It was 1998 and Sydney was gripped by fear. The parasites cryptosporidium and giardia had been found in the water supply and residents feared to drink the water. It was a public relations nightmare for Sydney Water, but a blessing for the bottled water industry. As confidence in tap water dropped, sales of bottled water rose.
“That year, sales went up by something like 300%,” says Tony Gentile, executive director of the Australasian Bottled Water Institute. “Sales dropped again after the scare was over, but if left the industry in a much better position.”
Until then, Australians had relied on tap water, with an occasional glass of sparkling mineral water at dinner.
“Europe has long been a market leader in the water sector,” says Samantha Critchley, Senior Brand Manager for Coca-Cola Amatil’s Mount Franklin. “While our consumption figures are relatively low in comparison, it should also be considered that the Australian water market is really in its infancy.”
According to the Australian Bottled Water Institute, more than 300 million litres of bottled water are sold every year through retail outlets, including supermarkets, specialist shops, restaurants and hotels. Around 250 million litres are sold into the home and office direct delivery (HOD) market. Gentile says there’s no reason why the overall sales shouldn’t double in the next five to ten years.
At present, still water represents about 10 percent of the beverage market, with sparkling water at 3 percent. Critchley says that the water market grew by 20 percent in 2004, against a five percent increase in carbonated soft drinks. There’s still plenty of room to grow. According to figures supplied by Evian, Australians currently drink 15L of bottled water a year, compared to 50L in the US, 110L in France and a whopping 130L in Italy.
Gentile says health considerations are a major reason that the market is growing. “Bottled water is very good for you, as it’s a no-calories beverage.”
He believes that bottled water sales could double in the next five to ten years, particularly as Australians become wealthier and are more used to buying luxury items. Bottled water is definitely a luxury: it costs in the order of one thousand times the same amount as tap water.
The most popular bottled water in Australia is spring water, where the water comes from an underground source. Spring water has to be collected at source, either from the spring itself or from a borehole tapping the spring. Other water categories include mineral water, which is water with less than 250 parts per million of dissolved solids in it. Sparkling bottled water is water with carbon dioxide, while a ‘near’ water is one that’s been flavoured, but which has no sugar, or a water that’s been fortified by vitamins. ‘Near’ waters, like soda water and tonic water, are not classified as water.
Ultimately, though, water is water. As much as marketers like to talk about the taste differences between one ‘premium’ water and another, how do they get consumers to distinguish between the different offerings?
Familiarity and cachet help, as shown by Evian, Australia’s number one imported water. “Because of its massive international presence, Evian appeals both to the inbound tourism market and the local consumers,” says Guirec Danno, Zone Director, Danone.
Evian has had a market presence for more than 20 years and has a strong presence not only in supermarkets and convenience stories, but also in hotels, restaurants and nightclubs.
Sheer size helps, too, as proven by Coca-Cola Amatil’s Mount Franklin, Australia’s biggest seller.
“Coca-Cola Amatil’s strong distribution network means the brand is stocked almost everywhere you would expect to find Coca-Cola, and also in outlets that you wouldn’t, such as pharmacies,” says Critchley.
Australians buy an astonishing 50,000 bottles of Mount Franklin a day. The brand is so profitable that CCA will treble its marketing investment in it in 2005. “The campaign targets women, the main drinkers of bottled water, and aims to start highlighting the benefits of pure spring water,” says Critchley, adding that this approach is critical to building the market.
Mount Franklin entered the premium bottled water category last year, by launching Mt Franklin Lightly Sparkling in a light blue glass bottle.
According to Anthony Notaras, managing director of specialty water distributor Thirst For Life, packaging is all-important at the high end of the market. He says one of his biggest sellers is the Welsh water Ty-Nat, due to the distinctive blue bottle it comes in.
“Everyone likes the bottles,” he says. “They’re well known for the design.”
He says he sees many Australian waters being launched, only to disappear again in under two years. Notaras believes that most small manufacturers can’t sustain the level of promotion needed to make an impact in such a crowded market. He says another barrier to market entry for small players is the lack of good-quality glass bottles in Australia.
“All the Italian waters sell because they’re in glass bottles,” he says. “No-one’s going to put plastic bottles in a restaurant.”
One Australian spring water company decided that cracking the Australian market was too difficult, so they went overseas. “We saw an opening at a professional level in the UK,” says Wattle Springs CEO Ross Bennie.
Wattle Springs donates a percentage of profits to the biggest HIV/AIDS charity in Europe, the Terrance Higgins Trust. Bennie says this cause-related marketing strategy made them attractive to the UK market, and now Wattle Springs is distributed in Tescos and Harvey Nichols.
”We’re now just starting to finalise our exports to Japan,” Bennie adds.
Cause marketing has worked well for Wattle Springs on the local market, too. They have been selling through schools in NSW and Victoria for nearly six months. A percentage from the sale of each bottle goes back into the school system.
Although the Australian market is crowded, there is still room for players with a clear point of difference, as US-owned Fiji Water shows. According to Leigh Maloney of Maloney Communications, which represents the brand, the water does very well in delis, restaurants and health food stores.
Fiji Water comes from rainfall that’s filtered underground, to collect in an aquifer at the base of Fiji’s Yaqara River Valley. The water has a naturally high mineral content, including levels of silica, which is promoted as being good for hair and nails. Better still, from a marketing point of view, the water has a high Hollywood factor. Maloney says that the water is popular among Hollywood stars.
“People wanted it on the set,” she says. Fiji Water went on to make guest appearances on shows like Friends and Sex and the City. Viewers noticed, and now Fiji Water is the second highest-selling premium water in the US, after Evian.
Another factor in Fiji Water’s success has been its unusual PET packaging. The bottles are square, and you can see through the front of the bottle to a picture of a waterfall on the back.
“The square bottle is very practical for packing,” says Leigh Maloney of Maloney Communications, which represents Fiji Water. “Space is money.”
But for true innovation, you can’t go past Dog Plus, the flavoured dog water that’s becoming an Australian export success. It was developed by former Coca-Cola Amatil product, Andrew Larkey, who noticed that the two fastest-growing categories of sales in the supermarket were water and pet products.
“Dogs do not have the intellectual capacity to prepare for a run,” says Larkey, saying that Dog Water keeps the dog hydrated, no matter how punishing its walkies is going to be.
The water is flavoured with chicken and beef, and has been fortified with four Vitamin Bs, plus Vitamin C. Dog Water is now stocked by both Woolworths and Coles. Larkey says Cat Water could be on the way, to help solve cat urinary problems. There could even be a Horse Water one day, aimed at racehorses that are being transported. For the moment, however, Dog Water is doing well by itself and is being exported to Taiwan, Japan and the US.
Waters fortified by vitamins represent only a fraction of the overall human water market, thanks in part to a legislative quirk. Australia’s food regulation laws don’t permit the fortification of our food supply. That doesn’t, however, stop fortified beverages from New Zealand being sold here.
“New Zealand has a much more liberal standard,” says Gentile. “Some of these products have been imported from New Zealand, because of our free trade agreement.”
Gentile says that the Food Standards Australia board has just approved a draft standard allowing Australian producers to create vitaminised waters. The draft will soon be made available for public comment.
In the meantime, there are plenty of other bottled waters. Even as Australians learn to water their gardens at night, and recycle bath water, it seems that nothing will stop the gush of fresh water from supermarket and deli shelves.
This article appeared in National Liquor News in 2005.
