Thursday, December 04, 2003

Dasani's D-Day Coca Cola just announced that it will be transferring its bottled water brand, Dasani, to France and the UK. That brand, founded in 1998, has become the number one seller in the United States in a few short years, beating out rival brands from Nestle, Danone, and Pepsico. We've documented the way in which the big soft drink companies have built market share in the US, and how Coke's distribution muscle has made the water dominant in convenience stores, supermarkets, and vending machines. Now Coke is going into the lion's den, planning to release Dasani in France and the UK, standing up against brands like Perrier, Volvic, Vittel, and Evian on their native soil. There is one twist, however. In the US, Dasani is just filtered tap water, the byproduct that bottlers have to make before adding the ingredients for Coke or Sprite. In Europe, it will be enhanced mineral water, taken from a spring in Belgium. Coke is ready to shake up the large European but mature bottled water market with a major advertising blitz. The product is likely to hit the whole market almost overnight. To compete against well-established brands, Coke plans to stress the heath aspect, as they will be loading the drink with added calcium and magnesium. Coke does sell a lesser brand, Bonaqua, in some other European countries. Rumors are already flying that Coke will next push into Scandinavia. Note that Coke is competing against friendly enemies Groupe Danone, several of whose water brands it distributes in the US and Nestle, whose iced tea it bottles and sells by license in the US. All this illustrates a growing tendency, especially in American companies. They develop a new product in the big US market, test its acceptability, and, if it succeeds, build a campaign strategy for the brand. They then can airlift the brand to other countries, with a game plan in place and plenty of money to spend on it. Big companies like Kraft, Procter & Gamble, Gillette, McDonald's, Colgate-Palmolive, and Pepsico are becoming masters at this game. And European companies like Nestle, Diageo, and Interbrew are catching on as well. For many companies in wealthy societies, there is no simpler way to grow than by expanding key brands to other countries. There used to be determined regionalism in many brands, but that's lessening rapidly. And since these companies starting at zero market share in any given country, they can make inroads into their competitors. Expect to see many more such brand attacks in the next few years. Companies that don't have this knack are in serious danger. Three notable US examples in the food industry are Hershey Foods, Heinz, and Campbell Soup. These companies own major brands and have big market share in the particular areas (chocolates, condiments, soup) that they specialize in. But they all operate in mature markets with slow, if any, growth, and they have limited smarts at approaching foreign markets. As a result, these companies have no easy way to grow, and they are constantly the subject of takeover talks. 8:44:42 PM

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