Evian and Coca-Cola to End Distribution Partnership

With both companies diverging from each other’s plans, Evian and The Coca-Cola Co., Inc., have jointly decided to end their distribution partnership in the middle of 2014. The decision, which will conclude a partnership that was formed in April 2002, was made at the end of this summer and announced on Nov. 1.

“Over time, what evolved is a different level of relative importance between Evian and [Coke’s] in-house brands,” said Eric O’Toole, the president and general manager of Danone Waters North America.

Along with building around smartwater and attempting to revive vitaminwater, Coke moves on from Evian with an effort to ensure the strength and mitigate the declines of its carbonated soft drink portfolio.

In an e-mail to BevNET, Melina Baetti, a public affairs and communications manager at Coke, wrote that the parties have evolved portfolios and the competitive landscape has changed.

“The beverage marketplace has evolved over the course of time in ways beyond those contemplated when the distribution agreement was originally conceived,” Baetti wrote. “The end of the Selling and Distribution Agreement allows both parent companies to play to their respective strengths.”

Coke will continue to distribute Evian through the first half of 2014, however, its last ship date will be on July 3. After that, Evian, a branch of The Danone Group, will work with several wholesalers and use the distribution system of Dannon yogurt, another branch of The Danone Group, to compensate for the loss of Coke’s expansive network.

Evian envisions this change as a way to enhance its business with distributors and clients by focusing on more direct relationships. According to O’Toole, Dannon will be able to give more attention to Evian than Coke has in the past — a natural byproduct of a smaller distribution system.

“When you’re a brand in a large organization, whether it’s Pepsi or General Mills or Proctor & Gamble, you’re going to get a fairly small share of voice or of time of the sales person and, therefore, of the buyer as well,” O’Toole said.

Evian’s on-premise model, which includes sales to restaurants and hotels, will stay the same with distribution via Southern Wine & Spirits.

Off-premise, Dannon will handle the large-store portion, which includes grocery, mass, merchandise and club retailers. The small-store portion, which includes convenience and drug stores, will be operated by Danone Waters of North America, which represents Evian, Badoit and Volvic. The group will sell directly to the headquarters of national and regional convenience store and drug chains and work with distributors such as McLane, Eby-Brown and perhaps other direct-store-delivery partners.

O’Toole believes that Danone will be able to handle the operations because, after years of shipping from France to various ports in North America, the company has the infrastructure in place.

“We’re very used to moving product to numerous warehouses,” he said.

Meanwhile, reenergizing the brand and making it desirable for influencers, celebrities and top hotels, restaurants, bars and clubs has become one of the company’s primary objectives. O’Toole said that the company’s business was bigger in the early 2000s, so they’re retracing steps. By devising expensive marketing plans and working with brand endorsers such as actress Blake Lively and disc jockey Chelsea Leyland, Evian hopes to compete with brands such as smartwater and FIJI, which have continued to increase their distribution footprints and sales figures.

“Celebrities were a big part of the development of Evian back in the 80s, the 90s,” O’Toole said. “We kind of walked away from that in the 2000s, but we’re getting back to that.”

The competitors also inspired the company’s new bottle design. O’Toole said Evian’s bottle was once influential but, as a 14-year-old design, had lost its sheen. He also said that he was feeling the pressure from the competition as they continued to grow and establish themselves as the “it” brands. So, in May, the company announced that it had redesigned its bottle to become clean, sleek and smooth.

“The purity of the physical bottle and the graphic design really matches the purity of the water,” O’Toole said.

The company has already released the new design in 500 mL bottles. Evian’s 330 mL bottles will begin rolling out in December or January. The 1 L bottle is due in May or June, and the 750 mL bottle will arrive nine months after that, meaning that the full rollout of the new design will continue until the start of 2015.

O’Toole said that combining Evian’s brand endorsers, eventual marketing projects and the new bottle will revitalize the water’s relevancy in the marketplace and double or triple the company’s business. Since announcing the new bottle, the company is off to a strong start. O’Toole said that since June, the 500 mL bottle has grown by 15 percent, according to IRI, a Chicago-based market research firm.

The news follows a similar decision by Coke in January 2012 when it ended distribution of Nestea. At that time, Nestle Waters North America took over U.S. distribution for the the brand, which had been sold by Coke since 1991. To fill the gap left by Nestea, Coke created a cold-fill brand extension of FUZE, the iced tea and juice brand purchased by the cola giant in 2007.

This article has been updated to include Coca-Cola’s response to the change in distribution rights.