Thirsting for a larger market share of the country's most-consumed drink behind soda, the Big Three beverage marketers are preparing several new bottled-water varieties in the first quarter. Coca-Cola Co. and Pepsi-Cola North America each are prepping citrus- and berry-flavored line extensions for mid-tier water brands Dasani and Aquafina. Coca-Cola in November assigned ad duties for Dasani to independent Anomaly, New York, and is expected to break creative in the first quarter. Omnicom Group's BBDO, New York, handles Aquafina and bowed creative last week to more directly tie drinking water as part of consumers' New Year's resolutions.
Category leader Nestle is planning its own four-flavor line called Pure Life Splash amid global expansion of its Nestle Pure Life brand. Nestle plans to roll out a campaign from various agencies in February.
With many waters bottled by regional or upstart players, it's already a crowded category. More than 120 bottled waters were introduced in the U.S. in 2004, according to Mintel's Global New Products Database, up from 114 in 2003 and 94 in 2002.
Bottled water has become increasingly important in soft-drink marketers' portfolios, and for good reason: Excluding Wal-Mart, which accounts for as much as 20% of the total, volume for the category grew 11% among food, drug, and mass merchants during the four weeks ended Nov. 27, according to ACNielsen data. Conversely, carbonated-soft-drink volume fell 4.2% in the same channels for the period.
"Water is the one place people psychologically go for its perceived health benefits," said Darrell Jursa, managing partner of Liquid Intelligence."[Marketers] are trying to find ways to make the category more exciting." Originally relying on pricing and general health messages to drive trial, they now are turning to more specifics and emotional benefits to differentiate themselves, he said.
Coke and Pepsi both have failed in earlier attempts to launch flavored waters. In November, Coke pulled its Dasani NutriWater and Pepsi canned its Aquafina Essentials after poor sales. But the two giants are apparently encouraged by the success of PepsiCo's Propel Fitness Water, a sub-brand of Gatorade, and Energy Brands' Glaceau VitaminWater, which have sold exceedingly well at high price points. Propel sales grew 48.7% to capture a 2.8% share of bottled-water sales, according to Beverage Digest.
Rohan Oza, senior VP-marketing for Energy Brands, which markets Glaceau Vitamin Water, contends enhanced waters are driving the growth in bottled waters: "The category is no longer a niche." He said that Vitamin Water outsells brands including Evian, Dasani, Aquafina and Propel in markets where it is sold, including New York.
According to Beverage Digest, Vitamin Water's volume grew 36% to 12 million cases last year, vs. Propel's 35 million cases.
Marketers also are bolstering their premium still-water portfolios as Americans become increasingly discriminating and seek products that offer more in quality and taste. In November, Roll International Corp., the holding company that owns Pom Wonderful, the Franklin Mint and Teleflora, agreed to purchase fast-growing Fiji Water. Fiji claims to be the No. 2 imported-water brand. Earlier that month, Group Danone said it was renegotiating its agreement that allows Coke to distribute Evian in North America.
Eric Leventhal, president-general manager of Evian North America, said he is planning to tweak Evian's marketing strategy to better convince consumers why the French brand that started the bottled water industry in America 30 years ago is better than locally produced water. Havas' Eruo RSCG, New York, handles Evian in the U.S.
Energy Brands, meanwhile, is moving into pioneer territory again with its fledgling Veggie Water, which Mr. Oza called his "single biggest opportunity since Vitamin Water." He also hinted at one more product coming out, but he wouldn't confirm details. The marketer has applied for trademarks for Tea Water, Fruit Water and Soy Water.
Water world: The numbers behind the drink
* On a per-capita basis, consumers drank 22.6 gallons in 2003, up 9.8% over the prior year.
* More than half of bottled-water consumers prefer spring water over purified water and can notice a difference in taste.
* 43% of bottled-water consumers believe there is a significant difference between brands of bottled water, and nearly two-thirds are brand loyal.
* Mid-price brands have the highest penetration with almost 70%, while value brands have 60%. Premium brands have 13%.
* More than 120 bottled waters were introduced in the U.S. in `04.