Competition in the Bottled Water Industry

Competition in the Bottled Water Industry in 2006

Business Policy

Group 1

Jonathan Bower

Alretha DeRosa

Kelly Fleming, 0501562

Mike Lalonde

Jennifer Major

INTRODUCTION

Introduction

The global bottled water industry is, after several years of strong growth, maturing into a substantial sector of the bigger, non-alcoholic beverage industry. The increased awareness of the societal pressures to a healthier lifestyle coupled with the demand to do more in less time

INDUSTRY ANALYSIS

Strategy Shaping Characteristics

The general bottled water industry has international scope with a market size rivalling some of the largest markets in existence. The growth of this industry varies from nation to nation but all relevant nations are experiencing growth. Mexico and most European countries have histories of bottled water consumption. This relates to stronger connections with past brands. The United States of America (USA), although not as historical relevant in the industry, is now one of the largest growing market. This country provides a great opportunity for bottled water companies because it does not have the same degree of brand loyalty seen in Europe.

International competition in this industry is between three large multi-national players (Coca-Cola, Pepsi, and Nestle). This oligopolistic industry presents a large barrier to new entrants attempting to penetrate the market. The major competitive advantage of the large corporations is their increasing returns to scale and their strong, integrated distribution systems. As one of the existing leaders in the industry, the bottled water market appears attractive in terms of growth potential due to the increased consumer trends toward convenient, healthy living. As a new entrant, the international market is hostile. Limited availability of shelf facing in grocery and convenience stores enables retailers to charge slotting fees. The new...