Lessons From the Growth of Bottled Water

Lessons From the Growth of Bottled Water

I’ll admit it I am fascinated by water.

Not just any water…A very special water – the kind you find in a bottle. In fact, I think many great business lessons can be found in the world of bottled water.

My water fascination dates back to at least 2011 when I wrote the following…

“…bottled water is truly a phenomenon of our time. When I was a kid, water didn’t come in bottles, occasionally I was even reduced to drinking it straight from a garden hose. In fact, 30 years ago there was hardly a bottled water industry. But bottled water caught on quickly…To put < sales> in perspective, more money is spent on bottled water than on movie tickets or iPods. Think about it, bottlers and distributors have elevated water to a place where it sells for 4 times the price of a gallon of gasoline, even though we get it free from our home taps. But I hear a few of you saying, that there is a qualitative difference between bottled water and tap water. In truth, approximately ¼ of all bottled water is tap water repackaged by either Pepsi or Coke. Of course, there are those sophisticated brands like Fiji or Pellegrino. Fiji produces a billion bottles of water a day in a country where more than half of the locals don’t have safe drinking water and while the town of San Pellegrino is known for water from volcanic mineral springs, Pellegrino’s bottled water requires the injection of bubbles at the companies bottling plant.

So maybe it’s not the quality that drives sales but rather it’s the convenience. A convenience that results in 38 billion water bottles being sent to landfills annually and over a billion dollars’ worth of plastic being pushed underground each year. Now lest you fear that I am trying to guilt you out of drinking bottled water, I tout no such social agenda. I drink my share of bottled water. My favorite is Ethos water, a Starbucks brand that offers a portion of the proceeds from each bottle I purchase to help secure safe drinking water in a world where 1 in 6 people don’t have a reliable, healthy source.”

So, that was what I wrote in 2011 and we all know iPods gave way to streaming audio and smartphones, but how has bottled water done?

Just recently Ad Age ran an article with the headline There’s a Clear Winner in Beverages: Bottled Water Tops Soda. The article went on to note:

“Industry tracker Beverage Marketing Corp. today announced that bottled water surpassed carbonated soft-drinks in 2016 to become the largest beverage category by volume, capping what it described as a “remarkable, decades-long streak of vigorous growth.”…Total bottled water volume grew from 11.8 billion gallons in 2015 to 12.8 billion gallons last year…On a per capita basis, bottled water consumption exceeded 39 gallons compared with 38.5 gallons for soda. Carbonated soft-drink per-capita consumption exceeded 50 gallons as recently as 2006. Beverage Marketing Corp. projected that bottled water would hit the 50-gallon mark by the middle of next decade.”

Back to the business and customer experience lessons of bottled water…There are few products more ordinary or readily available in countries like the United States than water. Generations ago, no one would have envisioned people paying for and walking around with bottles of water; however, lifestyle trends created an opportunity for companies to package and deliver a readily available product in a new way. In the 1970s Perrier was the first to bring bottled water (albeit an effervescent version) to America. Subsequently, two trends paved the way for the explosion in the bottled water market that we are experiencing today:

  • Consumer trends toward healthier choices in hydration.
  • A desire for “grab and go” lifestyle products.

H.L. Menken once wrote, “No one in this world…has ever lost money by underestimating the intelligence of the great masses of the plain people.” While I don’t think paying $60,000 for a 750 ml bottle of Acqua di Cristallo water necessarily reflects a problem of intelligence on the part of a purchaser (the bottle is made of solid gold and the water is dusted with gold flakes), I do think a considerable amount of money can be made from:

  • Tailoring products to fit with hectic lifestyles of customers.
  • Thinking about how you can make doing business with your company easier.
  • Removing pain from the life of your customer.
  • Helping your customer achieve health or pleasure.

So, what lessons can you take from the growth of “bottled water?” More importantly, how can you take the ordinary in your products and deliver those products in ways that offer extraordinary value to your customers?

I’ll sip my $2.25 bottle of Ethos Water knowing that between 5 and 10 cents of that purchase goes to a positive social cause. In fact, Ethos was the first company I’m aware of that linked a cause to consumption, a trend later followed by brands like Warby Parker and TOMS shoes. Maybe that’s one last lesson we can learn from at least one bottled water brand…you can “do well and do good” at the same time!

Joseph Michelli
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Joseph A. Michelli, Ph.D., is an internationally sought-after speaker, author, and organizational consultant who transfers his knowledge of exceptional business practices in w ... Click for full bio

Most Read IRIS Articles of the Week: April 24-28

Most Read IRIS Articles of the Week: April 24-28

Here’s a look at the Top 11 Most Viewed Articles of the Week on IRIS.xyz, April 24-28, 2017 

Click the headline to read the full article.  Enjoy!

1. Implementing a Robo Advisor Strategy

Robo advisors can complement—not threaten—any bank’s business model and improve customer engagement. Regardless of age, income, or gender, 75% of bank customers surveyed by KPMG said they would be likely or somewhat likely to consider a robo advice service from their bank. — Greg Vigrass

2. The Sweetspot of Sales

I’ve had some extremely interesting conversations the last few days. We’ve been discussing sales, sales management, leadership, motivation etc. I am very fortunate to have the opportunity to meet with these inspiring business leaders. One question keeps coming up: Why do you love sales so much? — Tove Zilliacus

3. New ETFs That Reinvent Fixed Income Investing—Without Reinventing the Wheel

We all know the drill: the Fed raises interest rates, and the bond market falls. That’s an important equation to consider now that the decade-long era of historically low interest rates is slowly but surely coming to an end. — Salvatore Bruno

4. Alternative Beta Strategies: Alpha/Beta Separation Comes to Hedge Funds

A quiet revolution is taking place in the alternatives world. The idea of alpha/beta separation has finally made its way from traditional to alternative investing. This development brings with it a more transparent, liquid and cost-effective approach to accessing the “alternative beta” component of hedge fund return and a new means for benchmarking hedge fund managers. — Yazann Romahi

5. Advisors Will Be Extinct in 5 Years Unless…

I’ve had financial advisors for more than 40 years. Not once in those years have I called my advisor to find out what stock/funds I should buy or sell. But I have called to find out where I should get my first mortgage, when to sell my house, or how much income I could get in retirement. — Paulette Filion and Judy Paradi

6. Outsourcing Investment Management: TPAM vs. TAMP

Many financial advisory firms want the silver bullet solution to outsourcing investment management so the focus can be on client interactions and business development. However the jargon in this outsourced space has become very confusing so here is a brief summary of our understanding. — Jennifer Goldman​​​​​​​

7. How Can Financial Planners Save You From America's #1 Killer?

You probably aren’t aware of this, but it’s true: financial planners are heroes. Yep, it's the truth. And when you think of the America's top killer, you might think about smoking, cancer or obesity. Or maybe even a serial killer. — Ronald Sier

8. How to Stay On Clients' Minds

How to effectively stay on your clients’ minds (for all the right reasons), even though they may not see you for months. — Paul Kingsman

9. 20 Reasons Why Your Company Should Do Less Better

Do Less Better practitioners are fanatical about focus and de-complexity; herein lies the secret of their success. Yet, do less better isn’t something most leaders embrace. The seemingly more attractive (and logical) option is to do more and more — John Bell

10. Advisors: Where Should You Start with Content Marketing?

Often advisors ask us, “How should I get started in marketing?” It’s a fair question. They just want to make sure they’re putting their time and resources in the right place. — Jud Mackrill​​​​​​​

11. The 11 Best Steakhouses in the World

Serious carnivores will go to the ends of the earth to seek out a perfectly marbled, expertly seared steak. And so, it seems, will we. We've visited the best butchers in France, reacquainted ourselves with the idea that everything (steaks included) is bigger in Texas, eaten at celebrated parrillas of Argentina, and enjoyed the elegant ambiance of metropolitan steakhouses. — Andrew Harper

Douglas Heikkinen
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IRIS Founder and Producer of Perspective—a personal look at the industry, and notables who share what they’ve learned, regretted, won, lost and what continues to ... Click for full bio