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Industry Analysis

The decline of soft drink purchases shows signs of a new direction consumers are taking. The new obsession for pursuing a healthy lifestyle and diet has led to new ideas and products but none more popular than Glaceau’s Vitamin Water. Vitamin Water has revolutionized the bottled water industry through its’ unique development. The use of natural water, enhanced with a variety of nutrients and vitamins has made it climb to the top of the industry chain. Vitamin Water has been the fastest growing company in the bottled water industry for the past few years. Despite their growth and high rank in the industry, Vitamin Water has competitors who are also very strong. Gatorade’s Propel Fitness Water and the bottled water, Aquafina, are just a few to name. Vitamin Water is currently ranked number one in sales in the category of nutrient-enhanced water. The success of Vitamin Water in their competitive industry can be directed to their effective marketing efforts. They have endorsements with many celebrities and athletes, such as 50 cent and NASCAR Driver, Kasey Kahne. (Associated Content, 2007) Their large variety of flavors also aid them in reaching out to different consumers; such as the peach black tea, called ‘perseverance,’ and the energy drink, formula 50. Vitaminwater’s new Facebook innovation is the latest craze, as people all around the world have the opportunity to vote and select for a new flavor.

Market Size

In a saturated category, Vitaminwater posted a 19.3% gain in 2008 sales, as of Sept. 7, hitting $315.3 million, according to Information Resources Inc. Propel Fitness Water, owned by Pepsi Cola, is a direct competitor of Vitaminwater. (Advertising Age, 11/17/2008). In 2009, Vitaminwater has taken the lead over Propel and Pepsi in the enhanced water market. The following chart shows 2009 Sales Data for the top four brands of Enhanced Water. Vitaminwater holds 60% of sales, while Propel, Sobe Life, and Aquafina Flavor Spash (all Pepsi products) make up the remaining 40%.

Source: Information Resources Inc., Chicago, 2009

Macroenvironmental Factors

Culture:
A healthy lifestyle is the market driver behind Vitaminwater. As consumers become more conscious about what they eat and drink, they look for products that promote wellness and provide prevention against diseases. Functional food products are getting increasingly popular due to this new and strong perception of consumers. (Yahoo Shine, 11/26/2009).
Another cultural factor that Vitaminwater plays to is the “on-the-go” lifestyle of most Americans. We don’t have time to take daily vitamins every morning. We need the convenience of our vitamins packaged in a bottle. (Newsweek, 1/31/2000).

Demographics:
The market for Vitaminwater is aimed at young adults, between the ages of 18 and 24. Although the market is intended for men, women tend to be more health-conscious, and are more concerned about their weight. An article written in Medical News Today states that “new research suggests women are more likely than men to be taking advantage of and eating foods to maintain overall health and wellness as well as for more specific benefits like improved feelings of fullness and digestive health.”(Medical News Today, Oct. 20, 2008).
Marketers of Vitaminwater would do well to try and reach the ‘over-50’ Baby Boomer demographic sector. This is the largest age demographic group in the United States. This consumer group is formed of approximately 78.2 million people who were born between the 1940s and the mid 1960s. Baby Boomers are a very selective consumer group who are particularly quality conscious. “They have tremendous purchasing power, active lifestyles and well-defined tastes.” (MissouriBusiness.net, 1/13/09).

Social:
A wave of environmental legislation has singled out the bottled water industry. In the last 10 years, the amount of plastic bottles being recycled increased from about 775 million pounds in 1995 to about 1,170 million in 2005, according to the Container Recycling Institute. (USA Today, 6/7/2008).
A report released by the Center for Disease Controls in 2006 indicted that over 60% of
American adults were overweight or obese and approximately 25% of American adults were
Obese. (Functional Beverages, 2007). Soft drinks high in sugar content may be partially responsible for the obesity rate in America. Consumers are choosing beverages, such as Vitaminwater, that have greater nutritional value. (Functional Beverages, 2007).

Technological:
Not only can you participate in selecting the new flavor on the Vitaminwater Facebook website, they also have a Flavor Buzzmeter. You can even play VitaminGames, to see what vitamins your body needs most. The Vitaminwater Facebook website also allows you to design the Vitaminwater Label, for a chance to win $5,000. Vitaminwater recently ran an interactive campaign on Facebook that encouraged users to pass “virtual” Vitaminwater among their friends.
This past summer, Vitaminwater teamed up with MySpaceMusic, the world's largest music community, which will allow drinkers to 'sync up while they drink up' by visiting MySpace Music and downloading a free Mp3 of their choice. "We see it every day, people with their headphones on, listening to their favorite songs and drinking their favorite vitaminwater," said Rohan Oza, Chief Marketing Officer for Glacéau. (Business Wire, May 14, 2009)
It seems that Vitaminwater could do more to take advantage of the Facebook medium. Perhaps offering coupons to those who install their application would increase traffic on the website. In their defense, keeping up with the latest technology is difficult.

Economic:
People feel uneasy in a tough economy. During a recession, consumers feel they have little control over their lives. Drink marketers, she suggests, should position their products as an affordable luxury that will help health and well-being. According to Mintel, a leading market research company, “The number of consumers buying energy drinks continues to grow despite a difficult economy.” (Convenience Store Decisions (CSD), March 31, 2009).

Political/Legal:
The Center for Science and Public Interest (CSPI) filed a class-action suit against Coca Cola, saying that the Vitaminwater brand is guilty of deceptive and unsubstantiated claims. (Progressive Grocer, 1/26/2009). Marketers of Vitaminwater claim that the product can reduce the risk of chronic disease and promote healthy joints. CSPI feels the drink is more likely to do harm than good, considering the 33 grams of sugar it contains.
In response to the lawsuit, a Coca Cola representative said: "This is a ludicrous lawsuit. Glaceau Vitaminwater is a great-tasting, hydrating beverage with essential vitamins and water, with labels showing calorie content. Consumers can readily see the nutrition facts panels on every bottle of Glaceau Vitaminwater, which show what's in our product and what's not." (Progressive Grocer, 1/26/2009).
The following, taken from the label of a bottle of Vitaminwater, suggests that Coca Cola is not taking these legal threats seriously.

power-c ; dragonfruit (c + taurine)
legally, we are prohibited from making exaggerated claims about the potency of the nutrients in this bottle. therefore, legally we wouldn’t tell you that after drinking this, eugene from kansas started using horseshoes as a thighmaster or that this drink gave agnes from delaware enough strength to bench press llamas. heck, we can’t even tell you this drink gives you the power to do a thousand pinkie pushups… just ask mike in queens. legally, we can’t say stuff like that — ’cause that would be wrong, you know? vitamins + water = all you need. for best results, stick it in the fridge. the inside is natural. the outside is plastic.

Bibliography

Advertising Age, 11/17/2008, Glaceau's Vitaminwater: A Marketing 50 Case Study, by Rupal Parekh, Retrieved 9/20/2009 from http://adage.com/article?article_id=132447

Associated Content,(4/23/2007) Review of Glaceau Vitaminwater, by Chad Rainwater, Retrieved 9/0/09 from http://www.associatedcontent.com/article/205473/review_of_glaceau_vitaminwater.html?cat=5

Business Wire, May 14, 2009, Vitaminwater's Newest Single - sync - Climbs the MySpace Music Charts; Free Song Download under the Cap of 24 Million Bottles of vitaminwater sync. Retrieved 9/22/2009 from http://businesswire.com

Convenience Store Decisions (CSD), March 31, 2009, Energy Drinks Holding Strong, by Julie Crawshaw, Retrieved 9/22/2009, from http://www.csdecisions.com/article/6363

Functional Beverages – US. (August 2007) Market Segmentation. Retrieved September 21, 2009, from Mintel International Group Ltd.

Gems Sty, June 1, 2007, Vitamin Water – Packaging Design, Retrieved 9/22/09, from http://gemssty.com/2007/06/01/vitamin-water-packaging-design/

How Stuff Works, How Vitaminwater Works, by John Fuller, Retrieved 9/20/2009, from http://recipes.howstuffworks.com/vitaminwater2.htm

Medical News Today, Oct. 20, 2008, More Women Have Healthy Eating Habits Than Men, Survey, Retrieved on 9/20/2009, from http://www.medicalnewstoday.com/articles/126045.php
Newsweek, Jan. 31, 2000, Drinking Your Daily Dose. By: Howard, Lucy, Stevenson, Seth, Gordon, Devin, Begun, Bret, Newsweek, 00289604, 01/31/2000, Vol. 135, Issue 5

Nutraceuticals World, July 2009, Functional beverages: thriving or surviving? A tough economy has been both a blessing and a curse for these products. SECTION: Pg. 28 Vol. 12 No. 6 ISSN: 1531-0671

Nutraingredients.com,Sep. 4, 2002, Glaceau vitaminwater range expands, Retrieved 9/22/2009, from http://www.nutraingredients.com/Consumer-Trends/Glaceau-vitaminwater-range-expands

MissouriBusiness.net, 1/13/09, Appeal to Baby Boomers' active lives to grab a piece of their buying power- Mary Paulsell, Missouri Small Business and Technology Development Centers, Retrieved 9/22/09, from http://www.missouribusiness.net/sbtdc/docs/baby_boomers.asp

Progressive Grocer, 1/16/2009, CSPI Sues Coke Over Vitaminwater Claims, Retrieved 9/22/09 from http://www.lexisnexis.com.mutex.gmu.edu/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T7404848669&format=GNBFI&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T7404848676&cisb=22_T7404848675&treeMax=true&treeWidth=0&csi=167546&docNo=1

USA Today, (6/7/2008), By Krisy Gashler, The Ithaca (N.Y.) Journal, Thirst for bottled water unleashes flood of environmental concerns, Retrieved on 9/21/2009, from http://www.usatoday.com/news/nation/environment/2008-06-07-bottled-water_N.htm

Vitaminwater website: http://www.vitaminwater.com/
Vitaminwater Facebook website: http://facebook.com/vitaminwater
http://walk.avonfoundation.org/site/PageServer?pagename=walk_homepage
Yahoo Shine, (11/26/2009) Sugary drink consumption still on the rise. by Dr. Ayala Laufer-Cahana, Retrieved on 9/22/09, from http://shine.yahoo.com/channel/health/sugary-drink-consumption-still-on-the-rise-401779/