Coca-Cola goes flat out for water

Water is fast becoming the new must-have item for drinks companies, particularly industry giant Coca-Cola. A combination of health concerns and maturing market conditions have led to slow growth sales for cola drinks. These days, it's all about bottled water when it comes to better margins.

by The Sunday Times
Last Updated: 23 Jul 2013

Between 2001 and 2006, sales of cola drinks in the UK increased by 7%. Sales of water on the other hand saw a handsome 74% growth. Coca-Cola in particular has been working hard at establishing itself into this new segment. The company is market leader in fizzy drinks but lags behind its arch rival PepsiCo when it comes to non-carbonated drinks (which include bottled water, juices etc).

The quest started in 1999 when Coca-Cola acquired Malvern Water. In 2004, the company then decided to launch its own brand of bottled water, Dasani, a venture which ended in a complete fiasco after it emerged that Dasani was nothing more than glorified tap water sold at a 300,000% premium (half a litre of mains water costs roughly 0.03p; with Dasani it was sold at 95p).

Coca-Cola now seems to have decided that acquisitions of well-established brands was the way forwards. Last week, the company took over the American company Glaceau for $4.2 billion. And it was also revealed that the drinks giant was looking at acquiring Highland Springs, a well-established Scottish brand of mineral water in the UK. Highland Spring make up about 10% of volume sales of bottled water, on a par with Volvic and just behind Evian (both belong to French food company Danone).

The acquisition would establish Coca-Cola as a firm contender in the bottled water market. "There is definitely a sustained shift towards drinks that don't have added sugar," observed Richard Laming at the British Soft Drinks Association. "Also, people seem to be shifting away from things with bubbles."

Another wild card to throw into the equation is climate change. Research by the association suggests that for every one degree Celsius increase above 14C, sales of water increase by 5.2%.

Source:
For Coke, water is the real thing
Ben Laurance
The Sunday Times May 27 2007

Review by Emilie Filou

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