for that they are required to be too much skillful in many things,

while other small companies are even not that fierce competitors for Nestle. So

among competition Nestle is at the top and winning the race right now.

Competitors with Substitute Product

We know that not importantly our main competitors lie among our same product

category but it is a big possibility that your competitor may lie among those who

are producing substitute product of your core product. And in this case of Nestle

this is quite evident that substitute product are really capturing the market now.

Substitute product includes all beverages other then bottled water those are Tap

water, Soft drinks (Pepsi Cola, Coca Cola), Juices (Nestle, Shezan, Country etc.)

Energy Drinks ( Blue OX etc), Milk and some others. They all are satisfying the

same need but each has its own value and what benefit the customer will prefer

he/she will go for that product, For example if a Person is thirsty and his

preference is Low Price, he will go for the tap water, of his preference is the

product which provides taste along with fulfilling the basic need of thirst her will

go for Soft drinks, if he prefer refreshment he will go for juices, if he want some

energy along with satisfying basic need of thirst he will go for energy drinks, and

if he want something good for health and also useful to satisfy thirst he/she will

be some cold milk. That is how these substitute product will capture the market

and are the competitors of Nestle. In this regards, soft drinks are the top most

competitors of Nestle Pure life and secondly it comes juices.

Value AdditionFor any new product the value addition is necessary, a new product only develop

and come into existence when we add some new value into the product which

was previously satisfying the same need. Same is been done by the Nestle as

they been the pioneer of Bottled water industry in Pakistan. They are the first

who introduced this packed water and the value which they have added is the

purity, the difference between the ordinary tap water and the Nestle Bottled water

is the Purity that is how they have added the value, we know that people are

really purity conscious and they are even willing to pay more prices if the are

getting pure water.

With every value addition we know that it increase the price of the product. And

Bottled water is Lot more expensive then the ordinary water but the value is the

key. Another value addition they have done is the packaging we know that the

value can be added either by changing or upgrading the product but it can also

be created by changing the packaging to the product. And they have presented

the water in a best way so that even we can carry it with ourselves and this is the

creation of value and it creates the utility for us that we can carry water with

ourselves because we cannot carry tap water with but we can carry this bottled

water with us.

So the major value additions are both with the product and with the packaging.

They both are combined together and results into a new value added product

with the new market.

Creating differentiation

Value added work is been done by everyone in the industry but what required is

the differentiation. Differentiation leads to the determination of brand that which

brand is the best. Differentiation is to provide that product or service which others

are not providing. These are called the Augmented Product or service.

Expected products/services are those which are expected by the customers

these products do not create differentiation. Now lets see how Nestle provide and

create differentiation.

Differentiation by Nestle Pure Life

They have been creating differentiation by providing augmentation to their

product. That augmentation is:

Augmentation in Nestle Pure Life

Nestle added some useful minerals into their water but these minerals are now

expected product, what is the augmentation they have created is the “Calorie

free Minerals”. These minerals are not been provided by the others uptill now and

that is the way of creating differentiation. They can even create positioning over

this attribute and can create new market where they will be in monopoly and that

market is of those people who are conscious about their health and fitness and

take care of calories taken. So this is the way through which Nestle pure life is

different from others and that is what differentiation demands to make your

product prominent among all the products of your competitors.

Segmentation of Market for Nestle Pure LifeNestle has segmented its market differently for their different Packaging of

product. Their positioning is same for both because the product is same but the

market is different on the basis of size. Because, one can carry 500 ml bottle with

him but not the 5-gallon carton, so it means that the market for both packaging is

different. Lets see segmentation of Nestle Pure life by dividing it into two

categories on the bases of its packaging sizes.

1. Segmentation for Bottled Water (0.5,1.0,1.5 Liters)

2. Segmentation for carton (4-5 gallons)

Segmentation for Bottled Water (0.5,1.0,1.5,3.0 Liters)

This included all the bottles of available sizes in market that are 0.5 liter to 3.0

liter. First let us differentiate the market for this type of packaging in broader

terminology.

Market Specification

The whole available market for this type of packaging are the out door users.

That is what the actual market available to us because no one will use these

bottled water at home. These bottles can only work for out door users. Now

among this available market we have to find out our target market by segmenting

the market and comparing the attributes of market and the product.

Basis of Segmentation

The basis of segmentation used for these sizes of Nestle Pure life are the

combination of both demographics and psychographics factors. These variables

are Age, Education, Income and Purity conscious People.

Age

Through the variable of age we have segmented the market into number of

markets and our target segment according to the age is from the age group of

late teen ages to the old ages. That would be from 18 to so on.

Education

Education is one of the key variables for our market segmentation as behavior of

the people changes with the education level and the market that we have

targeted is the market of literate people who knows the worth of Purity in their

lives. Illiterate person even if they have money they would not find any attraction

in this product but the educated people who know what purity means to their life

and health would certainly attract towards them and they will prefer to buy Nestle

pure life instead of ordinary tap water while walking roadside when they feel

thirsty for the sake of purity.

Income Level

Income level is another key factor during the segmentation of market. As income

level increase the luxuries of life going to increase and people comes towards the

quality with the increase in income level and become less price conscious. Our

segmented market on the basis of income level may be:

Low income

Low middle income

Middle income

High Middle income

High income

Our target market according to this aspect is the market of people whose family

income falls in the category of high income and high middle income and middle

income.

Purity Conscious people

This is the psychographics factor that we have added while our segmentation.

The people who are psychologically very much health and fitness conscious and

they care about the cleanliness and purity of every thing are among our target

market.

Our target Market

Among Out door users out target market is the market of those people who are

about 18 in their age and they have atleast basic education which let them know

the importance of quality in life and people with high profile of income and psycho

graphically they need to be Purity conscious. The people having all above

qualities is our target market for our brand Nestle Pure Life.

 

Segmentation for carton (4-5 gallons)

This included the product size of large carton of 4-5 gallons of water. First let us

once again differentiate the market for this type of packaging in broader

terminology.

Market Specification

The market available to us for this type of packaging is the indoor market. That

uses the product indoor and those are Offices and Home users. So the broader

market for this category is Home and Offices.

Basis of Segmentation

The basis of segmentation used for this size of Nestle Pure life are also

the combination of both demographics and psychographics factors. These

variables are Family size (Organization Size in term of Offices), Income Level

and Purity conscious People.

Family Size

Since our major market is Home and offices therefore for Home market the

Family size is the important demographic variable to identify the target segment.

Here we can divide family size into different categories.

Small families (Parents + 2 children)

Medium families (Parents + 3-5 Children)

Large Families (Parents + More then 5 Children)

Our Target families are Small families in particular while medium families in

general. Because for large families it is too difficult to afford such expensive

water for their drinking purpose because their water consumption is high and

mostly they are not interested in such luxuries this is been the general behavior

of these family sizes in Pakistan’s Society. That is why out target market is the

market of Small and medium families.

And for offices out target market are the medium level and large level

organization. According to the Government of Pakistan the medium organization

is that which has the labour force of more then 35 people.

Income Level

Income level as defined earlier is so important and it can divide into 5 different

categories as defined above and our target segment is the segment with High

and Middle high income for this size of Nestle Pure life. Here we have not added

Middle income for our potential target as they were there for our bottled water

because this packaging of water and use of this water at home is been

discourages at the homes of people with middle income, they will buy this water

when they are on road, in parks or during journey but they will not use it most of

the time for their daily use.

Purity Conscious People

This is the psychographics factor that we have added while our segmentation.

The people who are psychologically very much health and fitness conscious and

they care about the cleanliness and purity of every thing are among our target

market because only they will buy this expensive water for their daily drinking

usage.

Our target Market

Our target market among Offices are medium and large scale enterprises

including restaurants and for hour home market our target market is the segment

of those families with high and medium high income level with the small of

medium family size along with the psychographics attribute of being purity

conscious.

Positioning

They position there product on the basis of product attribute that is pure they say

that Nestle Pure life is a “Pure family water”. This is the positioning of the product

that is pure so they are creating perception in the mind of customer that the

product is pure and whoever wants to have purity in its drinking water should buy

Nestle Pure life. Not only the positioning jingle but the Brand Name itself is

positioning the product in the mind of customer.

The word “Family” in the jingle is actually positioning the nestle that it is not only

for the one person of the family, but it is the whole family drinking water because

purity is important for each and every person of the family.

Nestle Pure life - On the Positioning Map

On positioning Map Nestle Pure life comes at the place where quality is

high and the price is reasonably high. Because they are providing the value that

permit them to suggest that price because price is never of the product but it is

the price of the value added by the organization.

References

1.http://www.expertsadvisorycell.org/EAC_Publications/DigestofIndustrialSectors/Industrial%20Digest%202004/Bottled%20Water/Bottled%20Water.pdf

2. http://www.nestle-waters.com

3. http://www.nestle.com/

Product: Nestle Pure Life (Bottled Water)

Industry OverviewPakistan’s bottled water industry is a rapidly growing segment of the

beverages sector. The country’s market is comparatively very small on a global

scale and was estimated at 33 million litres a year by end of 1991. However, with

swift increase in the number of bottled water producers during the last three

years, the country’s market is estimated to have grown to 70 million litres with per

capita consumption reaching half a litre. The bottled water market is presently

growing at a robust rate of 40% per annum. According to a study compiled in

2001 by Zenith International, specialist consultants for Asia Bottled Water

Association (ABWA), Pakistan registered the fastest growth of 140% in 2000

amongst the countries in Asia and Middle East region.

There are around 26 players operating in the bottled water sector.

According to industry sources, the number of bottlers scales up well above 70

during summer season due to increased demand for drinking water in summer.

However, the much publicized laboratory report published by the Pakistan

Council of Research in Water Resources (PCRWR) after conducting a survey of

26 brands in the Rawalpindi and Islamabad region declaring that ‘all the 26

brands available in the market are contaminated while 10 of them are unsafe for

drinking’, forced the Pakistan Standards and Quality Control Authority (PSQCA)

to make it obligatory for the companies to obtain license from the authority before

commencing operation. A total of 18 companies have so far been registered by

the PSQCA.

THE BOTTLED WATER INDUSTRY OF PAKISTAN

GLOBAL SCENARIO

‘Bottled Water’ is considered to be the smallest yet fastest growing and

most dynamic segment of the beverage industry. The world bottled water market

represents an annual volume of 89 billion litres and is estimated to be worth US$

22 billion. Western Europeans are the world’s major bottled water consumers

with per capita consumption of 85 litres, 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% per annum.

Global Bottled Water Market

The world total bottled water consumption grew from 19.186 billion gallons

in 1996 to 30.103 billion gallons in 2001registering a compound annual growth

rate of 9.4% during the period. The U.S., Mexico and Western European

countries are the leading bottled water consuming countries. However, Asia and

the Pacific regions have witnessed a remarkable growth in consumption during

the last five years. Table below depicts ten leading countries by consumption

along with CAGR during1996 – 2001:

ASIA – The fastest Growing Bottled Water Market

The bottled water industry is one of the fastest growing industries in Asia.

Zenith reports stunning growth of 45% since 1998 across 50 countries in Asia,

Middle East and North Africa. Total sales reached 25,270 million litres, more than

double the level of 1995. The region now represents 23% of global consumption

with market value at US$ 4,700 million. According to Zenith Research and

Development Director, ‘the Asian Market is still very young and it is anticipated

that

volumes will double again to over 50 million litres by 2005.

Per Capita Consumption of Leading Countries

Per Capita Consumption by leading countries during the years 1996 and

2001 is depicted in table below. It is evident from the table that West European

nations have the highest per capita consumption of bottled water. In 2001, global

average of per capita consumption of bottled water stood at 4.9 gallons against

3.3 in 1996.

Major Global Players

The bottled water market is a lucrative one, dominated by Swiss food giant

Nestlé, with a 16.8 per cent share, and France's Danone, which controls about

14 per cent. Nestle has found a growing market niche for bottled water in non

industrialized and developing countries where safe tap water is rare. In these

countries, its main product line is Nestle pure, a low-cost purified tap water with

added minerals. Nestle Pure Life has sold well in Pakistan and Brazil and have

some other bottled water products in China, Vietnam, Thailand, and Mexico.

Besides Nestle, giants of the global food and beverage industry have also

become purveyors of bottled water, including Coca-Cola, Pepsi and Proctor &

Gamble. With the entry of the big soft drink giants, market growth is expected to

accelerate further. PepsiCo is currently leading the way with its Aquafina line,

while Coca-Cola has launched a North American line under the name Dasani in

addition to its already established international label, Bon Aqua.

STRUCTURE OF PAKISTAN BOTTLED WATER INDUSTRY

Pakistan’s bottled water market comprises of two main segments i.e. the

retail market and the bulk market. The retail market supplies water in 0.5, 1.5, 3.0

and 5.0 litres capacity PET bottles whereas the bulk market makes Home and

Office (H&O) deliveries in 3 and 5 gallons made of Polycarbonate. There are

around 26 players operating in the bottled water sector. However, according to

industry’s sources, this number reaches well above 70 when small unknown

operators crop up during summer owing largely to the lax regulation and

ineffective monitoring of the sector. Nestlé’s Pure Life brand dominates the retail

market with a share of 50 per cent. Other well known brands include Sparkletts of

Hashwanis with a market share of 12 per cent, BSW brand of M/s Wah Valley

Corporation 5 per cent. The rest of the market is in the hands of small players.

There are an estimated 20 brands in the H&O delivery segment of bottled

water. Nestle dominates this segment also with an estimated market share of

over 50 per cent. To expand its H&O water delivery business countrywide, Nestle

acquired major share holdings in both AVA and Fontallia in 2001. While AVA is a

major player in the branded bottled water category, both in PET and H&O

service, Fontallia enjoys strong holding in H&O service in Karachi. In addition,

the Jerry Cane segment makes home and office deliveries in Karachi. This

segment is mostly unorganized supplying low quality water.

BOTTLED WATER MANUFACTURERS

Some of the well-known bottled water manufacturers are listed below

alongwith their brand names, installed capacities and production during 2002:

TARIFF STRUCTURE

The tariff structure for bottled / mineral water is covered under chapter 22

under the H.S. Code 22.01. Following is the tariff structure on various types of

bottled water:

Profit Margins in the Bottled Water Business

At average, it costs the bottled water companies approximately Rs 150 per

carton (12 bottles) of 1.5 litres capacity bottles. The companies average selling

price ranges between Rs 178.0–180.0 per carton including General Sales Tax

plus other taxes (total taxes 18.5 %). The profit margin for the companies at

average ranges between Rs 8.0 – 10.0 per carton. Taking into account the

market price of Rs 22.0 for 1.5 litre bottle, the price of carton containing 12

bottles comes to Rs 264/- giving a margin of Rs 80.0– 85.0 to the middle man. It

is evident from the approximate calculation that the middle man is making huge

profits from the bottled water business which can safely be assumed between Rs

50.0 – 55.0 per carton after factoring out the cost of transportation at the rate of

Rs 5.0 and retailers margin at the rate of 12.0 per carton.

The Quality Issue of Bottled Water

The bacterial and chemical contamination associated with bottled water is

a major global concern and has sparked many controversies even in the US and

Europe. In Pakistan, the issue of contaminated bottled water came to the fore

when Pakistan Council of Research in Water Resources (PCRWR) claimed in its

report that all the major brands available on the market were contaminated and

10 of them not fit for human consumption after conducting a survey in the

Rawalpindi-Islamabad region where it randomly collected 41 water samples of 26

brands from public utility stores and shops.

The source plays a vital role in the in the bottlers ability to produce the

desired quality of bottled water. Spring water and purified water are the two major

types of bottled water sold on the market around the world. While these two

products are generally viewed as high quality, they differ significantly in the

treatment required to obtain the end product.

Regardless of the source, the water must be inspected, tested and

certified by the authorities concerned. In addition, amounts of organics and in-

organics as well as the quantity of Total Dissolved Solids (TDS) help determine if

the source is practicable. A challenge for spring water bottlers is that the water

source must be an actual spring that can supply and sustain the quality and

quantity of water required. Purified water is a highly treated product and offers

the most consistent and high quality water to consumers worldwide. The U.S.

based Natural Resources Defense Council (NRDC) in its march 1999 study

concluded that ‘ yet in contrast to the market image of ‘pure spring water’ that is

projected by the industry, bottled water is not always safer than tap water and in

some case it is less so’. The study claimed that ‘one-third of the 103 brands of

bottled water it studied contained levels of contamination, including traces of

arsenic and E.coli. One-quarter of all bottled water is actually taken from the tap,

though it is further processed and purified to some degree, and in many

countries, bottled water itself is subject to less rigorous testing and lower purity

standards than tap water’. ‘One brand of 'spring water’, reported the NRDC ...

actually came from a well in an industrial facility's parking lot, near a hazardous

waste dump, and periodically was contaminated with industrial chemicals at

levels above FDA standards’. In terms of nutritional value, according to the

United Nations Food and Agricultural Organization (FAO), bottled water is no

better than tap water. The idea that bottled "spring" or "natural" water contains

near-magical qualities and great nutritive value is "false," declares a 1997 FAO

study on "Human Nutrition in the Developing World." "Bottled water may contain

small amounts of minerals such as calcium, magnesium, and fluoride, but so

does tap-water from many municipal water supplies."

All this reflects global controversies surrounding the quality, purity and

safety of bottled water. The issue of sub-standard quality of bottled water could

be more pronounced in the developing countries. The lax regulation and weak

monitoring infrastructure in countries like Pakistan makes the bottled water sector

extremely susceptible to the unscrupulous bottlers. The PCRWR report is an

indication of situation prevailing in the bottled water sector of Pakistan. The

sensitivity of the matter, keeping in view that water is the basic human necessity

and has a major bearing on the health of the society as a whole, be it the future

generation of the country or the major consumer community including

participants of seminars/conferences, foreigners, traveling passengers,

restaurants and residents of lodges and rest houses, forced the Pakistan

Standards and Quality Control Authority (PSQCA) to step into the scene and

formulate measures for strict monitoring of this vital sector.

The quality standards for bottled water have recently been formulated by the

PSQCA. Water standards PSS No 2102 for natural mineral water and PSS No

4639 for bottled drinking water have been declared mandatory for mineral and

bottled water manufacturers under the authority of PSQCA Act IV of 1996 of the

Government vide SRO: 638 (1)/2000,dated September 12, 2001.

The water quality standards are mandatory, and have become legally

enforceable from December 1. After December 1, all brands of bottled water

have to comply with the stipulated standards, failing which legal action could be

initiated against the non- complying bottled water manufacturers. The PSQC has

now made it obligatory for the companies to obtain license from the authority

before commencing operation. A total of 18 companies have so far been

registered by the PSQCA.

ORIGINS AND CATEGORIES OF BOTTLED WATER

Bottled Water is classified according to its origin. Within the

noncarbonated bottled water market, there are two primary products – Spring

Water and Purified Water. These two products account for the majority of the

industry’s sales and consumption. In addition, Artesian, Drinking, Mineral and

Well waters are also bottled and sold in the market but represent a small sales

percentage. While the label on the bottle does give some basic information

required by the monitoring authorities, the average consumer is generally

unaware of what type of water is inside the bottle. The US Food and Drug

Administration (FDA) has defined the following types of bottled water:

Artesian water:

Water from a well that taps a confined aquifer (a water-bearing

underground layer of rock or sand) in which the water level stands at some

height above the top of the aquifer.

Drinking water:

Water that is sold for human consumption in sanitary containers and

contains no added sweeteners or chemical additives. It may be rebottled tap

water treated at a municipal source and retreated by simple filtration.

Mineral water:

It is distinguished by a constant level and relative proportion of minerals

and trace elements (not less than 250 parts per million (ppm) of Total Dissolved

Solids TDS). These minerals and elements must occur naturally from the water

sources and cannot be added at the time of bottling.

Purified water:

Water that has been produced by distillation, de-ionization, reverse

osmosis (RO) or another process and meets the definition of purified water.

Spring water:

Water derived from an underground source from which water flows

naturally to the surface of the Earth. Spring water must be collected only at the

spring or through a borehole tapping the underground spring. Spring water can

be collected with an external force, but must be from the same underground

stratum as the spring and must have all the physical properties, composition and

quality before treatment.

The Origins of Bottled Water - Schematic

Bottled water may be used as an ingredient in beverages, such as diluted

juices or flavored bottled waters. However, beverages labeled as containing

"sparkling water," "seltzer water," "soda water," "tonic water," or "club soda" are

not included as bottled water under the FDA's regulations, because these

beverages have historically been considered soft drinks.

TREATMENT METHODS OF BOTTLED WATER

Bottled water is treated by different methods. Bottled water that has been

treated by distillation, reverse osmosis, or other suitable process and that meets

the definition of "purified water" can be labeled as "purified water." Some of these

methods are briefly described below:

Distillation:

In this process, water is turned into a vapor. Since minerals are too heavy

to vaporize, they are left behind, and the vapors are condensed into water again.

Reverse Osmosis:

Water is forced through membranes to remove minerals in the water.

Absolute 1-micron filtration:

Water flows through filters that remove particles larger than one micron in

size, such as Cryptosporidium, a parasitic protozoan.

Ozonation:

Bottlers of all types of waters typically use ozone gas, an antimicrobial

agent, to disinfect the water instead of chlorine, since chlorine can leave residual

taste and odor to the water.

RECOMMENDATIONS

• The PSQCA should set strict limits or industry guidelines (equivalent to

international standards) for contaminants of concern in bottled water,

including arsenic, bacteria, E.coli and other parasites and pathogens, and

synthetic organic chemicals, including chemicals such as phthalate, which

can leach from plastic.

• The PSQCA should adopt rules for bottled water testing, to control microbial

and chemical contaminants, to protect water sources, to ensure the reporting

of test results and violations to concerned federal authorities, to certify

operators of water bottling plants, and to require the use of certified

laboratories. In addition, PSQCA should do monitoring of the quality of

bottled water sold across the nation and should publicly release the results.

• The bottlers, keeping to their words that bottle water is so pure, should

disclose contaminants, the exact water source, treatment, and other key

information on the bottle labels. This would not only prove that the image

they are projecting for their bottled water is true but also satisfy the right-toknow

requirements of the consumer.

• The PSQCA bottled water program must be better funded. A one rupee per

bottle fee on bottled water needs to be charged to fund regulatory programs,

testing, and enforcement of standards.

Company ProfileHistory

1866-1905

The key factor, which drove the early history of the enterprise that would become

The Nestlé Company, was Henri Nestlé's search for a healthy, economical

alternative to breastfeeding for mothers who could not feed their infants at the

breast.

In the mid-1860s Nestlé, a trained pharmacist, began experimenting with various

combinations of cow's milk, wheat flour and sugar in an attempt to develop an

alternative source of infant nutrition for mothers who were unable to breast feed.

His ultimate goal was to help combat the problem of infant mortality due to

malnutrition.

He called the new product Farine Lactée Henri Nestlé. Nestlé's first customer

was a premature infant who could tolerate neither his mother's milk nor any of the

conventional substitutes, and had been given up for lost by local physicians.

People quickly recognized the value of the new product, after Nestlé's new

formula saved the child's life and within a few years, Farine Lactée Nestlé was

being marketed in much of Europe.

Henri Nestlé also showed early understanding of the power of branding. He had

adopted his own coat of arms as a trademark; in his German dialect, Nestlé

means 'little nest'. One of his agents suggested that the nest could be exchanged

for the white cross of the Swiss flag. His response was firm: "I regret that I cannot

allow you to change my nest for a Swiss cross .... I cannot have a different

trademark in every country; anyone can make use of a cross, but no-one else

may use my coat of arms."

Meanwhile, the Anglo-Swiss Condensed Milk Company, founded in 1866 by

Americans Charles and George Page, broadened its product line in the mid-

1870s to include cheese and infant formulas. The Nestlé Company, which had

been purchased from Henri Nestlé by Jules Monnerat in 1874, responded by

launching a condensed milk product of its own. The two companies remained

fierce competitors until their merger in 1905.

Some other important firsts occurred during those years. In 1875 Vevey resident

Daniel Peter figured out how to combine milk and cocoa powder to create milk

chocolate. Peter, a friend and neighbor of Henri Nestlé, started a company that

quickly became the world's leading maker of chocolate and later merged with

Nestlé. In 1882 Swiss miller Julius Maggi created a food product utilizing

legumes that was quick to prepare and easy to digest.

His instant pea and bean soups helped launch Maggi & Company. By the turn of

the century, his company was producing not only powdered soups, but also

bouillon cubes, and sauces and flavorings.

1905-1918

The Company formed by the 1905 merger was called the Nestlé and Anglo-

Swiss Milk Company. By the early 1900s, the Company was operating factories

in the United States, Britain, Germany and Spain. In 1904, Nestlé added

chocolate to its range of food products after reaching an agreement with the

Swiss General Chocolate Company.

Condensed-milk exports increased rapidly as the Company replaced sales

agents with local subsidiary companies. In 1907, the Company began full-scale

manufacturing in Australia, its second-largest export market. Warehouses were

built in Singapore, Hong Kong, and Bombay to supply the rapidly growing Asian

markets.

Most production facilities remained in Europe, however, and the onset of World

War I brought severe disruptions. Acquiring raw materials and distributing

products became increasingly difficult. Fresh-milk shortages throughout Europe

forced factories to sell almost all their supplies to meet the needs of local towns.

Nevertheless, the war created tremendous new demand for dairy products,

largely in the form of government contracts. To keep up, Nestlé purchased

several existing factories in the United States. By war's end, the Company had

40 factories, and its world production had more than doubled since 1914.

1918-1938

The end of World War I brought with it a crisis for Nestlé. Government contracts

dried up following the cessation of hostilities, and civilian consumers who had

grown accustomed to condensed and powdered milk during the war switched

back to fresh milk when it became available again. In 1921, the Company

recorded its first loss. Rising prices for raw materials, the worldwide postwar

economic slowdown, and deteriorating exchange rates deepened the gloom.

Nestlé's management responded quickly, bringing in Swiss banking expert Louis

Dapples to reorganize the Company. He streamlined operations to bring

production in line with sales and reduced the Company's outstanding debt.

The 1920s also saw Nestlé's first expansion beyond its traditional product line.

The manufacture of chocolate became the Company's second most important

activity. New products appeared steadily: malted milk, a powdered beverage

called Milo, a powdered buttermilk for infants, and, in 1938, Nescafé.

The Brazilian Coffee Institute first approached Louis Dapples in 1930, seeking

new products to reduce Brazil's large coffee surplus. Eight years of research

produced a soluble powder that revolutionized coffee-drinking habits worldwide.

Nescafé became an instant success and was followed in the early 1940s by

Nestea.

1938-1944

The effects of the onset of World War II were felt immediately by Nestlé. Profits

dropped from $20 million in 1938 to $6 million in 1939. Neutral Switzerland

became increasingly isolated in a Europe at war, and the Company transferred

many of its executives to offices in Stamford, Connecticut.

The first truly global conflict ended forever the traditional Company structure. To

overcome distribution problems in Europe and Asia, factories were established in

developing countries, particularly in Latin America.

Ironically, World War II helped speed the introduction of the Company's newest

product, Nescafé. After the United States entered the war, Nescafé became a

staple beverage of American servicemen serving in Europe and Asia. Annual

production levels reached one million cases by 1943.

As in World War I, production and sales rose in the wartime economy: Nestlé's

total sales jumped from $100 million in 1938 to $225 million in 1945. As the end

of the war approached, Nestlé executives found themselves unexpectedly

heading up a worldwide coffee concern, as well a company built upon Nestlé's

more traditional businesses.

1944-1975

The close of World War II marked the beginning of the most dynamic phase of

Nestlé's history. Throughout this period, Nestlé's growth was based on its policy

of diversifying within the food sector to meet the needs of consumers. Dozens of

new products were added as growth within the Company accelerated and

outside companies were acquired.

In 1947, Nestlé merged with Alimentana S.A., the manufacturer of Maggi

seasonings and soups, becoming Nestlé Alimentana Company. The acquisition

of Crosse & Blackwell, the British manufacturer of preserves and canned foods,

followed in 1950, as did the purchase of Findus frozen foods (1963), Libby's fruit

juices (1971) and Stouffer's frozen foods (1973).

Meanwhile, Nescafe continued its astonishing rise. From 1950 to 1959, sales of

instant coffee nearly tripled, and from 1960 to 1974, they quadrupled. The

Company's total sales doubled twice in the 15 years after World War II. The

development of freeze-drying led to the introduction, of Taster's Choice instant

coffee, in 1966.

Finally, Nestlé management reached the decision to diversify for the first time

outside the food industry. In 1974, the Company became a major shareholder in

L'Oréal, one of the world's leading makers of cosmetics

1975 - 1981

After the agreement with L'Oréal in 1974, Nestlé's overall position changed

rapidly. For the first time since the 1920s, the Company's economic situation

deteriorated as the price of oil rose and growth in the industrialized countries

slowed. In addition, foreign exchange rates deteriorated with the French franc,

dollar, pound sterling, and mark all losing value relative to the Swiss franc.

Finally, between 1975 and 1977, the price of coffee beans quadrupled, and the

price of cocoa tripled. As in 1921, the Company was forced to respond quickly to

a radically changed marketplace.

Nestlé's rapid growth in the developing world partially offset a slowdown in the

Company's traditional markets, but it also carried with it the risks associated with

unstable political and economic conditions. To maintain a balance, Nestlé made

its second venture outside the food industry by acquiring Alcon Laboratories,

Inc., a U.S. manufacturer of pharmaceutical and ophthalmic products.

Taking such a step in a time of increased competition and shrinking profit

margins required boldness and vision. Even more than the L'Oréal move, Alcon

represented a leap into unknown waters for Nestlé. But, as Group Chairman

Pierre Liotard-Vogt noted, "Today we find ourselves with a very wide range of

activities, all of which have one thing in common: they all contribute to satisfying

the requirements of the human body in various ways."

1981 - 1995

Under a new Chief Executive Officer, Helmut Maucher, Nestlé approached the

1980s with a renewed flexibility and determination to evolve. The Company's

strategy for this period was twofold: improve its financial situation through internal

adjustments and divestments, and continue its policy of strategic acquisitions.

Thus, between 1980 and 1984, the Company divested a number of non-strategic

or unprofitable businesses. At the same time, Nestlé managed to put an end to a

serious controversy over its marketing of infant formula in the Third World. This

debate had led to a boycott of Nestlé products by certain lay and religious

organizations. This issue is still alive in some quarters, but there is no longer any

significant boycott activity.

In 1984, Nestlé's improved bottom line allowed the Company to launch a new

round of acquisitions, including a public offer of $3 billion for the American food

giant Carnation. At the time, the takeover, sealed in 1985, was one of the largest

in the history of the food industry.

1996-future

The first half of the 1990s proved to be a favorable time for Nestlé: trade barriers

crumbled and world economic markets developed into a series of more or less

integrated trading areas. The opening of Central and Eastern Europe, as well as

China, and a general trend towards liberalization of direct foreign investment was

good news for a company with interests as far-flung and diverse as Nestlé. While

progress since then has not been as encouraging, the overall trends remain

positive.

Consolidation since 1996 has been demonstrated by the acquisition outright of

the Italian mineral water concern San Pellegrino (1997), the acquisition of

Spillers Petfoods of the UK (1998), and also with the decision to divest the

Findus brand in order to concentrate on high added-value frozen food products

(1999). Since then, Ralston Purina was acquired (2002) and the petcare

business is now joint world leader and known as Nestlé Purina PetCare. In the

same year, the former Perrier Vittel water business was re-named Nestlé Waters,

recognizing the fact that the dynamic bottled water business accounts for a

growing share of Group sales.

Nestlé opened the 20th century by merging with the Anglo-Swiss Condensed

Milk Company to broaden its product range and widen its geographical scope. In

the new millennium, Nestlé is the undisputed leader in the food industry, with

more than 470 factories around the world and sales of more than CHF 81 billion.

In July 2000, Nestlé launched a Group-wide initiative called GLOBE (Global

Business Excellence), aimed at harmonizing and simplifying business process

architecture; enabling Nestlé to realize the advantages of a global leader while

minimizing the drawbacks of size.

There have also been two major acquisitions in North America, both in 2002: in

July, Nestlé announced that the U.S. ice cream business was to be merged into

Dreyer's, and in August, a USD 2.6bn acquisition was announced of Chef

America, Inc. , a leading U.S.-based hand-held frozen food product business.

The Company's strategy will continue to be guided by several fundamental

principles. Nestlé's existing products will grow through innovation and renovation

while maintaining a balance in geographic activities and product lines. Long-term

potential will never be sacrificed for short-term performance. The Company's

priority will be to bring the best and most relevant products to people, wherever

they are, whatever their needs, throughout their lives.

Our BrandsQuality is the essential ingredient in all of our brands and the reason why millions

of people choose Nestlé products every day. Our consumers have come to trust

in Nestlé’s commitment to excellence and turn to Nestlé brands to maintain

nutritional balance in a fast paced world

Baby Foods

“Nutrition that suits the needs of your baby.”

Dairy Products

“From shelf-stable solutions to chilled dairy. “

Breakfast Cereals

“Start your day out healthy with Nestlé Breakfast Cereals.”

Ice Cream

“Discover the world of delicious Nestlé Ice Cream.”

Chocolate & Confectionery

“Delighting the senses with a range of tastes and textures”

Prepared Foods

“Preparing well-balanced meals is a snap with Nestlé. “

Beverages

“Drink to a healthy, active life with Nestlé beverages.”

Foodservices

“Providing food and beverage professionals with a wide range of solutions.”

Pet Care

“Nutrition, health and wellness for your pet.”

Bottled Water

“Capturing nature in its purest form.”

About Bottled Water

Nestlé began its entry into the water business in 1969 with a 30% stake in the

owners of the Société Générale des Eaux Minérales de Vittel. It acquired a

controlling interest in SGEMV in January 1992, and went on in May of the same

year to buy out the entire Perrier Group.

In 1992, Nestlé was the first company to dare to launch a mineral water, Valvert,

in five different countries at once. Its originality lied in the use of an all-new

plastic, P.E.T. (polyethylene teraphthalate), which is stronger and more elastic

than the PVC used since 1968. Besides, P.E.T. is recyclable.

By the end of 1997, the Group was present on every continent, and the purchase

of San Pellegrino gave it the leadership in the Italian market. In 1998, for the

first time in its history, Nestlé associated its name with a bottled water: Nestlé

Pure Life.

The brand was launched in Pakistan and soon appeared in Brazil, followed by

Argentina, Thailand, the Philippines, China, and Mexico in 2000. In 2001, India,

Jordan, and Lebanon followed, and in 2002, Egypt, Uzbekistan and the United

States.

Nestlé Pure Life is drinking water that has been treated and remineralized using

a standardized industrial process to ensure purity and quality and is marketed in

emerging countries.

A second product with the Nestlé name was launched in May 2000, this time in

six European countries: Nestlé Aquarel. A natural spring water currently from

nine different springs in France, Germany, Belgium, Hungary, Italy and Spain,

Nestlé Aquarel also uses the multi-source concept to satisfy new consumer

expectations, especially for water with a low mineral content that the whole family

can drink.

In April 2002, the Group changed its name to Nestlé Waters, a token of Nestlé's

decisive commitment to the bottled water market, which now represents 9% of its

sales. Today, Nestlé Waters is established in 130 countries and markets about

70 different brands. The Group is able to offer top quality brands and innovative

packaging to meet the individual needs of the water consumer all over the world,

whenever, wherever and however thanks to the wide variety of its offer in terms

of distribution and product.

Nestle Brands

What’s in the Nestlé name

The Nestlé brands are another strategic asset for Nestlé Waters. They originated

in the global need for a safe family drinking water with a pleasant taste,

affordable price and tailored to local preferences. This need gave rise to a new

multi-site production process for bottled water based on a simple idea: a single

brand of water produced at a variety of sites, thus reducing costly logistical,

warehousing and transport constraints – which are particularly high in the bottled

water sector – enabling consumers to enjoy the product at a more attractive price

under a strong brand identity.

Nestle Pure Life, Purity guaranteed

Launched in 1998 in Pakistan, Nestlé PURE LIFE has been the first illustration of

the multisite concept. First meant to answer to the needs of emergent countries'

people waiting for healthy water, Nestlé PURE LIFE is now present on every

continent in Canada, USA, Mexico, Argentina, South Africa, Saudi Arabia,

Jordan, Egypt, Lebanon, Turkey, Russia, Uzbekistan, Pakistan, China, Thailand,

Philippines, Bahrain and the United Arab Emirates. Launched in 2003 on north

American market, Nestlé PURE LIFE is to become the first global brand, the

most worldly distributed in 2010.

Product Packaging Sizes

Nestle has floated its water into market in different packaging sizes. Nestle Pure

Life is available in the size of 500 ml, 1 Liter, 1.5 liters and 3 liters pet bottles,

whereas the bulk market makes Home and Office (H&O) deliveries in 3 and 5

gallons water cartons. These are the packaging size available in the market by

nestle and they made their marketing strategies on the basis of these packaging

size, their marketing strategy and customers changes with the change in the

packaging size.

What is the Basic need they are satisfying?

The basic need which they are satisfying is the “Thirst”. Thirst was the need

identified by the marketers and then by using the concept of marketing that is to

satisfy the need in better way was implemented and then the final result was the

new product with the value addition that is the Nestle Pure life was developed

which is capturing good market share in Pakistan now.

From the research it has been showed that most of the population of Pakistan is

been using the tap water and satisfying their thirst with that tap water, but this is

the new product with value addition which is trying to capture the market of tap

water user with its value and benefits, even though the basic need what they are

satisfying same but the main thing is that the value they have added they have

find out new way of satisfying that particular need.

CompetitorsThey have two broad category of competitors, one are those which are producing

the same product and satisfying the same need those are all other bottled water

companies. While the others are those who are producing the substitute products

to satisfy same need. Let us discuss separately.

Competitor with same Product

There are 26 organizations working in Pakistan in the bottled water industry. All

these organizations are the competitors of Nestle Pure life. Nestle is the

commanding brand among all of them as it is haring the major portion of the

market. Nestlé’s Pure Life brand dominates the retail market with a share of 50

per cent. Other well known brands include Sparkletts of Hashwanis with a market

share of 12 per cent, BSW brand of M/s Wah Valley Corporation 5 per cent. The

rest of the market is in the hands of small players.

There are an estimated 20 brands in the H&O delivery segment of bottled

water. Nestle dominates this segment also with an estimated market share of

over 50 per cent. To expand its H&O water delivery business countrywide, Nestle

acquired major share holdings in both AVA and Fontallia in 2001. While AVA is a

major player in the branded bottled water category, both in PET and H&O

service, Fontallia enjoys strong holding in H&O service in Karachi. In addition,

the Jerry Cane segment makes home and office deliveries in Karachi.

This means that the major market of Pakistan is in the hand of Nestle and it is the

most popular brand of Pakistan in bottled water. This is a big real competitive

advantage for nestle, even that there are 26 competitors in market but nestle has

upper hand over all of them because of its “Brand awareness” and market share.

Only 3 companies are there who can give tough time to nestle because of its

market share, but for that they are required to be too much skillful in many things,

while other small companies are even not that fierce competitors for Nestle. So

among competition Nestle is at the top and winning the race right now.

Competitors with Substitute Product

We know that not importantly our main competitors lie among our same product

category but it is a big possibility that your competitor may lie among those who

are producing substitute product of your core product. And in this case of Nestle

this is quite evident that substitute product are really capturing the market now.

Substitute product includes all beverages other then bottled water those are Tap

water, Soft drinks (Pepsi Cola, Coca Cola), Juices (Nestle, Shezan, Country etc.)

Energy Drinks ( Blue OX etc), Milk and some others. They all are satisfying the

same need but each has its own value and what benefit the customer will prefer

he/she will go for that product, For example if a Person is thirsty and his

preference is Low Price, he will go for the tap water, of his preference is the

product which provides taste along with fulfilling the basic need of thirst her will

go for Soft drinks, if he prefer refreshment he will go for juices, if he want some

energy along with satisfying basic need of thirst he will go for energy drinks, and

if he want something good for health and also useful to satisfy thirst he/she will

be some cold milk. That is how these substitute product will capture the market

and are the competitors of Nestle. In this regards, soft drinks are the top most

competitors of Nestle Pure life and secondly it comes juices.

Value AdditionFor any new product the value addition is necessary, a new product only develop

and come into existence when we add some new value into the product which

was previously satisfying the same need. Same is been done by the Nestle as

they been the pioneer of Bottled water industry in Pakistan. They are the first

who introduced this packed water and the value which they have added is the

purity, the difference between the ordinary tap water and the Nestle Bottled water

is the Purity that is how they have added the value, we know that people are

really purity conscious and they are even willing to pay more prices if the are

getting pure water.

With every value addition we know that it increase the price of the product. And

Bottled water is Lot more expensive then the ordinary water but the value is the

key. Another value addition they have done is the packaging we know that the

value can be added either by changing or upgrading the product but it can also

be created by changing the packaging to the product. And they have presented

the water in a best way so that even we can carry it with ourselves and this is the

creation of value and it creates the utility for us that we can carry water with

ourselves because we cannot carry tap water with but we can carry this bottled

water with us.

So the major value additions are both with the product and with the packaging.

They both are combined together and results into a new value added product

with the new market.

Creating differentiation

Value added work is been done by everyone in the industry but what required is

the differentiation. Differentiation leads to the determination of brand that which

brand is the best. Differentiation is to provide that product or service which others

are not providing. These are called the Augmented Product or service.

Expected products/services are those which are expected by the customers

these products do not create differentiation. Now lets see how Nestle provide and

create differentiation.

Differentiation by Nestle Pure Life

They have been creating differentiation by providing augmentation to their

product. That augmentation is:

Augmentation in Nestle Pure Life

Nestle added some useful minerals into their water but these minerals are now

expected product, what is the augmentation they have created is the “Calorie

free Minerals”. These minerals are not been provided by the others uptill now and

that is the way of creating differentiation. They can even create positioning over

this attribute and can create new market where they will be in monopoly and that

market is of those people who are conscious about their health and fitness and

take care of calories taken. So this is the way through which Nestle pure life is

different from others and that is what differentiation demands to make your

product prominent among all the products of your competitors.

Segmentation of Market for Nestle Pure LifeNestle has segmented its market differently for their different Packaging of

product. Their positioning is same for both because the product is same but the

market is different on the basis of size. Because, one can carry 500 ml bottle with

him but not the 5-gallon carton, so it means that the market for both packaging is

different. Lets see segmentation of Nestle Pure life by dividing it into two

categories on the bases of its packaging sizes.

1. Segmentation for Bottled Water (0.5,1.0,1.5 Liters)

2. Segmentation for carton (4-5 gallons)

Segmentation for Bottled Water (0.5,1.0,1.5,3.0 Liters)

This included all the bottles of available sizes in market that are 0.5 liter to 3.0

liter. First let us differentiate the market for this type of packaging in broader

terminology.

Market Specification

The whole available market for this type of packaging are the out door users.

That is what the actual market available to us because no one will use these

bottled water at home. These bottles can only work for out door users. Now

among this available market we have to find out our target market by segmenting

the market and comparing the attributes of market and the product.

Basis of Segmentation

The basis of segmentation used for these sizes of Nestle Pure life are the

combination of both demographics and psychographics factors. These variables

are Age, Education, Income and Purity conscious People.

Age

Through the variable of age we have segmented the market into number of

markets and our target segment according to the age is from the age group of

late teen ages to the old ages. That would be from 18 to so on.

Education

Education is one of the key variables for our market segmentation as behavior of

the people changes with the education level and the market that we have

targeted is the market of literate people who knows the worth of Purity in their

lives. Illiterate person even if they have money they would not find any attraction

in this product but the educated people who know what purity means to their life

and health would certainly attract towards them and they will prefer to buy Nestle

pure life instead of ordinary tap water while walking roadside when they feel

thirsty for the sake of purity.

Income Level

Income level is another key factor during the segmentation of market. As income

level increase the luxuries of life going to increase and people comes towards the

quality with the increase in income level and become less price conscious. Our

segmented market on the basis of income level may be:

Low income

Low middle income

Middle income

High Middle income

High income

Our target market according to this aspect is the market of people whose family

income falls in the category of high income and high middle income and middle

income.

Purity Conscious people

This is the psychographics factor that we have added while our segmentation.

The people who are psychologically very much health and fitness conscious and

they care about the cleanliness and purity of every thing are among our target

market.

Our target Market

Among Out door users out target market is the market of those people who are

about 18 in their age and they have atleast basic education which let them know

the importance of quality in life and people with high profile of income and psycho

graphically they need to be Purity conscious. The people having all above

qualities is our target market for our brand Nestle Pure Life.

 

Segmentation for carton (4-5 gallons)

This included the product size of large carton of 4-5 gallons of water. First let us

once again differentiate the market for this type of packaging in broader

terminology.

Market Specification

The market available to us for this type of packaging is the indoor market. That

uses the product indoor and those are Offices and Home users. So the broader

market for this category is Home and Offices.

Basis of Segmentation

The basis of segmentation used for this size of Nestle Pure life are also

the combination of both demographics and psychographics factors. These

variables are Family size (Organization Size in term of Offices), Income Level

and Purity conscious People.

Family Size

Since our major market is Home and offices therefore for Home market the

Family size is the important demographic variable to identify the target segment.

Here we can divide family size into different categories.

Small families (Parents + 2 children)

Medium families (Parents + 3-5 Children)

Large Families (Parents + More then 5 Children)

Our Target families are Small families in particular while medium families in

general. Because for large families it is too difficult to afford such expensive

water for their drinking purpose because their water consumption is high and

mostly they are not interested in such luxuries this is been the general behavior

of these family sizes in Pakistan’s Society. That is why out target market is the

market of Small and medium families.

And for offices out target market are the medium level and large level

organization. According to the Government of Pakistan the medium organization

is that which has the labour force of more then 35 people.

Income Level

Income level as defined earlier is so important and it can divide into 5 different

categories as defined above and our target segment is the segment with High

and Middle high income for this size of Nestle Pure life. Here we have not added

Middle income for our potential target as they were there for our bottled water

because this packaging of water and use of this water at home is been

discourages at the homes of people with middle income, they will buy this water

when they are on road, in parks or during journey but they will not use it most of

the time for their daily use.

Purity Conscious People

This is the psychographics factor that we have added while our segmentation.

The people who are psychologically very much health and fitness conscious and

they care about the cleanliness and purity of every thing are among our target

market because only they will buy this expensive water for their daily drinking

usage.

Our target Market

Our target market among Offices are medium and large scale enterprises

including restaurants and for hour home market our target market is the segment

of those families with high and medium high income level with the small of

medium family size along with the psychographics attribute of being purity

conscious.

Positioning

They position there product on the basis of product attribute that is pure they say

that Nestle Pure life is a “Pure family water”. This is the positioning of the product

that is pure so they are creating perception in the mind of customer that the

product is pure and whoever wants to have purity in its drinking water should buy

Nestle Pure life. Not only the positioning jingle but the Brand Name itself is

positioning the product in the mind of customer.

The word “Family” in the jingle is actually positioning the nestle that it is not only

for the one person of the family, but it is the whole family drinking water because

purity is important for each and every person of the family.

Nestle Pure life - On the Positioning Map

On positioning Map Nestle Pure life comes at the place where quality is

high and the price is reasonably high. Because they are providing the value that

permit them to suggest that price because price is never of the product but it is

the price of the value added by the organization.

References

1.http://www.expertsadvisorycell.org/EAC_Publications/DigestofIndustrialSectors/Industrial%20Digest%202004/Bottled%20Water/Bottled%20Water.pdf

2. http://www.nestle-waters.com

3. http://www.nestle.com/