Coke admits defeat in Dasani rollout

- Last updated on GMT

Related tags: Bottled water, Dasani

Convincing US consumers to buy bottled, purified tap water at a
premium price may be relatively easy for a company as adept at
marketing as Coca-Cola, but doing the same with the rather more
savvy European bottled water drinker appears to be beyond even
Coke's undoubted ability, writes Chris Jones.

Just months after the launch of its Dasani bottled water brand in the UK, the Atlanta-based soft drinks giant has decided to withdraw the brand there altogether - and drop plans to launch it in France and Germany as well.

Dasani's European rollout has been plagued with problems, even in the UK where there is much less of a tradition of bottled water consumption. There, the problem centred around the fact that cynical British consumers were unwilling to pay £1 for a bottle of filtered tap water - which would cost them a few pence at home - and escalated last week when it emerged that the product also contained excessive levels of bromate, a chemical that can increase the risk of cancer.

The UK bottled water market is still much smaller than those in France, Germany or Italy - per capita consumption is just 35 litres a year, compared to the European average of 100 litres, according to Zenith International​ - but it has been growing rapidly in recent years on the back of a growing awareness of the health benefits of mineral water - growth which Coke clearly hoped to exploit with Dasani.

But with Dasani's 'goodness' coming from added ingredients, it was already at a disadvantage compared to brands such as Volvic or local player Highland Spring, which are perceived as being more natural. And when one of these added ingredients - calcium chloride, added to meet UK requirements for calcium content in bottled water - contaminates the water with bromate, there is little chance of convincing even the most gullible consumer of the product's health credentials.

As a result, the world's biggest soft drinks group has been forced to make a humiliating withdrawal from the UK market, and ditch plans for a French launch in April and a German rollout in May - even though it planned to use spring, rather than tap, water for the brand in both those markets. Local waters such as Evian in France or Apollinaris in Germany already have extremely strong positions, and Dasani would have found it hard to make much of an inroad there even without the negative publicity surrounding the brand. With it, success would have been impossible.

But while the planned launches have been scrapped indefinitely, Coke does not appear to have given up entirely on the European market, saying simply that now was not the right time to launch Dasani there and that the brand had a proven track record in markets such as the US and Canada.

The irony is that Coke already has an established mineral water business in Europe, albeit through relatively minor brands such as Malvern in the UK, Chaudfontaine in Belgium and BonAqua in Germany. But with a European water market share of around 2 per cent, the company will have its work cut out without Dasani to challenge the Nestlé/Danone duopoly which owns most of the leading brands and have combined market shares in excess of 70 per cent in some countries.

Related topics: Carlsberg, R&D

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