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As Soda Sales Suffer, Beverage Marketers Are Shifting to a New Stream of Income: Water


March 20, 2017

By Kristina Monllos

Edna Mitchell is an 88-year-old volunteer ambulance driver from Liberty, Maine. She’s also the star of a lighthearted new branding campaign that Nestlé will roll out this week for Poland Spring—one of the company’s six regional bottled water brands—touting a new tagline, “Greatness springs from here,” from creative agency FCB in New York. The Northeastern bottled water brand’s new promotional effort is the latest in a series of water-focused campaigns from major marketers like PepsiCo, The Wonderful Company and Nestlé.

In fact, during the Super Bowl on Feb. 5 of this year, PepsiCo used the platform to pitch its new premium water brand, Lifewtr, to the game’s 111.3 million viewers instead of pushing its titular soda. “Launching a brand during a cultural moment with audience scale that only the Super Bowl can deliver provided us with the perfect way to introduce our TV spot to the world with big results,” said Todd Kaplan, vp, water portfolio, PepsiCo North America Beverages.

PepsiCo wasn’t alone: The Wonderful Company brought its water brand, Fiji, to the Big Game for the first time. So did Dr Pepper Snapple Group’s Bai Brands—the healthier alternative to soda that it acquired in November 2016 for $1.7 billion—with a spot featuring Bai’s “chief flavor officer” Justin Timberlake. The question:

Why now?

“It’s clear that soda sales are suffering in the U.S.,” said Ruth Bernstein, co-founder and chief strategy officer at Yard, a strategic image-making agency.

“From heightened consumer awareness on the health implications of sugar drinks, to government interventions in the forms of sugar taxes, it’s not an easy time to be in the business of selling a soda. It’s no surprise then that the big players are broadening out their offering.”

Michael Wachs, CCO at GYK Antler, an independent marketing agency, agreed. “For years these bigger companies have made a fortune on making products that, at the end of the day, are enjoyable, but not healthy for you,” said Wachs. “That’s why they are trying to increase their portfolio of brands that are better for you—like water. … It makes sense that water is getting courted by everyone.”

Earlier this month, a new report from the Beverage Marketing Corporation found that annual bottled water consumption surpassed that of soda for the first time in 2016, with 39.3 gallons consumed per capita versus carbonated soft drinks’ 38.5 gallons. “Water became No. 1 last year on a volumetric basis,” explained Michael Bellas, chairman, CEO of the Beverage Marketing Corporation. “It’s being driven by health and wellness trends, it’s natural, local and has this wonderful good for you halo. It hits all of those buzzwords.”

But what can be said of this seeming marketing boom? “The marketing support [for water brands] has been relatively small,” said Bellas. “It’s a very tiny amount compared to the other beverage categories, but certain companies are really leading it—Coca-Cola, Pepsi, Nestlé. It’s not so much that the category is exploding but that certain companies are spending more.”

That thinking checks out according to data from Kantar Media. Spending for the bottled water category for the first 11 months of 2016 was $118.7 million versus $807 million for carbonated soft drinks. The top three bottled waters (Propel, Aquafina Sparkling and Smartwater) spent $44.3 million in the first 11 months of 2016. During that same period in 2015, that trio spent just $24.5 million, which means that the brands’ parents (Propel and Aquafina are owned by PepsiCo, Smartwater is part of Coca-Cola) nearly doubled spending from 2015 to 2016.

But it isn’t just about spending more; it’s about creating a brand that consumers want to connect with, explained Nestlé Waters’ CMO Antonio Sciuto. “What’s happening in the consumer landscape is that consumers are increasingly growing cautious in what they are eating and what they are drinking,” said Sciuto. (Nestlé Waters’ brands include Deer Park, Arrowhead, Perrier and San Pellegrino.) “The new focus on wellness is changing the habits of the American consumer where they are consuming more fluid, more vegetables and a lot more water.”

With the wellness trend in full force, selling water to health-conscious consumers shouldn’t prove too difficult. For marketers, the challenge ahead will be figuring out how to steer those consumers to specific brands.