The Message in a Bottle of Mineral Water. Differentiation Strategies and Consumption Patterns in the Bottled Water Industry: the S.Pellegrino case

Colourless, odourless, and tasteless. These features do not seem to belong to water anymore.
Whether it is on the desk in an office or in a famous athlete’s hands, nowadays carrying a bottle of water around wherever a person goes has become a real commonplace. In the last decades, bottled water consumption is witnessing to a large increase both in volume and geographical terms. The economic development and the growth of world population alone cannot justify this trend and the “paradoxes” characterising the bottled water industry. Bottled water is consumed even if cheaper alternatives, such as tap water, are available to consumers; the packaging costs more than the water contained; and in some countries a bottle of water is more expensive than other bottled beverages, which obviously contain water.
This thesis aims at shading light on all these aspects by recognising the role played by companies in exploiting and even fostering the transformation of a primary human need (thirst) into a sort of social phenomenon (drinking bottled water). For this reason the work focuses on the strategy of differentiation, and, more specifically, on the concept of “differentiation of anything”. Taking water as an example of homogeneous and hard to differentiate product, given its lack of visible distinguishing features, the analysis figures out how the theoretical concepts are implemented in the industry of bottle water and, in particular, in the S.Pellegrino water case.
The work is divided into three main sections. The first chapter offers an overall portrait of the industry at world level in its main aspects: from the legal definition of mineral water to its worldwide market structure, its major world players, and some of the main steps towards a more sustainable industry. The analysis underlines how the success for bottled water is both due to social reasons and to companies’ Marketing activities, in a vicious cycle. Bottled water is consumed for its convenience, in terms of portability and readiness to be used, and for health concerns, as water is not seen anymore as a necessary source of hydration but as a low-calorie alternative to sweet and carbonated beverages. Moreover, bottled water is considered pure and safe, differently from tap water. The second chapter deepens differentiation under a theoretical lens and highlights how it can be pursued at any step of the value chain and not just by the product alone. Such value drivers are distinguished from their “outcomes”, the elements of differentiation, which instead stand for what consumers perceive as distinguishing in the final proposition. The second part of the chapter applies these concepts to the bottled water industry in order to investigate how companies, especially through Marketing drivers, are actually able to answer to, and even stimulate, consumers’ need. Finally, the third chapter connects the previous ones, by tracing out the strategy implemented by the S.Pellegrino brand and the drivers of differentiation leveraged by the company, starting from the identification of the elements of differentiation perceived by end consumers. People seem to prefer S.Pellegrino not just for its chemical properties but also for other elements: its iconic image, ubiquity, packaging and so forth. Despite the undeniable importance of Marketing tools, the uniqueness of the final proposition is achieved also by other drivers, for example distribution network, R&D, creation of Shared value.
To conclude, though the generic product is identical (water), the offered one is differentiated (S.Pellegrino) and occupies a clear positioning. S.Pellegrino is able to differentiate a homogeneous product as it conceives differentiation as a business approach, leveraging drivers along the entire value chain. What is differentiated is the Marketing mix, not the product alone. Business strategies turn out to be both cause and effect of new market ideologies and lifestyles since, at the same time, they are able to follow and foster such trends, as the transformation of bottled water into a “super premium” product testifies. Bottles are filled up with much more than just a little water.