Many bottled water brands have seen serious declines in the last year, but the category – especially its premium segment – won’t evaporate any time soon.
The economy may have nudged many consumers to downgrade to bargain or tap waters, and environmentalists remain as negative as ever on the product class, but the industry’s leaders have adjusted to the new paradigm. Large brands and the International Bottled Water Association have responded to criticism about the sector’s environmental impact. Meanwhile, premium brands have held tight to core consumers and developed measures to hold and gain peripheral users.
Premium’s New Twist
Fiji, for example, recently created a 6-pack of 330 ml bottles aimed at casual consumers. The SKU carries a suggested retail price of $5.49, which Grace Jeon, Fiji’s senior vice president of sales, said gives fringe users an accessible bulk entry point while maintaining the brand’s premium pricing. Those casual users have lately bedeviled the brand. Fiji suffered a rough 2009, with sales down 9.4 percent (as tracked by Information Resources, Inc. in drug, club, convenience and grocery stores excluding Wal-Mart), though Jeon said her reading of the numbers shows that he brand is now on an upswing. She expects the new SKU to help revitalize the brand.
But the brand’s difficulties involve more than sales losses. Fiji, after years of building the brand on the inherent beauty of the Fijian islands, has had to augment its image with conscious capitalism. In 2008, it launched its Fiji Green campaign to highlight new and old charitable programs that mitigate its impact on the Earth and improve the lot of the island’s natives. Furthering those efforts, the company announced in December its participation in 1% for the Planet, an organization that verifies that certified businesses donate one percent of revenues to environmental groups.
While Fiji hopes these pricing and image efforts will help address their peripheral consumers, Jeon said the company’s core business has remained intact.
“You have very dedicated consumers that are very specific about they want,” she said.
Kristjan Olafsson, co-founder and CEO of Icelandic Glacial bottled water, cast that divide in an economic light. Customers of mid-tier brands, he said, have suffered more during the recession than their wealthier counterparts. While that situation may be regrettable, Olafsson said the resulting environment has enabled his premium-priced and positioned brand to nearly double its sales in the last year.
But Icelandic Glacial has its youth going for it. Fiji debuted when the American consumer perceived bottled water as an affordable luxury and a healthy alternative to Coke or Pepsi. Icelandic Glacial appeared as the term “carbon footprint” entered popular parlance and consumers started casting sidelong glances at plastic bottles.
That shift in perception has left Fiji kneading its image. Icelandic Glacial has worn its environmental awareness – literally – on its sleeve since the brand’s first appearance, a front-label CarbonNeurtal certification since day one. It has continued to burnish its green credentials as it has grown in distribution and sales. The company reduced its energy consumption when it moved to a new factory, and, most recently, hired Zenith International to certify the sustainability of its water source.
“You’ve got to be aggressive these days,” Olafsson said.
On the power of that aggression and its pristine image, the brand saw an 80 percent increase in sales in 2009 according to IRI. Olafsson said that’s not just a matter of distribution and retail placement. According to his September numbers, he said, the brand had doubled U.S. sales versus the previous year, while increasing its distribution by just 20 percent.
Fellow environmentally-conscious premium brand VOSS has also seen gains. Newly hired CEO Jack Belsito said VOSS still focuses primarily on on-premise sales, but he sees continued retail opportunity for his brand – especially because it offers retailers a high penny profit. In 2009, IRI showed that the brand’s still variety grew by 19.4 percent, powered, Belsito said, by distribution gains.
His brand’s appeal, he said, lies in both its distinctive packaging and its environmental awareness. While VOSS still comes in a robust glass or PET bottle, Belsito said his company has tracked its carbon impact from source to shelf, and offset it with wind farm and family dairy projects in China and the U.S., respectively. It even redesigned its PET line in 2009 to reduce the package’s weight, and, therefore, carbon impact.
“For most people, I think they want to believe that we’re doing things to offset our carbon footprint, and we’re doing that,” Belsito said.
Kristen Walker, a senior analyst with Mintel, said brands like VOSS and Icelandic Glacial represent a new trend at the top of the bottled water market. Top-dollar bottled water brands used to call themselves “premium” in their on-label selling points. Now, “premium” claims have dropped, Walker said, as new upscale brands boast about their positive impact on the world – whether that be through carbon offsets or donations to meaningful causes.
While premiums have held firm, sparkling waters, another segment that is often enjoyed by a higher income demographic, have quietly climbed the sales charts. The category grew a notable 3 percent in 2009, with Nestle Waters North America’s Perrier and San Pellegrino brands (which account for 20.7 and 15.6 percent of the category, respectively) both achieving sales gains.
Nestle said its sparkling brands have grown in retail not just in spite of the recession, but, in part, because of it. Both Perrier and San Pellegrino thrive at restaurants, where traffic has fallen due to consumers holding tight to their wallets. In response, Nestle has shifted its promotional thrust. The company launched a fancy-dining-at-home campaign for San Pellegrino through thesparklinglife.com that taps into the current ascendency of the at-home gourmet. The campaign uses a partnership with Food & Wine Magazine, Top Chef judge Gail Simmons, and a collection of food festivals in Florida. The brand also hosted an international “Almost Chef” competition that connected culinary students with established chefs. Meanwhile, Nestle increased Perrier’s profile at top nightclubs through its Societe Perrier marketing and sales program. Both initiatives include in-store, on-shelf support.
The Broader Slide
While some sparkling and premium brands have done well, they represent bright spots on a dark tapestry. The category slipped by 5.5 percent in 2009 – a drop of $400 million – with Dasani, Aquafina and top Nestle Waters North America brands falling by double digits.
Tom Lauria, spokesman for the IBWA, attributed the segment’s ills to the economy. He said he expects bottled water’s fortunes to look better when the financial environment improves in the coming year. In the meantime, however, his organization and some of its members have actively addressed environmental criticism.
Nestle Waters North America recently issued a study that – while admitting that tap water has the lowest impact of all commonly consumed beverages – demonstrated that bottled water has a lower impact than sports drinks or enhanced waters. Both of those products increase their burden on the Earth, the report said, through heavier packaging and through their ingredient lists. While the study cast a green glow upon the entire bottled water market, it further exonerated Nestle. The company’s eco-shape bottle had the lowest environmental impact of all packaged beverages commonly available, the report said.
The IBWA has taken a more general approach. The organization created and released a number of short videos that try to humanize bottled water suppliers and advance IBWA talking points. In one four-minute spot, a young woman opens her refrigerator and considers whether or not to consume a bottle of water. A devil appears on her left shoulder and spouts common complaints about the product. An angel (with wings that didn’t fully survive the blue-screening process) appears on her right shoulder and trots out the IBWA’s standard defenses of the product.
At another point, the IBWA took on an anti-bottled water info-graphic that circulated via Facebook and Twitter. The graphic, called “The Facts about Bottled Water,” blasts bottled water on moral and environmental grounds. Western consumers, it says, pay as much as $10 per gallon to fuel an industry whose packaging requires the petroleum equivalent of 17 million barrels of oil per year. The IBWA responded with its own poster-like image. The organization called its version “IBWA’s Verified facts about Bottled Water,” pointing out that, among other things, the products’ packages are 100 percent recyclable, and the FDA reported no illnesses linked to bottled water while the Center for Disease Control reports an average of 19 million U.S. illnesses caused by tap water each year.
The industry also saw something of a PR boon following the Haitian earthquake (see sidebar). Bottled water companies sent product donations to relief efforts in its first major industry-wide effort since Hurricane Katrina. Still, the campaigns against bottled water continue. The University of Portland in Oregon recently banned bottled water sales on campus, and Vancouver took a shot at the category during the Winter Olympics. The event’s host city encouraged visitors to consume tap water instead of buying Dasani from Games-sponsor The Coca-Cola Co., Inc. Vancouver’s Fairmont Pacific Rum Hotel even discouraged its visitors from purchasing water from the mini bar by instead providing refillable metal bottles.
All that PR may ultimately amount to noise. Satwant Gill, president of San Diego’s 5 Star Distributing said he’s seen savvy retailers drop their bottled water cooler set from a full door to half a door – but the category’s still getting half a door. Meanwhile, Nestle’s national brand Pure Life still netted $242 million for something that can be accessed at virtually no cost in every home in America. Ultimately, the category may be getting smaller, but any consumer market for which a 5 percent dip amounts to $400 million is still full of opportunity. And, with the industry’s banner organization better prepared to repulse threats and the economy supposedly ready to rebound, the immediate future may be brighter than the present.BRAND NEWS: BOTTLED WATER
Project 7. Project 7 recently switched its water line to a biodegradable bottle that can also be recycled.
SanTásti. SanTásti introduced a new package designed with the help of Cal Poly Graphic Arts students. The brand is currently expanding sales internationally in Italy and Hong Kong as well as in the United States.
LAUQUEN Water Co. Laquen introduced its water brand to the U.S. in December. The company boasts that its artesian mineral water comes from the southernmost source in the world.
Echo Beverages. Los Angeles based Echo Beverages announced the launch of Echo Water in February. Echo is packaged in 100 percent recycled PET bottles, uses local water sources, distributes locally, and features a removable label to prepare the bottle for the recycling stream. Echo has begun distributing the product in the Los Angeles area.
Soma Beverage Co. Metroelectro is now available in a 12-pack. The new package was created in response to retailer requests.
The Coca-Cola Co., Inc. The Coca-Cola Company announced that Dasani and other beverages in its PlantBottle packaging have arrived on store shelves in select markets. PlantBottle PET plastic bottles are made partially from plants, which reduces the Company’s dependence on petroleum. The bottles are 100 percent recyclable.
FIJI Water. FIJI Water introduced a 6-pack of 330 mL bottles with a suggested retail price of $5.49.
PepsiCo Inc. Aquafina’s new package, the Eco-Fina Bottle, weighs just 10.9 grams. The Eco-Fina Bottle utilizes 50 percent less plastic than similar Aquafina packaging produced in 2002 and is estimated to eliminate the use of 75 million pounds of plastic annually.
Neuro. Neuro introduced a mineral water SKU, NeuroAqua, to its enhanced water line. NeuroAqua boasts a high magnesium content and an alkaline ph balance.
TASMANIAN RAIN LLC. TASMANIAN RAIN increased its U.S. distribution channels by partnering with Sysco, Fresh Point and others. In addition, TASMANIAN RAIN offers direct delivery.
Activate. Activate announced the launch of its new Deionized Water in 1 L and 20 oz. bottles.
Saratoga Spring Water Co. Saratoga Spring Water announced that it offsets its electricity usage with wind power certificates. Its glass and plastic waste is also recycled into everything from blue glass mulch to bath mats and shower curtains. Saratoga is now distributed in over 35 states.
Icelandic Water Holdings ehf. Icelandic Water Holdings ehf, announced that Zenith International deemed its source certifiably sustainable. The company has also been adding distribution at resorts, including ski destination Squaw Valley.
Keeper Springs. Keeper Springs Natural Spring Water has a new look and a new bottle. Its new 500 mL and 700 mL bottles are made with 25 percent recycled PET. The company aims to use 50 percent recycled plastic by the end of 2010.
Equa Water. Equa narrowed the openings on its 500 mL and 330 mL bottles to a standard diameter, giving the package a more sleek look. Equa also added a sparkling option in glass. The product is gently carbonated and features a green label.
Nestle Waters North America. Nestlé Waters North America’s introduced its Born Better campaign for its regional spring water brands. The campaign, focuses on the sources of Poland Spring, Deer Park, Arrowhead, Ozarka, Ice Mountain, and Zephyrhills.
Nestlé Pure Life will continue its focus on healthy choices in 2010. National TV advertising, featuring the brand’s signature “Embrace the Pure Life” campaign, will air in the warm weather season. In addition, the brand will reinforce the importance of drinking water and making healthy lifestyle choices through its new consumer promotion, the Nestlé Pure Life Pledge.
Brands of Britain, LLC. Gleneagles recently revamped their bottle with a new, modern logo.
Mountain Valley Spring Company. Mountain Valley introduced a new 4-pack carton for its 1/3 L bottles in the 4th quarter of 2009. The 4-pack is available in both spring and sparkling versions.
Next Generation Waters. Next Generation Waters announced that Nuu Water is adding distribution in the U.S. through a partnership with Tree of Life. The company also became affiliated with 1% for the Planet.
Nika Water Company, LLC. Nika Water is introducing a 6-pack for its 1/2 L bottles as well as a new 1 L product. The company also added a new 1/2 L bottle made from 100 percent recycled PET in special accounts.
Aspen Pure Water. Aspen Pure Water announced that it has recently changed its 16.9 oz. bottle, making it more eco-friendly. The new package contains less plastic and is boxed with 60 percent recycled cardboard.
Voss water. Voss redesigned its PET Lineup, reducing its weight, improving its look and continuing the brand’s commitment to carbon neutrality. Voss added 500 mL 4-packs and 330 mL 12-packs and has expanded to all divisions of Whole Foods.
Gota. Gota introduced a new bottle size specifically tailored to the U.S. consumer. The company also announced that it allocates a portion of revenues to programs that promote water preservation and facilitate access to safe water in Argentina.
Le Bleu Corporation. Le Bleu Corporation donated 21,672 bottles of water to Haiti. Global Medical Outreach of Clinton, N. C., distributed Le Bleu water along with over half a million dollars in medical supplies during their visit to Haiti Feb. 20-28.
drench. drench and Carlson Distributing have partnered in the Greater Salt Lake City, Utah area.
New Dutch Water Corp. New Dutch Water Corp introduced Ny2o premium water in summer of 2009. Recently, Arizona Beverage Co. and Ny2o joined forces to distribute the brand throughout South Florida.Ny2o has co-sponsored or supported events benefiting the Ruby Peck Foundation for Children’s Education.
Saint Geron. Saint Geron recently introduced its water to restaurants in New York.
Volvic. Volvic’s bottles are now made with 25 percent recycled PET with the goal to reach 50 percent as soon as possible.
Hawaiian Springs. Hawaiian Springs began an expansion on the U.S. mainland and internationally. The brand is now available in more than 12,000 locations worldwide and through the company’s online store. New distribution in 2010 included UNFI, Nature’s Best, and Real Soda. Hawaiian Springs recently extended its retail availability in the Western U.S. to the states of Colorado, New Mexico and Utah with placements in Natural Grocers by Vitamin Cottage stores.
Jana. Jana has increased its distribution in California and is now carried by Prestige Beverage, Mission Beverage, Trent Beverage, Nature’s Best, United Natural Foods and GBL Distributers. In Florida, the brand added distribution with, Arizona Beverage and Tree of Life. The brand added Try It distributing in Upstate NY.
WAT-AAH! WAT-AAH! recently added distribution through UNFI West and Nature’s Best.
PURE SWISS Inc. PURE SWISS launched a new 0.5 L bottle in the U.S. in March. The brand also sponsored the Swiss Olympic Houses in Vancouver and Whistler.
Iceland Spring. Iceland Spring announced that it will now be distributed in New York City, Long Island, Rockland, Westchester, Putnam, Orange, Ulster, Sullivan and Dutchess Counties by Manhattan Beer Distributors.
National Beverage Corp. LaCroix is debuting an 8-can fridge pack to compliment its 12-pack in 2009.
Native Waters, LLC. Native Waters is now available in 16.9 and 23.7 oz. ENSO bottles made with 25 percent recycled plastic. The brand is no distributed in New England through g.housen, Great State Beverages, Blue Coast Beverages and Sysco.
OWATER. OWATER is now available in a new 1 L size. The 1 L package is designed with graphics featuring New England Revolution Soccer Player, Shalrie Joesph, Ultra Runner, Darcy Africa and International Mountain Biker, Ted Philip.
Angel Fire Water Co., LLC. Angel Fire Water Co., LLC is expanding to a new facility. The facility is approximately 130,000 square feet in size with a greenhouse for testing Angel Fire’s effect on different plants.
AquaHydrate. AquaHydrate hosted a webcast with former “World’s Fittest Model” Jamie Eason. The topic for the webcast was “Recommitting to your New Year’s fitness resolutions.”
Fred Water. Fred added an oval 1 L bottle, distributors Farner-Bocken and Core-Mark, and placement at Mapco and Sunoco.