Bottled Water

1. What are the strategy-shaping business and economic characteristics of the bottled water industry? What is the industry like?

The bottled water industry is made up of three large players, Coca Cola, Nestle and Pepsi. In recent years the move has been to consolidation within the bottled water industry as Coke, Pepsi and Nestle's have all acquired smaller regional brands. As the market for bottled water has plateaued a move to flavor enhanced water and vitamin water has occurred with Pepsi coming out with products such as Propel, etc. In a recent article on Brandweek.com "Has the Bottled Water Well Finally Run Dry?" Kenneth Hein discusses the downturn in the bottled water industry by Coke and Pepsi.Hein talks about several reasons for the downturn including the economy, why pay for something you can get free, the concern over PET bottles leeching toxins into the liquid and the increase of sales of store labels (i.e. Target- Archer Farms).

To combat some of this decline Pepsi has aligned Aquafina with a sponsorship Major League Baseball And a bright spot with sales of enhanced water increasing by 18,4% in the first half of 2008. Nestle's has moved more into the Home/Office delivery of bottled water.

2. How is the bottled water industry changing? What are the underlying drivers of change and how might those driving forces individually or collectively change competition in the industry?

The move in the industry has been toward consolidation as the big three purchase the smaller regional the flavor and enhanced water brands. Also, customers are purchasing more store labels are the economy slows. The move away from PET bottles by consumers along with the store labels entering the market is cause for concern. The two factors that have effected sales of the large companies have been the increase in the sales of store labels and the economic downturn. Plus the advances in home filtration systems have caused people to move in that direction and away from the use of bottles.

3. What recommendations would you make to Coca-Cola to improve its competitiveness in the global bottled water industry? to PepsiCo? to Nestlé?

Each of these companies should develop alternatives for PET bottles as more Westerns become environmentally conscious. Coke needs to expand the market for vitamin and flaver water to be competitive against Pepsi's success in the market. Coke should go after sporting event sponsorship that will bring in name recognition for Dasani products.
Nestle should continue to use packaging innovation to separate itself from competitors. Styles that will catch the eye of children and adults. Pepsi has an advantage with the Gatorade brand name to develop alternative water drinks. Use that name recogonition to advance new products such as the sports drink market.