Future Smarts – More Water Insanity on the Way

There’s no sign of the letup in what has been an 18-month long discount war in water prices – and if the hard line drawn by the country’s largest beverage companies continues to hold, it doesn’t look like there will be one anytime soon.

That’s the word that emanated from the Beverage Digest Future Smarts conference earlier this week, when Nestle Waters North America president Kim Jeffery made it clear his company had made a preliminary move to reduce price cuts, only to have Coke and Pepsi not follow suit.

According to Jeffery, it’s a mistake the company won’t make again.

“We thought it was the responsible thing to do,” he said. “There’s been a deafening silence from out competitors.”

Water pricing has been an issue because the three large companies have slashed case prices in pursuit of share growth. And while consumers have responded by snapping up cheap 24-packs of bottled water, the fight over floor space may be hurting margins for retailers and profitability for manufacturers.

Even Coca Cola Enterprises VP Mark Schortman made it clear that although his company had no plans to lead the water pack, it would still be keeping up with its competitors. He did offer a bit of optimism, however, declaring “deflation in water prices is beginning to wane,” although that was not followed with any indication that Coke would be the company to pull the reins.

The line was similar from the Pepsi Bottling Group, where CEO John Cahill said, “I would expect we’ve seen the bottom on water pricing.”

Nevertheless, Pepsi is one of the prime movers in cost cuts, especially through an extensive coupon program that resulted in bottlers passing price cuts on to mother company PepsiCo. With that in place, Jeffery maintained that his company was out for blood.

“I’ve been very clear on the subject,” he said. “We do not intend to go backwards.”