Nestle and Danone are the two main players in the bottled water segment market in the world, competing against each other in certain markets, whereas differentiating from each other in others.
Before discussing the environment in which these two companies are evolving, first will shed light on the two leaders of the water industry in the world and their runners-up, Coca-Cola and Pepsico.
To begin with, we will explain about Danone:
After a merger between two French glass makers, BSN was founded in 1966 and produced flat glass and packaging. Then, BSN diversified into food business, and acquired Kronenbourg brewery, Evian, and the Societe Europeenne de Brasserie. In 1975, BSN merged with Gervais Danone, which was at that time the leading French food manufacturer. In 1994, the group was renamed DANONE.
In 1997, the group decided to concentrate its business on 3 core activities:
-fresh dairy products (yoghourts, desserts and children's food), accounting for 47% of the turnover
-drinks (bottled water), accounting for 27%
-cereals and biscuits, accounting for 23%
So, the company decided to sell off non core businesses (withdrawal of glass packaging operation and sale of the beer business).
Today, Danone is the world leader in terms of sales (in volume) in the bottled water market. It owns 2 of the 5 leading brands, Evian and Volvic, and the top selling brand of bottled water in Indonesia.
Its global market shares in bottled water rise 11%, which accounts for 16.3 billion litres of water sold in a year. Its global turnover for the year 2002 was 13.5 billion euros.
[...] In 2002, they bought Chateau d'eau (the French market leader which also had strong positions in Spain, Italy and UK). In 2004, Danone acquired Arco Iris (Mexico), which increased its worldwide volumes. The year before, it had taken over Aqua Pura. In 1973, Gervais Danone and BSN merged and gave birth to the leading fresh food manufacturer. The path to competitive dominance for the main competitors in the bottled water segment Danone is looking to expand in emerging countries, and as a result, does not have a high market coverage level on the world scale. [...]
[...] As transport and deliveries account for the biggest part of the total cost of a HOD container, companies should focus on purified water or spring water where the market enables it, so that the bottled water can be produced everywhere, and carry the same brand name for the case of spring water. On the ground, several operations can be lead: o In supermarkets, suppliers should negotiate the best space, so that the product can appeal at best the customer. o Increasing the advertising budget is also a real need, as all the competitors do not have a real opportunity to differentiate from each other (same products and same formats); advertising seems to be the best way to reach customers. [...]
[...] food company in the world has presence in several market segments: - Nutrition - Ice cream - Chocolate and confectionary - Pet foods - Dairy products - Cooking products - Drinks - Catering Originally a food company, Nestle stepped into the water industry in 1969, when it took 30% of Vittel (stakeholding), in order to acquire major stakes in 1987. It took only 15 years for Nestle to become the leader in bottled water regarding value, and own 70 different brands. [...]
[...] International Strategies Nestle and Danone adopted global strategies to compete in the global market scenario. A global strategy is defined by product standardization, economies of scale and delocalization to lower the costs. Firms' strategies are thought at a global level, and companies focus on their core business and competences, in order to develop themselves internationally to boost their competitive advantage. Thus, firms target the global leadership for several businesses. However, being global don't oblige firm not to be aware of local specificities, because it can improve their competitive advantage. [...]
[...] But they failed in this market as the distribution system was disorganized, prices were too high and the market was too competitive. Coca-Cola has strong presence in Indian market. Several actions were aimed at reorganizing and reducing production and administration costs. It led to layoffs, sales of non-core businesses, and outsourcing. o Japan: Danone is the market leader in terms of value in the bottled water segment. Volvic and Evian are the 2 brand names with a dominant position in this segment. [...]
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