WATER, WATER EVERYWHERE
Coke, Pepsi unleash flood of ad muscle

Scott Leith - Staff
Thursday, July 12, 2001

Water is water, at least until the marketers get hold of it.

Then a humble commodity that literally falls from the sky becomes something else. Something with "personality."

Not long ago, it would have been silly to think about branding water. But the big beverage companies are doing just that, and this summer marks the biggest-ever ad barrage for Dasani, Coke's water brand, and Aquafina, bottled by Pepsi-Cola Co.

Those in the business believe brand loyalty will become a key factor in the water market, just as it did decades ago when Coca-Cola and Pepsi emerged as titans in the once-crowded soda business.

Branding is an important issue in a category where sales grew by nearly 26 percent in 2000, to 807 million cases --- the highest growth rate in the beverage industry. The challenge is getting attention in a highly fragmented market. There are hundreds of different water brands, and some are so small that they serve just a few towns.

"Consumers are trading up. They're willing to search for a brand," said Kellam Graitcer, Dasani brand manager at Coca-Cola. "We're trying to injecta little bit of personality into the category."

Meanwhile, other water sellers are watching as the behemoths reshape the business.

"We see their activities as rather good for the industry," said Steve Bayliss, vice president for marketing at Suntory Water Group, a Marietta company that sells Crystal Springs and other brands. About 80 percent of Suntory's sales come from delivering water to businesses and homes, so the company is mostly out of the line of fire when it comes to Coke and Pepsi.

Figuring out how to best market water is still an ongoing process. Many consumers continue to associate bottled water with snooty brands like Perrier and Evian, which are both spring waters. Dozens of other brands have nature-ish monikers: Poland Spring, Deer Park, Crystal Geyser and so forth.

Coke and Pepsi are aiming for the middle of the market. They sell purified water --- highly filtered regular water, usually taken right from municipal supplies --- instead of spring water, which comes from a specific groundwater source.

Coke also avoided a water-sounding name by choosing Dasani, a fabricated term that seems Italian. "That connotes a little bit higher quality," Graitcer said. "Bottled water is really most developed in Italy and France."

This year's Dasani ads, made by Berlin Cameron & Partners of New York, also avoid images of mountain streams and other standards of the category. Instead, Dasani shows water drinkers during their daily routines --- one woman pushes a baby stroller --- while funk music plays in the background. "Treat yourself well. Everyday" is the tag line.

Pepsi, in its new campaign for Aquafina, stays closer to traditional water ads by emphasizing the simplicity of the product and the slogan "So pure, we promise nothing."

The goal is to reach buyers who favor bottled water chiefly because of purity. The lighthearted voice-over is from "Friends" star Lisa Kudrow, but the visuals don't go beyond shots of Aquafina bottles and pouring water.

"How we're going about it is very different," said Robin Kaminsky, director of alternative beverages at Pepsi. "We don't think this is a complicated category."

The two companies are likely to spend about $20 million each this year on ads.

Both companies are trying to raise their profiles. While some water brands have been around for decades, Aquafina debuted in 1994 and Dasani came out in 1999. Thanks largely to powerful distribution, the brands already dominate the category. Together they hold nearly a quarter of the U.S. market.

Until recently, marketing was a mere distraction compared with distribution. Pepsi and Coke initially focused on simply getting their products into the marketplace.

Now water is everywhere. Dasani, for example, reaches 95 percent of the country. Atlanta Coca-Cola Bottling Co., a unit of Coca-Cola Enterprises, just spent $7 million to install a Dasani line at its plant in Marietta to handle the demand.

Now the focus is shifting to marketing.

"There are some who believe that branding a commodity-like product is very challenging," said John Sicher, editor of Beverage Digest. "For Coke and Pepsi, marketing their brands --- and marketing them right --- is very important."

That leaves upscale brands like Evian and Perrier with the challenge of trying to keep up.

Perrier, a carbonated spring water that fell from favor when plain bottled water rose in popularity, debuted a new campaign recently. The ads depart from snobbish imagery. One features a rusty pickup truck with empty Perrier bottles littering the bed.

Regional brands are in the ad game, too. Suntory has been running TV ads for its brands for the past five years, Bayliss said. Crystal Springs, Suntory's brand in the Southeast, was the official water for this week's Peachtree Road Race.

Keeping up with the leaders is important. Observers believe the number of water brands is certain to dwindle as time goes on. "The smaller brands are kind of starting to fall by the wayside," Graitcer said.

Sicher said only the strongest brands will survive. "Over the years to come, it will look like other beverage categories," he said. "It will come down to a relatively small number of big brands."

COMPARING MARKET SHARE
The fast-growing bottled water market is now topped by brands owned by Pepsi-Cola and Coca-Cola. These figures show U.S. market share for the first quarter of this year for the top five brands.
...............U.S.......Percentage.........Ownership
...............market....change in sales.............
...............share.....from 2000...................
Aquafina.......15.1%.....Up 59.4%...............Pepsi
Dasani.........8.7%......Up 123.9%...............Coke
Poland Spring..6.4%......Down 2.6%............Perrier
Dannon.........5.3%......Up 0.1%...............Danone
Evian..........4.9%......Down 12.6%............Danone
Source: Beverage Digest

/ JEROME THOMSPON / Staff