Years ago, in my economics classes, I learned 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 liters 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 liters). However, the 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, except 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). This foundation makes the category complex with pricing strategies, water sources, 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 couldn’t tell the difference between tap water and $4 a liter bottled water.
ABC’s Good Morning America conducted a blind-tasting experiment in 2001 where they sampled branded bottled water such as Poland Spring, O-2, Evian, and the famous New York City tap water. The results shouldn’t surprise you – Big Apple water beat them all.
If bottled water is the same 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 liter (or ounce) at a time. Here is the secret to 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, a writer at SocialRank, says the emotional tipping point for bottled water occurred in the early 1980s 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 bottled 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 thought 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 most significant growth development in the bottled water industry has been the mass distribution systems. Dominated by the same companies that have covered the world with sugar water like Coca-Cola (which has such famous 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’s 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 stay top-of-mind.
In 2003 ( an article in The New York Times), TNS Media Intelligence/CMR estimated Aquafina spent $24.6 million, Dasani spent $18.8 million on media, and Evian spent only $800,000.
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), has contributed 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 bottled water brands use the same branding tool to build credibility and gain the coolness factor. Evian has used Maria Sharapova, the young and famous tennis champion. While the elite Fiji Water 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 bottled 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’s natural artesian water is bottled at the source in Viti Levu (Fiji islands). It’s a leading premium bottled water in the United States and the fastest-growing worldwide. Here is their story of the world’s finest water. It should be for $3.50 – 4.00 per liter (3 times the price of gasoline, depending on what the cartel does with the supply chain). For more about Storytelling, link here.
Stunning Design
Water has no distinct taste, no unique color, 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 will 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 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 proves that anything can be branded and elevated from no value to high value with sufficient investments. Through these investments and the ability to create a strong brand image, brand value is achieved. In essence, consumers are buying dreams in a bottle. Dreams of being 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 researches water use and conservation, has estimated bottled water is up to 2,000 times more energy-intensive than tap water. It is estimated that in 2006, U.S. bottled 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 the environment. We must be careful about how we use the power of the brand.
Wow, you really did your research!
Amazing what people will spend when they like their experience with a particular brand. I remember seeing David Suzuki speak at MRU and he said “bottled water is the biggest sham of our time!” And yet, look how big of an industry it’s become. You are right about the potential for abuse of brand power… Good to stop and take notice.