Bottled water brands get competitive

01 September 2009

NEW YORK: Competition is intensifying in the US bottled water category, as brands owned by companies like PepsiCo, Nestlé and Coca-Cola attempt to attract customers who have cut back on purchases for financial or environmental reasons.

According to Information Resources, the research firm, sales of bottled water in America fell by 6%, to $7.6 billion (€5.3bn; £4.7bn), during the year ending on July 12, although this does not include figures from Wal-Mart, the country's biggest retailer. 

Estimates from Nielsen, which were quoted by JP Morgan Chase, also stated that Coca-Cola's Dansai brand saw a decline of more than 25% in volume sales in stores, again excluding Wal-Mart, for the 12 weeks to August 9 this year.

While Coca-Cola has resisted the temptation of implementing wide-scale price promotions for Dansai thus far, it has been more willing to experiment with such measures for its Aquarius range.

However, Brandon Leck, director of the company's water brands in North America, predicted sales will start to grow again as the overall economic climate improves.

Nielsen's data also show that sales of PepsiCo's Aquafina dropped by 13.8% for the 12 weeks to August 9, with a reduction in price of around 5% helping contain the overall downward trend.

In that same month, a 24-pack of half-litre bottles of Aquafina was available for just $2.99 in some grocery outlets, as the drinks giant continued with its cost-cutting strategy.

Bart Casabona, senior manager of public relations at PepsiCo North America, said that "as the economy recovers, we're confident that consumers' demand for value, convenience, and purity will prevail."

Nestlé, the biggest bottled water manufacturer in America, also saw sales of Poland Spring decrease by 8.9% in this same period, during which time prices fell by 11.3%.

However, Timothy F. Brown, the Swiss firm's head of retail operations in the US, said that while the company had pursued the policy of reducing prices to a certain extent, many retailers had used promotions in an effort to increase footfall.

Own label products are one major challenge to these premium brands, with Kroger selling two-dozen half-litre bottles for just $2.49, even cheaper than the discounted packs of Aquafina.

Michael Bellas, ceo of the Beverage Marketing Corporation, the consultancy, said "it used to be $6.99 for a 24-pack, then $5.99. But $2.49? That's the lowest I've seen."

Coca-Cola, PepsiCo and Nestlé have also all attempted to respond to environmental concerns relating to bottled water by reducing the amount of plastic used in their packaging.

For example, a half-litre "Eco-Fina" bottle of Aquifina now uses under half the amount of plastic than in 2002, while Coca-Cola has also developed a new bottle which includes materials drawn from plants.

Data sourced from Wall Street Journal; additional content by WARC staff