Saturday, June 16, 2007

Romans had their Aqueducts, Modern Italians their Bottled Water

The ANNOTICO Report

Paradoxically, Italy is a country where plenty of clean water flows freely from public taps and fountains in the streets of cities like Rome.

However, Last year, Health conscious Italians downed 178 litres of bottled water each - more than four times that of their counterparts in Britain and above that of other bottled water guzzlers such as France and Germany.

Fortunately,  about 120 companies battle it out in Italy, and thirsty Italians can chose from as many as 270 brands of bottled water, driving down prices.

Derisively, Italian comedian Beppe Grillo calls  bottled water - "putting rain in a bottle and then making you pay for it" 

Bottled Water: Rain in a Bottle?

Independent Online - Cape Town,South Africa

By Deepa Babington  

June 15 2007

Legend has it that the ancient Romans refreshed themselves with the bubbly water that springs out of an extinct volcano near Naples, a reference to which can be found even in philosopher Pliny the Elder's works.

A marketing dream perhaps, but not enough to stop the company that bottles that water, Ferrarelle, from sliding into losses a few years ago as competition heated up in Italy's bottled water market.

Now in the hands of a new owner, Ferrarelle has begun an ambitious plan to return to its glory days. But competition has become even more cut-throat and today it is one of about 120 companies battling it out in Italy, which boasts the world's largest per capita consumption of bottled water.

Thirsty Italians can chose from as many as 270 brands of bottled water, driving down prices and margins over the past few years.

"If you enter a big store today, you don't buy its water because it's good, you buy it because it has a lower price," said Carlo Pontecorvo, the Neapolitan entrepreneur who took over the Ferrarelle business in 2005. "It's a market where pricing is the only guide for purchasing."

It's easy to see why the rush is on.

Fresh water sources are abundant in Italy, local permits for bottling water are easily available and Italians seem to have an almost insatiable appetite for the final product.

Last year, they downed 178 litres of bottled water each - more than four times that of their counterparts in Britain and above that of other bottled water guzzlers such as France and Germany, according to research group Euromonitor.

That's nearly six percent of the $122-billion global bottled water market, dominated by multinationals such as Danone of France whose brands also include Evian and Volvic, and Swiss group Nestle, parent of Perrier and Vittel.

Paradoxically, this is a country where plenty of clean water flows freely from public taps and fountains in the streets of cities like Rome.

But health-conscious Italians still prefer to reach for the bottled version, looking to the label and packaging for a guarantee that tap water can't provide.

Despite Italian comedian Beppe Grillo's outrage over bottled water - he calls it "putting rain in a bottle and then making you pay for it" - few Italians seem perturbed by the environmental costs of using plastic bottles daily.

"It's a cultural thing. Italian consumers want to buy bottled water even if tap water has been tested and proven safe," said Chiara Pozzi, Italy analyst for Euromonitor. "It's the perception that bottled water is safer and cleaner."

One of the oldest Italian bottled water brands and the No.3 player in Italy behind Nestle and Acqua Minerale San Benedetto SpA, Ferrarelle's efforts to differentiate itself in a crowded field give an insight into the market's changes and challenges.

Commercially bottled for the first time in 1893, Ferrarelle passed through the hands of various Italian families before Danone scooped it up. Those were the days when rival brands were few and the Italian market among the most profitable around.

Along the way it had become a household name in Italy with its "Still, sparkling or Ferrarelle?" advertising campaign, popular with aficionados of naturally sparkling water.

To this day workers at its gleaming bottling factory in the verdant countryside outside Naples boast that their raw material is also their final product, since the company does not add any artificial carbonation to the water.

Nevertheless, high costs and fierce competition had pushed Ferrarelle into the red and by 2004 it was on the block again.

New owner Pontecorvo arrived with his work cut out as falling prices exposed the company's high costs, old bottling machinery and poor productivity.

So he moved the company's rented headquarters out of Rome, slashed a fifth of the workforce, ramped up marketing efforts and began experimenting with initiatives including a new glass-bottling line.

To tap into the premium segment of the market, Ferrarelle also introduced a high-end "Platinum" line featuring an architect-designed bottle that can set you back more than 5 (about R50) at a top restaurant.

The company is also looking abroad, applying for a permit to restart exports to the United States and beginning sales to Britain, Japan and Russia.

After three years of losses and new initiatives, Pontecorvo says his business is finally headed for breakeven this year. But he's also hoping consolidation in the industry will soon follow - and stop the price free fall.

"Italy is a land full of water," he said. "People think this is a very easy business, but once they enter the market they see the difficulties involved."

http://www.iol.co.za/index.php?set_id=1&click_id

=143&art_id=nw20070615142238122C996879

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