The water market : actors and strategies

Résumé du document

Nestle and Danone are the two main players in the bottled water segment market in the world, competing against each other in certain markets, whereas differentiating from each other in others.
Before discussing the environment in which these two companies are evolving, first will shed light on the two leaders of the water industry in the world and their runners-up, Coca-Cola and Pepsico.

To begin with, we will explain about Danone:

After a merger between two French glass makers, BSN was founded in 1966 and produced flat glass and packaging. Then, BSN diversified into food business, and acquired Kronenbourg brewery, Evian, and the Societe Europeenne de Brasserie. In 1975, BSN merged with Gervais Danone, which was at that time the leading French food manufacturer. In 1994, the group was renamed DANONE.
In 1997, the group decided to concentrate its business on 3 core activities:
-fresh dairy products (yoghourts, desserts and children's food), accounting for 47% of the turnover
-drinks (bottled water), accounting for 27%
-cereals and biscuits, accounting for 23%
So, the company decided to sell off non core businesses (withdrawal of glass packaging operation and sale of the beer business).
Today, Danone is the world leader in terms of sales (in volume) in the bottled water market. It owns 2 of the 5 leading brands, Evian and Volvic, and the top selling brand of bottled water in Indonesia.
Its global market shares in bottled water rise 11%, which accounts for 16.3 billion litres of water sold in a year. Its global turnover for the year 2002 was 13.5 billion euros.

Extraits

[...] in 2000, Sparkling Spring Water, Patin des eaux du Quebec; in U.S.A, with Mc Kesson Water; in France, with Chateau d'eau (French market leader- this brand's got a strong position in Italy, UK and Danmark); Mexico, with Arco Iris and Aqua Pura. Nestle, which is number 2 brand worldwide, made acquisitions to catch up time and market shares: It made 10 operations in 2 years in HOD segment. And in 2003, it bought the European leader in large bottle format, which is now sold in 187 countries and represent 16% of net sales years before it accounted only for In 1992, Nestle bought Perrier and merged it with Vittel 1993. [...]

[...] Danone is market leader in the bottled water industry. In Mexico, it is number 1 with Bonnafont and Pureza Aqua. In Argentina, it is present under the brand names Willa del Sur and Villacicencio. The company has also presence in Uruguay. Danone is leader in HOD bottled water segment in Argentina. Africa Coca-Cola and PepsiCo are encountering difficulties in the African market. Nestle launched Nestle Pure Life in Egypt (where the brand is number and in South Africa (where the brand is number 2). [...]

[...] Normally, guerrilla actions are taken by smaller firms against larger ones. But continuous guerrilla campaigns can be expensive and they must eventually be followed by a stronger attack if the challenger wishes to beat the competitor. Bibliography indicative The Business of Water: A Concise Overview of Challenges and Opportunities in the Water Market par Steve Maxwell, American Water Works Association fevrier 2008 Water Markets: Priming the Invisible Pump par Terry L. Anderson et Pamela Snyder, Cato Institute Markets for Water: Potential and Performance par K.William Easter, M.W. [...]

[...] Features of the 3 types of bottled water Spring water: cost of production is less compared to mineral water, and must comply with the same norms than tap water. Mineral water: got medical properties, is not to be processed, and does not have to comply with the same norms applied to spring and tap water. Tap water: treated to be drinkable, has to comply with strict norms. Can be dechlorinated or gas added. In the USA, it is legal to modify tap water chemically to improve its quality or eliminate unhealthy substances. This trend will be followed soon in Europe, as sources are threatened by pollution. [...]

[...] Wait for the change in the law, which will lead to an exponentional growth. Logistics will accounts for the major part of the costs of the product Consumers have to switch to a new way of consuming water. To make use of this segment, firms have to develop logistics skills. The purified water segment A potential market growth appears in this activity outside Europe, as people outside Europe do not make a difference between purified water and mineral water. But in Europe, mineral water is a staple. [...]