Water Works

10/1/2011

Buoyed by sustainability initiatives in particular, bottled water sales are helping the beverage aisle remain in full flow.

Water may be available free anywhere in the United States, but the bottled variety remains a category to be reckoned with, thanks to Americans' continuing desire for convenience on the go and even at home. For the 52 weeks ending June 11, 2011, total bottled water dollar sales rose 1.9 percent in U.S. food, drug and mass-merchandiser stores, including Walmart, according to Schaumburg, Ill.-based Nielsen, with private label bottled water brands' dollar sales growing 2.1 percent over that same time period, on top of 3.6 percent growth in the year-ago period.

As an illustration of bottled water's ongoing popularity, sales are brisk at Stamford, Conn.-based Nestlé Waters North America (NWNA). VP of Sales Thomas Hipwell describes them as “strong and growing,” with volume sales up 6.5 percent in 2010 — higher than those of the category and total liquid refreshment beverages. “Bottled water was the fastest category to come out of the recession, and sales continue to grow in the U.S. as consumers shift away from sugary sodas,” notes Hipwell.

“We're pleased with how our bottled water business has performed ... over the past year, in line with our projections,” seconds Geoff Henry, Dasani brand director at the Coca-Cola Co. in Atlanta, who points out that consumers additionally take into account taste, trust in the brand and the right package size to meet their immediate needs when selecting a bottled water product. “We're also seeing positive consumer response to the latest innovations we've put out in the marketplace.”

Those innovations include the launch of Dasani PlantBottle packaging nationwide in the United States. The 100 percent recyclable plastic bottle features up to 30 percent plant-based materials sourced from sugar cane production. Unlike traditional PET bottles, which are made solely from nonrenewable materials, the PlantBottle is the first fully recyclable plastic beverage bottle produced using plants. As well as reducing dependency on non-renewable resources, the packaging lowers carbon dioxide emissions and offers consumers who are worried about the environment a bottle they can feel good about buying.

“Within the bottled water category, some consumers were starting to consume less in response to the economy and the perceived effect of packaging on the environment,” explains Henry. “Sustainable packaging is critical to easing consumers' concerns and to our efforts as a socially responsible company.”

In common with Dasani, NWNA has revamped its packaging to address environmental concerns. “We make an ongoing effort to reduce all of the primary and secondary packaging materials we use in our products,” observes Jane Lazgin, director of corporate communication. “Our next-generation Eco-Shape bottle, an updated version of the 2007 Eco-Shape bottle, is among the lightest half-liter bottles available across the entire packaged beverage industry, and over the past 15 years, we've reduced the amount of PET plastic in our bottles by 60 percent. This has helped avoid using 260 million pounds of plastic, and the associated greenhouse gas emissions. Also, we have continuously reduced the size of our paper labels since 1998 — to date saving nearly 20 million pounds of paper, or the equivalent of 25,000 trees.” Lazgin adds that the company's resource brand has recently moved from 25 percent rPET to 50 percent, and it introduced a 50 percent rPET bottle in some markets for the Deer Park brand.

In altering their packaging to be more sustainable, companies must factor in the attractiveness of the new bottle. “OmegaWater's recently redesigned bottle is significantly lighter — roughly half the weight of most of its competitors — and more aesthetically appealing, enabling it to stand out on store shelves,” notes Joe Lyons of Nature's Omega, a subsidiary of Pittston, Pa.-based Nature's Way Purewater Systems Inc. “The new packaging highlights Nature's Omega's continued commitment to improving the environment and reducing its carbon footprint. By using a cold-filled process in making OmegaWater, it saves substantial energy compared to a hot-filled process in which the water is superheated prior to going into the bottle, using far more energy and requiring a heavier bottle with 40 percent more plastic compared to the cold-filled process, according to market studies.” Launched this past spring and currently experiencing “robust” sales, OmegaWater is a line of four flavored, nutrient-infused varieties with zero sugar and zero calories.

“The new packaging highlights our continued commitment to improving the environment and reducing our carbon footprint.”

— Joe Lyons, Nature’s Omega

Another challenge to greener packaging goals is to protect the product within. “We came up with a clear glass bottle packaged, in a brown recycled content paper bag to protect our Raw Water,” says N. Brian Pullen, president of Harrison, Maine-based Summit Spring Water, provider of Raw Water, a minimally treated product bottled at the source. “The packaging obviously stands out on a shelf, but it actually serves the purpose of helping protect the water from light. 'Living' water like Raw Water must be protected from light and heat to prevent it from spoiling.”

Even private label products have gotten in on the sustainable packaging act. The bottles for Weis Quality 24-pack 20-ounce bottled water are now made with 100 percent recycled PET plastic, making Sunbury, Pa.-based Weis Markets the first supermarket company in the country to offer the environmentally friendly bottle, which uses 25 percent less plastic and is made with recycled resin derived from baled post-consumer plastic purchased from municipal recycling plants.

“We know that eight out of 10 plastic bottles end up in landfills,” says Bruno Garisto, Weis Markets' director of corporate brands. “Our new Weis Quality 24-pack bottled water is a creative, practical product that helps our company address this challenge and allows us to reduce our carbon footprint.”

Recycling Efforts

All too aware of the widespread perception that many consumer packaged goods containers are wasteful, bottled companies are determined to advance the cause of recycling. “We're working hard to help increase recycling rates in the U.S. and Canada by bringing new thinking to the debate over deposits and recycling,” says Lazgin. “We believe that there are more effective ways to approach recycling to capture all forms of containers, not just those for beverages. We are actively working with a variety of stakeholders to develop a closed-loop recycling system, including participating on the American Beverage Association's Recycling Task Force.”

In addition, Nestlé Pure Life this year revealed a four-year partnership with Stamford-based Keep America Beautiful (KAB), which will focus on increasing recycling rates nationwide through a new recycling awards program. Nestlé's association with the organization goes back a ways: In August 2009, NWNA teamed up with Austin, Texas-based Whole Foods Market for a program in which, for every plastic beverage container recycled at a Whole Foods store in a resource recycling station during that year, the manufacturer made a 5-cent donation to KAB to support local recycling programs across the United States.

Beyond the PlantBottle, which is additionally available in multiple international markets, Coca-Cola “has made a significant, company-wide commitment to support recycling efforts,” he affirms, including the creation of Coca-Cola Recycling to recover and recycle packaging materials throughout the Coca-Cola system. The company also promotes recycling through RecycleBank, which rewards recyclers with points redeemable at participating business partners; “RecycleMania,” a program with the National Recycling Coalition that involves students at more than 600 universities in a friendly competition to see which school can reduce, reuse and recycle the most waste; and Coca-Cola's own “Give It Back” campaign, which encourages bottle and can recycling. “Over the past few years, Dasani also has worked closely with the state parks in Arizona, California, Nevada, Oregon and Washington to provide resources and funds that help keep the parks clean,” adds Henry.

Among the company's retail-level reminders to recycle are providing consumers with reusable shopping bags when they buy Dasani water, and a partnership with the Pittsburgh-based Heinz Corp. on in-store activations for the Heinz and Dasani PlantBottle applications.

Bottled water providers are also keenly aware that recycling and other sustainability efforts begin at home “[Parent company] Nature's Way's bottling facility recycles all plastic and corrugated refuse, and works closely with its suppliers to ensure that the manufacture and delivery of its product uses the least raw materials,” explains Lyons of the plant where OmegaWater is bottled. “Companywide initiatives on energy efficiency, including replacing all lighting fixtures, have significantly reduced energy costs.”

One supplier has found itself “nearly alone” in espousing a more radical recycling solution. “We have been on the forefront in calling for a nationwide bottle redemption program for over five years,” says Summit Spring Water's Pullen, who acknowledges difficulties over associated costs being passed on to bottlers, and how regulatory bodies would attribute those fees.

Other Good Causes

Of course, recycling isn't the only worthy cause backed by bottled water providers. Their product's ubiquity makes it the perfect vehicle for getting the word out on a whole range of issues.

For the past four years, Nestlé Pure Life has supported National Breast Cancer Awareness Month in October with pink-ribbon packaging on its half-liter 24-pack. Last year, as a result of its efforts, the brand was able to donate $500,000 to the New York-based nonprofit Breast Cancer Research Foundation — twice its 2009 donation.

Winn-Dixie, Jacksonville Jaguars Relaunch Co-branded Water

Winn-Dixie Stores Inc. and the Jacksonville Jaguars pro football team have brought back the “official bottled water of the Jaguars.” The 24-ounce co-branded bottles sport the Jaguars' logo on a teal label and will be the only water sold at EverBank Field. If the game-time temperature is 90 degrees or higher, the team will lower the $3 price to S2 to ensure fans can stay hydrated throughout the game.

This is the second consecutive season the NFL's first co-branded bottled water will be used by the team, according to Jacksonville, Fla.-based Winn-Dixie. The water is bottled under certified-kosher standards in Silver Springs, Fla., and comes from the deepest source of drinking water in the Southeast, the Floridan Aquifer. The bottles are recyclable and use less plastic than most national brands, making them 50 percent lighter and reducing the amount of plastic in the environment.

≴The Jaguars are looking for a hot start this NFL season and will be depending on Winn-Dixie, as the official grocery store of the Jaguars, to keep the team and fans at EverBank Field hydrated,” says Mary Kellmanson, Winn-Dixie's group VP of marketing. “We are continuously looking for ways to provide solutions for our guests, and this partnership with the Jaguars is an easy way to offer a quality product at an affordable price for our fans.”

Wayne Weaver, chairman and CEO of the Jacksonville Jaguars, says that Winn-Dixie plays a “vital role” in making home games a great experience for the team and its fans. “Winn-Dixie's sponsorship continues to provide us the support we need,” he notes, “and we look forward to the season ahead of us.”

Winn-Dixie has also kicked off a sweepstakes tied to the Jaguars. The Tealgate with Pride sweepstakes will award 20 4-packs of tickets for each Jaguars home game and a private pre-game tailgate party. One of the winners will also be selected in a random drawing to participate in the Bag It and Winn on-field contest during the game, where the fan has the chance to win up to $2,000 in Winn-Dixie gift cards.

Winn-Dixie guests who use a Customer Reward Card to buy any two specially designated tailgating items advertised each week will be entered automatically in the sweepstakes. Winners will be selected in a random drawing from all entries from the 50 Winn-Dixie stores in northeast Florida and southeast Georgia the week before each home game.

Additionally, to mark the 10th anniversary of 9/11, the grocer presented a $100,000 check to Wounded Warrior Project (WWP), also based in Jacksonville, before a Jaguars-Tennessee Titans game. The money was raised from sales of specially packaged Winn-Dixie bottled water sold between Memorial Day and Independence Day.

The ubiquity of bottled water makes it the perfect vehicle for getting the word out on a whole range of issues.

Along with recycling efforts, “we have been involved in ovarian cancer, Dallas Rocks Autism, and 'Mary Poppins' for the Children's Hospital in Portland, Ore., thus far,” notes Marsha Green, director of marketing for New York-based Jana North America, an all-natural premium water brand with high levels of minerals.

Wat-aah, a New York-based functional water brand aimed at kids, teamed up in May with the National Association of Broadcasters Education Foundation and music superstar Beyonce for the “Let's Move! Flash Workout” event in support of First Lady Michelle Obama's initiative to combat childhood obesity. The workout involved middle school students across the United States and abroad simultaneously exercising to the dance routine video “Move Your Body,” led by Beyonce personally.

On the private label side, Jacksonville, Fla.-based Winn-Dixie Stores Inc. offered specially wrapped 24-packs of its store-brand spring water and purified water this past holiday season to support the U.S. Marine Corps Reserve's “Toys for Tots” program, which has distributed gifts to needy children annually since the late 1940s. The grocer also sold 24-packs in patriotic packaging through July 4 to aid Jacksonville-based Wounded Warrior Project, which helps injured Iraq and Afghanistan war veterans. For more about Winn-Dixie's private label water, see the sidebar on page 61.

Keep on Selling

What's the best way to sell bottled water? NWNA has some ideas. “When temperatures reach 80 degrees, sales of bottled water increase exponentially,” notes Hipwell. “Endcaps provide needed space to be sure shelves are full, and branded bottled water at an attractive price as a front-page item is a traffic driver into stores.” He also advises that retailers consider the relationship of space allocation to beverage sales trends, devoting more space to those categories and brands — that are performing best.

When it comes to commercials, “we're the only national company that is advertising and driving consumers to the category, and we're seeing that strategy pay off,” asserts Hipwell. “Our TV ads for Nestlé Pure Life are resonating with moms who want healthful choices for their family, and we're seeing brand awareness increase among consumers when this advertising runs. Nestlé Pure Life, in particular, is having a fantastic year. It's up more than 35 percent in supermarkets in 2010.” Hip-well adds that NWNA's “Born Better” advertising for its regional spring water brands is “having a positive impact on sales growth.”

Despite many supermarket operators' successful bottled water lines, “private label alone can't build category growth — news and category support from branded bottled water is necessary,” he observes. “That said, branded bottled water needs shelf space and brand advertising at retail to make that happen.”

Smaller brands are coming up with inventive ways to market their products, including through social media. “We have been focusing on connecting with the retailers and their current programs, couponing, sweepstakes via retailers' websites and Facebook pages, and online viral IRCs,” says Jana Water's Green. “We are working on radio programming along with a Facebook page for both our retailers and core consumers.”

For a winning merchandising strategy, Green stresses “location, location, location — shelf presence in the right location — tie-ins with the right partners both in and out of store. Ensuring that the brand is recognized and tied back to brands or categories that fit the demographic is pertinent to success.”

Meanwhile, Coca-Cola has carried its passion for recycling into the development of its merchandising solutions. “To showcase our products and catch the eyes of shoppers, we will use more merchandisers made from recycled content in the months and years ahead,” promises Henry. “These new merchandisers look great, and reinforce our commitment to recycling and reuse.” PG

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