If ever there were a clear-cut opportunity to prove that a brand can learn by its mistakes, Coca-Cola's second attempt to muscle in on the lucrative European water market with the roll-out of Belgian brand Chaudfontaine is it.
The company has a challenge on its hands. The sector is dominated by established French players such as Danone's Evian. More-over, Coca-Cola is still smarting from its first, catastrophic attempt to break into the UK market with the introduction of its US brand Dasani three years ago. Then, the company was forced to beat a hasty retreat having received a roasting from consumers and press alike when the fact that Dasani was no more than purified tap water from Sidcup emerged. In addition, the product was found to contain traces of bromate, a potential carcinogen.
For its latest foray, Coca-Cola has again opted to roll out an existing brand, but this time it is a spring water. It has been drawn in by a market that reached a value of £643m in the UK last year, accounting for 20% of the soft-drinks sector by volume, according to Britvic. In other European countries, water's volume share sits at more than 50%, suggesting there is clear room for growth on these shores.
Coca-Cola is not the only firm desperate to tap into this potential. Over the past 12 months Britvic has launched two water brands: Robinsons Fruit Shoot H2O, aimed at children, and youth brand Drench. These joined its existing on-trade brand, Pennine Spring, which it revamped.
The results for Britvic have not been spectacular. Although there are no official sales figures, insiders claim Drench has failed to provide the hoped-for returns. They point to the fact that Britvic is already repackaging the brand to boost sales, and the drinks company's marketing director, Andrew Marsden, has admitted that growth has been slow.
If Coca-Cola wants to avoid a similarly disappointing performance for Chaudfontaine, it must focus on the brand's provenance and authenticity, according to David Goudge, managing director of agency Brand Development. 'Coca-Cola needs to anticipate that consumers will question its credibility after the Dasani fiasco,' he says.
Many industry experts agree that Chaudfontaine needs to establish a point of difference as other water brands have done; Evian, for instance, has created an association with health and beauty through its mineral-water face spray.
While some add that Coca-Cola will have to build up distribution quickly if it is to compete effectively with Evian and Volvic, Douglas Lamont, head of new opportunities at Innocent Drinks, believes that there may be greater dividends in following Nestle's approach for its San Pellegrino water brand by positioning Chaudfontaine as a premium drink targeting the on-trade first. 'This would help to disssociate the brand from previous launches,' he explains.
Lamont also expresses some misgivings about the category that Coca-Cola has chosen to focus its activity on. He suggests it might have been better advised to move into the functional-water market, which he expects to show the most prodigious growth in the next few years.
It is an area into which Innocent itself is expanding by rebranding its £12m Juicy Water brand as This Water, with plans for further launches. It is not the only brand to have spotted the potential; Danone Waters, for example, is launching Volvic Revive, a product containing extracts of ginseng and guarana.
A further obstacle for Coca-Cola will occur at a structural level, in poor communication between its UK operations and head office in the US, according to some experts. They also claim the emphasis the company is putting on Coke Zero will force the launch of Chaudfontaine to take a back seat.
Goudge agrees that Coca-Cola is guilty of neglecting its smaller brands. 'It has struggled to move on from a corporate mentality to niche marketing,' he says.
Environmental concerns may also raise their head in the shape of food miles, with the impact of transporting water by air becoming an ever-more pressing issue for consumers.
Coca-Cola's success in the growing water market is therefore far from assured. Some argue that Dasani's failure has already cost it its credibility in the arena; others believe consumers won't care. Either way, the launch of Chaudfontaine represents a huge leap of faith in a challenging market. That said, a marketing warchest of £30m a year and significant retail influence will do its chances no harm.
- £215.8m: Volvic
- £140m: Evian
- £52.8m: Vittel
- £8m: Perrier
- £1.4m: Drench.