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Revisiting Convenience – Lessons from H20

Joseph Michelli, Ph.D. | Mar 15, 2017 28 views No Comments

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I’ll admit it I am fascinated by water. Not just any water…A very special water – the kind you find in a bottle. In fact, I think many great business lessons can be found in the world of bottled water.

My water fascination dates back to at least 2011 when I wrote the following…

“…bottled water is truly a phenomenon of our time. When I was a kid, water didn’t come in bottles, occasionally I was even reduced to drinking it straight from a garden hose. In fact, 30 years ago there was hardly a bottled water industry. But bottled water caught on quickly…To put < sales> in perspective, more money is spent on bottled water than on movie tickets or iPods. Think about it, bottlers and distributors have elevated water to a place where it sells for 4 times the price of a gallon of gasoline, even though we get it free from our home taps. But I hear a few of you saying, that there is a qualitative difference between bottled water and tap water. In truth, approximately ¼ of all bottled water is tap water repackaged by either Pepsi or Coke. Of course, there are those sophisticated brands like Fiji or Pellegrino. Fiji produces a billion bottles of water a day in a country where more than half of the locals don’t have safe drinking water and while the town of San Pellegrino is known for water from volcanic mineral springs, Pellegrino’s bottled water requires the injection of bubbles at the companies bottling plant.

So maybe it’s not the quality that drives sales but rather it’s the convenience. A convenience that results in 38 billion water bottles being sent to landfills annually and over a billion dollars’ worth of plastic being pushed underground each year. Now lest you fear that I am trying to guilt you out of drinking bottled water, I tout no such social agenda. I drink my share of bottled water. My favorite is Ethos water, a Starbucks brand that offers a portion of the proceeds from each bottle I purchase to help secure safe drinking water in a world where 1 in 6 people don’t have a reliable, healthy source.”

So, that was what I wrote in 2011 and we all know iPods gave way to streaming audio and smartphones, but how has bottled water done?

Just recently Ad Age ran an article with the headline There’s a Clear Winner in Beverages: Bottled Water Tops SodaThe article went on to note:

“Industry tracker Beverage Marketing Corp. today announced that bottled water surpassed carbonated soft-drinks in 2016 to become the largest beverage category by volume, capping what it described as a “remarkable, decades-long streak of vigorous growth.”…Total bottled water volume grew from 11.8 billion gallons in 2015 to 12.8 billion gallons last year…On a per capita basis, bottled water consumption exceeded 39 gallons compared with 38.5 gallons for soda. Carbonated soft-drink per-capita consumption exceeded 50 gallons as recently as 2006. Beverage Marketing Corp. projected that bottled water would hit the 50-gallon mark by the middle of next decade.”



Back to the business and customer experience lessons of bottled water…There are few products more ordinary or readily available in countries like the United States than water. Generations ago, no one would have envisioned people paying for and walking around with bottles of water; however, lifestyle trends created an opportunity for companies to package and deliver a readily available product in a new way. In the 1970s Perrier was the first to bring bottled water (albeit an effervescent version) to America. Subsequently, two trends paved the way for the explosion in the bottled water market that we are experiencing today:

  • Consumer trends toward healthier choices in hydration.
  • A desire for “grab and go” lifestyle products.

H.L. Menken once wrote, “No one in this world…has ever lost money by underestimating the intelligence of the great masses of the plain people.” While I don’t think paying $60,000 for a 750 ml bottle of Acqua di Cristallo water necessarily reflects a problem of intelligence on the part of a purchaser (the bottle is made of solid gold and the water is dusted with gold flakes), I do think a considerable amount of money can be made from:

  • Tailoring products to fit with hectic lifestyles of customers.
  • Thinking about how you can make doing business with your company easier.
  • Removing pain from the life of your customer.
  • Helping your customer achieve health or pleasure.

So, what lessons can you take from the growth of “bottled water?” More importantly, how can you take the ordinary in your products and deliver those products in ways that offer extraordinary value to your customers?

I’ll sip my $2.25 bottle of Ethos Water knowing that between 5 and 10 cents of that purchase goes to a positive social cause. In fact, Ethos was the first company I’m aware of that linked a cause to consumption, a trend later followed by brands like Warby Parker and TOMS shoes. Maybe that’s one last lesson we can learn from at least one bottled water brand…you can “do well and do good” at the same time!

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