Water. Everyone needs it to survive, but for most of us it is a product which we take entirely for granted. Today, however, water is big business, and many of the world’s leading companies have been building up their bottled water operations in recent years.
So why is it that some waters are more expensive than others, and how can there be so many different varieties of what is essentially a basic element? For consumers in countries such as Belgium, France, Italy and Germany, where drinking bottled water has been a way of life for years, these questions are perhaps taken for granted, but in the UK, where there is no such tradition, the major bottled water producers have joined forces to create an organisation, the Natural Mineral Water Information Service (NMWIS), to help answer some of these questions.
Ian Hall, chairman of the NWIS, explained why there was a need for such an organisation in the UK. “There are three types of water available for consumers in the UK. Natural mineral waters are controlled by EU regulations, and must come from a specified and protected underground source. Before being bottled and sold they must undergo two years of rigorous testing to prove constant composition and gain recognition through the local authority. The only thing which can be added is carbon dioxide to add a little sparkle.
“Spring water must also come from a protected groundwater source, but unlike natural mineral water, it is not required to be consistent in composition, though some may be. In the UK, spring waters can legally be ‘natural’ or ‘processed’ waters but most of continental Europe states that spring water must by law be untreated. Some spring waters sold in the UK already meet European requirements by being untreated and natural. The final category contains a plethora of products which are almost always processed waters including table waters, tap water and distilled water.”
Health focus from the start
Telling these products apart is vital if consumers are to understand which products offer them the best value for money or which can provide them with the best health benefits, and this was one of the reasons why the NMWIS was set up five years ago. Originally part of the British Soft Drinks Association, the organisation was initially set up to react to short-term criticisms of the industry, but its long term goal was to spread the word about the health benefits of water over other drinks. However, this proved awkward given that many of the products it was criticising as unhealthy were produced by members of the BSDA, and so in 1998 the organisation was spun off into a separate unit.
“Our organisation accounts for 60 per cent of the bottled water volumes sold in the UK market,” said Hall, “but we hope that the messages we give out will be of use to everyone.”
He continued: “While we do not have many retailer own label brands among our members, we nonetheless work very closely with the major supermarket chains in the UK to spread the general message about water: that the majority of the UK population is dehydrated (only 10 per cent of the population drinks enough water) and that eight glasses of water a day are good for the health.”
“But because we are funded by the natural mineral water industry, we are also keen to stress the added benefits of this type of water. We are not saying that consumers should not drink other types of water to rehydrate themselves and keep healthy, just that they try and get the right balance. Natural mineral water can provide a lot more than just rehydration, and we simply want consumers to be aware of this when they make their choice.”
A growing business
In 2001, the UK bottled water market (including coolers) was worth nearly £900 million (€1.4bn) and sales reached nearly 1.6 billion litres. Coolers have helped drive growth in consumption, which is now around 11 per cent per annum, but bottled water is the fastest growing sector of the soft drinks industry in the UK according to the NMWIS, with packaged natural mineral waters accounting for 65 per cent of all bottled water sales in 2001, up 11 per cent in volume terms.
Britons now drink more bottled water than fruit juices or nectars or wine, but with just 20 per cent of regular consumers accounting for 74 per cent of total volumes, there is still a long way to go to turn Britain into a nation of water drinkers. Just 40 per cent of the UK’s adult population consume bottled water on a regular basis, according to Hall, with only 6 per cent drinking it on a daily basis. This averages out at around 24-25 litres per capita each year, a far cry from the 100 litres or more drunk each year by consumers in France, Germany, Italy or Belgium.
This means that there is still considerable room for growth in the UK market, with the result that a wide number of brands and products have been launched there in recent years, making it all the more important that the right messages get through to the consumer.
“With the major multinational drinks groups such as Coca-Cola and PepsiCo proving in the US that there is a market for remineralised table waters such as Aqua Fina, Dasani and Bon Aqua, it is unlikely to be long before we face a similar threat,” said Hall. “We need to ensure that consumers understand the difference between these brands and natural mineral waters, but also that they understand that these differences entail a difference in cost.
“It is an expensive business to produce, bottle and distribute natural mineral water, not least because the springs are often by definition in remote, mountainous regions. These costs, unfortunately, have to be passed on to consumers. Table water, on the other hand, costs a lot less, and the major soft drinks groups have well-established distribution networks to sell the water through, making them a lot cheaper. That gives them a major advantage.”
Lessons to be learnt
But the soft drinks industry can also teach mineral water producers a thing or two about marketing as well, Hall suggested. “Quality is of vital importance to soft drinks producers, and we have quickly learnt to follow the same path. The benzene scandal which affected Perrier a few years ago had a knock-on effect for the whole segment, so we have worked hard to ensure that quality standards remain high across all the brands.
“But we have also learnt to employ soft drink marketing techniques – more advertising, greater expenditure and more focused campaigns. Bottled water is consumed by such a range of people in the UK that we cannot pinpoint the characteristics of the traditional drinker. This is why we have launched campaigns to target specific groups such as mothers and babies.
“For a long time, bottled water was not allowed to be used in baby foods because it was thought to be too high in mineral salts, but this law has now been changed as the regulators have realised the benefits of mineral water. However, we have found that many doctors –the main source of advice for many new mothers – are often unaware of this change in the law, so we have been targeting them for the last two years.”
This ignorance of the true benefits of water is sadly shared by the vast majority of the UK population, Hall argued. Most people are unaware that they are already dehydrated by the time that they feel thirsty, while 15 per cent of men wrongly believe that drinking water leads to water retention and 6 per cent of people in the UK wrongly believe that sparkling water leads to cellulite.
Natural mineral water is highly regulated, but there are some health claims which are permitted on bottle labels, Hall said. “We can indicate whether a water is low or high in mineral salts, and we can say that it is suitable for those following a low sodium diet. The UK government is also proposing to allow a label claim regarding the suitability for inclusion in an infant diet, but we were not happy with the wording that the government had suggested and we are still waiting to reach a compromise.
“The rules governing infant formulas are still very draconian; for example we are not allowed to put a picture of a mother and baby on our bottles, which would clearly make it easier to get that particular message across. We are hopeful of a change soon, however. The Belgian company Chaudefontaine produces a water with such a symbol on it which is perfectly legal in its home market, and EU regulations state that products which are legally sold in one Member State must also be made available in all the others.”
Getting a lot for its money
The NMWIS is funded entirely by its members, which include all the leading bottled water producers and distributors in the UK – Danone Waters UK (whose brands include Evian, the biggest seller in the UK market, Volvic, Badoit, Chiltern Springs and Danone Activ), Nestle Waters UK & Ireland (Perrier, Vittel, Buxton, Ashbourne), Highland Spring (the largest UK produced brand, but also the owner of Gleneagles and producer of the Mountain Spring brand for the retailer Tesco), Well Well Well (producer of Aqua Pura, Ashe Park, Stretton Hills and a number of own label waters), as well as several other smaller players such as the distributor of the Belgian Spa brand and Waters & Robson, distributors of Abbey Well.
“Although all members are equal when it comes to voting, they contribute funds to the organisation on a banding basis according to their size,” Hall explained. “Our total budget is around £120-150 million (€190-237m) a year, the vast majority of which goes on communicating the issues to the media. We have become quite adept at getting the most from the media, and we can get the equivalent of £5-7million of media coverage from our £120,000.”
He explained that much of this coverage came around the time of Natural Mineral Water Week, the first week in May each year. “This is an important time of year to spread the water message. It is the start of the summer, when people need more hydration than ever, and the campaign has proved to be a great success over the years. But we also have a Detox Day after Christmas which we have run in conjunction with fruit and vegetable trade associations, as well as a Drink Water Day which we ran in conjunction with the National Kidney Research Fund, and we plan to organise other similar events in the future.”
But despite the coverage of events such as these, and the success of the organisation’s website www.naturalmineralwater.org, understanding among the public remains low. “Of course, if we had more money, we would be able to create big budget consumer campaigns to get our message across, but that is not likely to happen yet. Perhaps we could do more via the retailers, which after all are the main source of mineral water purchases, but they often have their own agendas and are not always willing to co-operate.
“But I think the turning point will really come when one of the major table water brands is launched in the UK with all the marketing might of PepsiCo or Coca-Cola behind it. We are already seeing a similar situation in Germany, where Coca-Cola has launched Bon Aqua. Natural mineral water producers there are starting to promote their brands by highlighting their naturalness, and I think we will see similar high profile campaigns in the UK when such products are launched here.”