Glacéau: Marketing Vitaminwater

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Case Details:

Case Code : MKTG166
Case Length : 18 Pages
Period : 2002-07
Pub Date : 2007
Teaching Note :Not Available
Organization : Energy Brands Inc.
Industry : Packaged Water
Countries : US

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Enhanced waters have the potential to deliver flavor variety and a number of positive added benefits, including nutrition, rehydration, energy, etc., thus placing them in the sweet spot of consumer demand. Enhanced water is catching on among consumers of all ages, genders and income levels."¹

- Bill Pecoriello, Analyst, Morgan Stanley², in 2006.

"Vitaminwater has hit those three prongs (physical, emotional and spiritual) by balancing the spiritual need of overall health and wellness with the physical of refreshment and the vitamins that you need, plus the emotional with the packaging having words on it that are cheeky and fun. I think it's one of the best new product introductions that I've seen in the last few years."³

- Heather Dupre, Director Innovation, Kindred Keziah⁴, in 2005.

Introduction

In September 2006, PepsiCo Inc. (Pepsi)⁵ announced that it had agreed to change the packaging, label, and cap of its SoBe Life Water⁶, as per the settlement it had reached with Energy Brands Inc., (Energy Brands), maker of the Glacéau range of enhanced water products.

In April 2006, Energy Brands Inc. had filed a lawsuit against Pepsi, alleging that SoBe Life Water's packaging, label, and cap were similar to those of Glacéau vitaminwater and that Pepsi intended to confuse the consumers with its new packaging. As per the lawsuit, Pepsi had resorted to trade dress infringement and dilution and its label and bottle resembled that of vitaminwater.

It was also alleged that Pepsi had launched SoBe Life Water after it failed to acquire Energy Brands in early 2006.

On reaching the settlement with Pepsi, Founder CEO of Energy Brands, Darius Bikoff (Bikoff), said, "We were pleased with the overall settlement. There has been a history of attempts to ride the success of vitaminwater's coat tails. And it is kind of a shame because I think our competitors are better served trying to come up with their own innovation..."⁷

Analysts opined that the lawsuit and its subsequent settlement indicated the growing insecurity of the soft drink majors, which were facing a threat from companies promoting healthy alternatives to soft drinks.

Glacéau: Marketing Vitaminwater - Next Page>>

1] Caroline Wilbert, "Enhanced Water's Popularity has Many Taking the Plunge," Cox News Service, December 28, 2005.

2] New York based Morgan Stanley is a global financial services firm and operates in four business segments including institutional securities, global wealth management, asset management and Discover credit card. In 2005, the company recorded revenues of US$ 52.49 billion.

3] Heather Todd, "Rising Stars," Beverage World, January 15, 2005.

4] Kindred Keizah Inc. is Colarado, US based marketing and brand strategy firm. In September 2005, Kindred Keizah was renamed Egg Strategy Inc. The company's clients include Coca-Cola, Toyota, and Royal Caribbean among others.

5] PepsiCo Inc. is a global manufacturer and marketer of beverages and food products. In 2006, the company's revenue was at US$ 35.14 billion. Some of the well known brands of Pepsi are Mountain Dew, Tropicana, Twister soda, Aquafina, and Gatorade.

6] SoBe Life Water is water with added vitamins and antioxidants. It was available in five flavors pomegranate cherry, blackberry grape, orange tangerine, strawberry kiwi and passionfruit citrus.

7] "Pepsi, Energy Brands Settle, SoBe Label to Change," Reuters, September 05, 2006.


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