The first key success factor of the bottled water industry is the growing popularity in the United States. This popularity was enhanced by the people’s growing concern over the water that was provided to them by the municipal. Another issue that led to the growth of the bottled water industry is the changing lifestyle. Bottled water was preferred because of the new lifestyle. For instance, many bottled water users always claimed that drinking more water improved the quality of one’s skin. Also, many analysts argued that drinking bottled water was a sign to others that one was taking care of his/her health. Lastly, bottled water is convenient because it is easily portable, making it very popular to travellers in the United States market.
The second success factor identified is the development of markets in the developing countries, mostly in the Asian and the South American countries. These markets are replicating what is happening on the United States markets, and hence, the successful improvement of the industry.
The third success factor is the decline in the use of carbonated drinks. For instance, although about 15.3 million gallons of carbonated drinks were consumed in the United States, the issue of fitness and sugar consumption had led to a decline in the usage of the drinks. In fact, between 2004 and 2005, the bottled water market grew by 10.7%, while the carbonated drinks market declined by 0.6% (Gamble, 2006).
Lastly, the successful growth of the bottled water can be attributed to the large producers such as Coca Cola and Pepsi. These producers were able to distribute the bottled water together with the carbonated soft drinks, and, therefore, water was easily available to consumers in the US.
How the Industry is Changing
Competitive rivalry in the industry continues to increase. Because the bottled water industry is dominated by big producers such as the Coca Cola, Pepsi and Nestle, sellers are producing innovative products in order to remain competitive. Despite these strategies, the US market, though still the largest, consumption for bottled water have fallen compared to those of Europe, Middle East, and Mexico. Several things continue to change in the industry concerning sales and packaging of the water (Gamble, 2006).
The first change noted in the industry is the packaging of the bottled water. In 1990, the producers of bottled water distributed their product in a returnable five-gallon container. Also, at the time, a little proportion of the market was provided with water in one-liter containers. However, the industry has changed this strategy because of convenience and portability of small containers to carry bottled water.
Another significant change noted in the industry is the distribution and sale of this product. Whereas bottled water used to be delivered only to the large supermarkets and other retailers, today it is readily available almost in all convenience stores. The competition in the industry has greatly increased with some large producers such as Coca Cola and Pepsi, forcing other companies use all strategies to remain competitive in the growing market.
Strategies of the Big Companies in the Industry
The Coca Cola Company produces more than 300 brands of nonalcoholic drinks. One of its brands, the Coca-Cola has been described as the most successful brand in the world. The company uses this brand to gain market share for new products. The first bottled water product introduced by the company is the Dasani water (1999). The formula of production of this water remains a closely guarded secret. Several strategies were developed by the company in order to effectively market this product. The first strategy that the company hoped would help market the product was the name. The “a” gave the name a soothing nature, while the “I” ending gave the name a foreign attachment. In addition, massive advertisement was carried out to introduce this product.
The second strategy is the merger and partnership with companies producing bottled water. For instance, the company produces and markets water in foreign countries under local brand names (Gamble, 2006).
Pepsi Co Inc.
Pepsi had tried unsuccessfully to enter the bottled water industry in the year 1987, but it was successful in 1997 with the introduction of Aquafina. The company decided that in order to capitalize on a large market, it had to completely differentiate its product. This was acquired through purification. The water produced by the company was chemical free as the company had to add ozone to prevent bacteria growth.
The second strategy was to develop battled water that reflected customers’ lifestyles. For example, Pepsi produced Propel Fitness Water and SoBE Life Water. These products were also available in various flavors (Gamble, 2006).
This is the most successful and oldest bottled water producing company in the world. The company offers around 75 brands of bottled water and also enjoys a wide market as it operates in more than 130 countries. One of the strategies employed by this company is the acquisition of leading local bottled water producing companies. Other strategies include the production and marketing water fortified with vitamins and plant extracts as well as fruit-flavored water.