College of Accountancy, Business, Information Technology and Engineering, Baliwag Polytechnic College, Baliwag, Bulacan

CASE STUDY ANALYSIS

SUBMITTED BY: Pearl Angelie F. Ramos Danmark V. Ramoso Jestin C. Sto. Tomas Rachel D. S. Valmocena Ma.Cristine Joy C. Verdillo Kimberly A. Arellano

SUBMITTED TO: MS. ANNE MHELARIE G. CARLOS

December 21, 2013

COMPETITION IN THE BOTTLED WATER INDUSTRY

ECONOMIC FEATURES
1. Market size and growth rate Bottled water was one of the most attractive beverage categories in the world. Bottled water had long been widely consumed product in Western Europe and Mexico where annual capita consumption averaged about 30 gallons in 2001, but in the mid 1990s bottled water had been prestige product in the United States . It has global sales in 2001 exceeding 32 billion gallons and annual growth averaging 9% from 1996 to 2001. In 2006, the United States bottled water market generated total revenues of $15.6 billion, representing a compound annual growth rate (CAGR) of 8.1% from 2002 to 2006. During the same time period, market consumption volumes increased with a CAGR of 8.6% totaling 8.3 billion gallons of water in 2006. To compare, 1977 sales totaled $250 million and consumption equaled 350 million gallons. Considering the industries continued growth and success in the last 20 years, the future of the bottled water industry is quite promising (Sorensen, 1999). 2. Scope of competitive rivalry The industry size is worldwide; they compete globally, internationally, nationally and locally. 3. Number of Rivals The Nestl, Group Danone, Pepsi & Coca-Cola are the major players in bottled water industry as of 2001. 4. Buyer needs and requirements People nowadays are being health conscious and because of that, there is an increase concerning about the tap water which is a substitute for bottled water.

5.

Production Capacity Bottled Water producers distributes into several channels like wholesale clubs, supermarkets, discount stores, food store and supercenters that requires large volume of production. Surplus is not pushing prices and profit margins down.

6.

Pace of Technological Change The technological change does not directly affect the bottled water industry. Since the bottled water industry is composed of sparkling and still flavored and unflavored water, there is much room for product differentiation within each category. Some company put vitamins and flavor in bottled water, still some consumer prefer ordinary water. Unlike other product when there is a technological change, some company having a hard time in coping with the changes.

7.

Vertical Integration Producers used to buy only an equipment to provide such materials they will be using for the production (e.g. bottles, labels, packaging and plastic seal). In making of flavoured drinks, they used to provide mineral water as their direct material.

8.

Product Innovation Each brands of bottled water has shown the vitamins added to their products and the benefits it can give to the consumers. The innovation of adding vitamins, carbohydrates, electrolytes and other food supplements seemed to be a kit to the consumers. It is considered the most important product innovation of bottled water.

9.

Degree of Product Differentiation The products or rival sellers are primarily identical. There are submarkets in the bottled water industry such as purified, mineral and/or enhanced waters.

10.

Economies of scale The bottled water is characterized by economies of scale in purchasing, manufacturing, advertising and shipping. not operate. There are only exceptions in the office/home delivery market where large companies do

FIVE FORCES OF MODEL COMPETITION

1. SUBSTITUTE PRODUCT/S LOW The only substitute for bottled water is tap water. LOW Since brand names are highly important in this industry it would be difficult to convince major retailers for shelf space. Only competitors that are able to provide large quantities of bottled water with a cheap price will be able to enter the market. MODERATE High storage costs tend to intensify the rivalry. MODERATE Most consumers able to buy bottled water because of disliking taste of chlorine coming from the municipal water system. HIGH A company that draws supply from a leased land may decide to up the lease price and rates that will cause to raise its prices.

2. POTENTIAL NEW ENTRANTS

3. RIVALRY AMONG COMPETING SELLERS

4. BUYERS

5. SUPPLIERS

STRATEGY ANALYSIS
The Coca-Cola Company offered a bottled water known as Dasani. Dasani strategy is to produced several different types of water in order to cater to people trying to be healthy, but looking for water with a different flavor. The latest result was Dasani Plus, a vitamin-enhanced flavored water beverage with zero calories per serving. Since the only things to remember in competing are the cost and the differentiation. The Coca cola improved their bottled water for their consumer needs. The company is being called as The Healthy Hydration Company. Nestle Waters regularly carries our research to help better consumers better understand the important role of water and hydration for health and actively supports education about it. Aquafina by PepsiCo bottled water goes through a stateof-the-art purification process so that you get the refreshment your body craves in its purest form as they improve the worldwide presence, reducing Production Cost and developing an international customer loyalty. Our body is 60% water. Drink more water the only beverage your body really needs is the key message of Danone Waters. Throughout the world, studies on water intake show that people generally dont drink enough of it. At the same time, studies into the links between hydration, well-being and health are multiplying and demonstrating the benefits of hydration on the body and on the cognitive and physical functions of human beings. As a stakeholder in this scientific consensus, Danone wishes to make hydration one of the daily reflexes for our health.