Years ago in my economic classes I learnt that supply and demand determined the price/value of most products especially commodities. If this is true, why is bottled water more expensive than gasoline? This is the result of building a powerful brand.
Transparency Market Research estimated that the global market for bottled water was worth about $157.3 US billion in 2013. In North America more bottled water is sold compared to milk or beer in terms of volume. Canadean research estimated that the global bottled water volumes would reach 233 billion litres in 2015. With all of Canada’s fresh water, they only produce less than one percent of the world’s bottled water (2.29 billion litres). However, United States remains the fastest growing bottled water market outside Asia. Mainly due to more health conscious consumers shifting away from sugary carbonated soft drinks.
In many emerging markets, the scarcity of clean water makes bottled water a necessary staple rather than a value-added refreshment beverage like juice or soda. In North America, the water in your tap is generally the same stuff you buy in the bottle. The big difference is that tap water is constantly tested to ensure they follow the drinking water quality guidelines. Bottle water doesn’t have the same stringent guidelines, expect for not containing any “poisonous or harmful substances”. Let’s hope that the big brands follow some type of quality control.
Clean drinkable water is generally available throughout North America where bottled water companies’ position their brands on quality (healthy choice) and convenience (portable and handy). From this foundation the category gets complex with pricing strategies, water source and lifestyle attributes.
Magician duo Penn & Teller in their show Bullshit did a spoof on bottled water. In a fine dining restaurant in Southern California they proved that the general public can’t tell the difference between tap water and $4 a litre bottled water.
ABC’s Good Morning America conducted a blind tasting experiment in 2001 where they sampled branded bottle water such as Poland Spring, O-2, Evian and the popular New York City tap water. The results shouldn’t surprise you – Big Apple water beat them all.
If bottled water is the same thing as tap water the real difference is branding. Tap water is a commodity with no brand. It comes from any unmarked tap – hot or cold. You take the same thing, build a formidable brand image and you can extract a premium by the litre (or ounce) at a time. Here is the secret on how to create brand value:
Power of Emotional Connection
Byron Sharp, professor of marketing science at the University of South Australia and author of How Brands Grow, says building a brand is based on “physical and mental availability” suggesting most brand purchase decisions are made with the emotional brain. A brand needs to trigger instinctual responses.
Ammar Mian writer at SocialRank says the emotional tipping point for bottle water occurred in the early 1980’s when Perrier launched its ‘Earth’s First Soft Drink’ campaign. This campaign embraced the belief that their sparkling water comes from the purity of nature, straight from mother-earth. This emotional connection resonated with consumers who are more health-conscious and want an alternative to soft drinks. Other premium bottle water brands followed suit with images of purity, youthfulness, healthy and natural. Water can’t get any better than this unless you turn it into alcohol. Here’s more on Emotional Branding.
Power of Convenience
A brand must be easy to buy – when and where you want it – ideally everywhere. Not unlike tap water. Remember the days of drinking fountains? We though they were convenient – if we could find one. But it was like drinking from a water hose – only one quick sip if there was a line-up.
The biggest growth development in the bottle water industry has been the mass distribution systems. Dominated by the same companies that have covered the world with sugar water like: Coca-Cola (who has such popular brands as Dasani and Glacéau smartwater), Nestle (who has all the water champs such as Perrier, Pure Life, S. Pellegrino, Deer Park and Poland Spring) and PepsiCo (who has Aquafina).
Where is Evian in the distribution mix you ask? In 2002, Evian signed a distribution agreement with Coca-Cola Co., Inc. which ended in 2014. Then Evian found new wings with distribution partner Red Bull. And Fiji Water? Dr Pepper Snapple Group website states that they distribute Fiji Water in various territories.
Power of Fame and Attention
Getting people to pay for a free commodity like water is hard work. It takes a great deal of investment to build a distinctive brand. Successful brands need big bank accounts to ensure the advertising messages get noticed and the brands stays top-of-mind.
Ten years later, Evian is still spending around a million in measured media annually according to Kantar Media . Over the years, Evian has lost market share to the more aggressive competitors, sitting in 3rd place behind Fiji Water and Smartwater. Eric O’Toole, president-GM at Danone Waters North America (parent company to Evian), contributes the brand stabilization in recent years, in part, to the launch of the Baby & Me advertising effort. Great creative never hurts if you can’t afford to advertise year-round. See more on Creativity.
The soft drink industry is notorious for using celebrity endorsers to help push their sugary drinks (check out a partial list of famous celebrities and soft drink brands). The top bottle water brands use the same branding tool to build credibility and gain the coolness factor. Evian has used Maria Sharapova, the young and popular tennis champion. While the elite Fiji Water has uses the former James Bond star Pierce Brosnan. Glacéau smartwater has used actress Jennifer Aniston to create a buzz around their relatively new brand.
A Memorable Story
Great brands always come with a great brand story. Many bottle water brands have great stories that would put National Geographic to shame. My favorite is the Fiji story or as some say the Fiji myth. Fiji Water, natural artesian water bottled at the source in Viti Levu (Fiji islands). Its a leading premium bottled water in the United States and fastest-growing worldwide. Here is their story of the world’s finest water. It should be for the price of $3.50 – 4.00 per litre (3 times the price of gasoline). For more on Storytelling.
Water has no distinct taste, no unique colour, and no smell. All water feels wet – physical there is no difference from one glass of water to another, so packaging is king. If nothing else is going to sell you, it must be the memorable packaging. The packaging must fit the great stories and celebrities who would never drink it, if it didn’t look good.
Packaging can help define a brand experience. Do you remember the first iPhone, iPad or iPod you unwrapped from its packaging? The simplistic and beautifully designed box with everything in its own place – clean and white. A perfect brand fit.
Since 2008 Evian has been working with some of the world’s most prestigious designers to create a limited edition bottle each year. Evian has worked with such creative artists such as Diane von Furstenberg, Paul Smith, Christian Lacroix, Jean-Paul Gaultier, Elie Saab, KENZO and most recently with Alexander Wang (2016 limited edition bottle). Former zone director for the Middle East & Indian Ocean for Evian, Elias Fayad explains the limited edition concept: “Our water is untouched by man and perfected by nature, so we attempt to give the bottle an artistic expression.” In a September 9, 2015 press release from Evian, they explain each collaboration as “a renewed celebration of purity and playfulness and a reinterpretation of evian’s spirit through art and design.” I have to remind myself that we are talking about a simple natural resource that can be found anywhere on the planet – water.
Dreams or Nightmares in a Bottle
Water is living proof that anything can be branded and can be elevated from no value to high value with sufficient investments. It is through these investments and the ability to create a strong brand image that brand value is achieved. In essence, consumers are buying dreams in a bottle. Dreams to be on a pristine tropical island or a youthful energetic baby once again. Stories of spiritual purity, blissful health and a fountain of youth – the water of life. Potentially over $200 US billion worth.
But there is a dark side to this story. While dreams are created and value generated from the replenishing resource, there is a social cost. Today, Wikipedia lists over 144 bottled water brands, and from the statistics, the market continues to grow. The Pacific Institute, which conducts research on water use and conservation, has estimated that bottled water is up to 2,000 times more energy-intensive than tap water. It is estimated that in 2006, U.S. bottle water consumption used the energy equivalent of 17 million barrels of oil and produced over 2.5 million tons of carbon dioxide – in one year. There’s also the worry that we are shifting water consumption from one region to another, creating an imbalance with consequences to our planet and to our future.
Just because we have the ability to create formidable brands to extract more value, it doesn’t mean we should. As marketing and brand experts, it’s important we use our craft wisely. We must balance the benefits for the consumer, society and environment. We must be careful on how we use the power of the brand.