Regarding the market trends, we mostly concentrate on the premium and luxury segments and on the on-trade channels since we consider that Veen should continue targeting these mentioned segments. At first, we provide you some information for the Finnish market and then for the Saudi Arabian one.
In 2011,
on-trade and off-trade markets in Finland started to recover from the economic
recession resulting in better total volume sales. Other economic aspects that
should be taken into consideration are the reduction of VAT on on-trade
purchases from 22% to 13% in July 2010 and the low growth rate of 4%.
(Source:
Euromonitor International, Passport Bottled Water in Finland, April 2012)
As far as
the Saudi Arabian market is concerned, the on-trade bottled water recorded
volume growth of 13% and current value growth of 8 % in 2011. Premium brands
are mainly sold through high-end cafes and formal restaurants. This can be
explained by the growing café culture in Saudi Arabia and also by the perception
of these products as social beverages. The demand for products like these is
formed by the middle-and high-income consumers who choose them as a part of
their lifestyle.
Premium and
luxury bottled water compete on the grounds of packaging quality and bottle
shape, for example glass bottles instead of plastic bottles, metallic caps in
place of plastic caps and futuristic bottle designs, coupled with premium
pricing and the promotion of their place of origin. In the interview we had,
Mikko Nikkilä mentioned that agreements with glass companies are very
important, but due to the size of the company and the relatively small amount of orders it is
difficult for them to get wholesale prices as bigger companies can. However, Veen is in contact with the
glass company and they cooperate in order to decide the bottle design. It is
worth it to point out here that Veen has won the Good Design Award for graphics
and packaging in 2007.
(Source:
Euromonitor International, Passport Bottled Water in Saudi Arabia, November
2012)
Competition Analysis
Competition in the Middle East is fierce with so many water brands
chasing after a relatively small numbers of outlets, so lasting relationships
with high-end hotels, restaurants and nightclubs through local distributors are
vital. The Middle East markets are very promising in terms of sales and they
represent an area where important future growth for the international business
of premium brands, like Veen, can be achieved. Opportunities are there, but
differentiation and brand recognition appear to be the key to become a
profitable bottled water company. Luxury brand positioning, customer service
and high quality of the product are the crucial criteria that have to be met.
(Source:
http://www.hoteliermiddleeast.com/10828-h2-whoa/)
Main
Competitors’ brands
The on-trade
bottled water accounts for 24.6% of volume and 38% of the value of the sales,
while the off-trade accounts for 75.4% and 62% respectively. The exact brand
shares were difficult to find for the on-trade sales.
(Source:
Euromonitor International, Bottled Water in Saudi Arabia, November 2012)
A brief presentation follows of the main brands that Veen has to compete with when entering
the Saudi Arabian market.
Evian
Evian is
owned by the Coca-Cola Company and it comes from a source in the French Alps.
It is a still luxury bottled water brand which positions itself as a product
perfect by nature, perfect taste, to enhance fine dining experience. About the
typical characteristics, Evian is recognized for its Alpine purity, great
balance in minerals and its unique taste. It is available in top hotels,
restaurants and nightclubs.
San Pellegrino and Acqua Panna
San
Pellegrino owned by Nestle since 1997, while Acqua Panna belongs to San
Pellegrino. These two premium water brands take advantage of Nestle’s size and
are distributed in many countries around the globe. Their Italian origins,
their strong relationship with Italy, its culture and its tradition create the framework
of their positioning. More specific, they are perceived to be a perfect interpretation
of Italian style as a synthesis of conviviality, well-being and fine dining.
Perrier
Perrier is
also a premium water brand that is owned by Nestle. It is a worldwide brand
since it is present in 140 countries and 50% of its sales come from abroad
operations. Its source is found in France, at a place called "Les
Bouillens". As far as its positioning is concerned, Perrier aims to “project
a bold, offbeat image, while keeping its elegance as its hallmark”. Some words
that they are linked to Perrier are: unique taste, fizzing with bubble,
ultimate refreshment.
(Source: http://www.perrier.com/thedrop/gr.html)
Voss
Voss is
bottled at an artesian source in Southern Norway and is characterized as naturally
pure water, low in minerals and incomparable in taste. Voss is available in
still and sparkling in a variety of sizes and it is exclusively served on the
finest restaurants and lounges, and in the most distinctive hotels. It is
present in Europe, Asia, America and Australia.
Fiji
Fiji water
stems from an artesian aquifer that lies hundreds of feet below a rainforest.
It is connected with the phrases; far from pollution, far from acid rain, and
far from industrial waste. Fiji’s positioning can be identified to the
following sentence “an icon of beauty, nature, simplicity, and remoteness – and
when it comes to drinking water, “remoteness” is a critical blessing”. It is
available for sale at leading hotels, fine restaurants, and limited retail
locations.
Antipodes
Antipodes
comes to surface from a deep aquifer and is bottled at source in Whakatane, Bay
of Plenty, New Zealand. It is recognized for its purity and it aims to
complement well crafted food and wine, and not to dominate restaurants’ tables.
Antipodes is mostly present in China, Hong Kong, Australia, Russia, U.S. and
Middle East.
I really like the analysis. It seems that most of the competitors really emphasizes the purity of source of water. Therefore, promoting of the purity of finnish water will be something that Veen Waters 's distributors can be used to market the water. On the other hand, I like that you guys mentioned the glass point.
ReplyDeleteGood evening dear team Veen,
ReplyDeleteGood job on the competitor analysis.
After reading the post, to me, it seems to be that VOSS is the most "similar" product compared to VEEN and maybe the biggest competitor.
The names of the both brands sound about the same. Other brand comes from Norway, another from Finland. Both rely on the purity of Scandinavia and both use same type of packaging etc.
How do you think they differentiate or why a buyer should choose VEEN over VOSS?
Carita R.
Thank you for your comments! Indeed all of the competitors emphasize the purity of the source of water. And definitely VOSS is the main competitor for VEEN. It is true that it's difficult for VEEN to differentiate itself from VOSS since they share pretty similar characteristics. However, as Unesco has identified Finnish water to be the purest in the world, this provides VEEN at least some degree of competitive advantage.Also VEEN has come up with a strong story based on Kalevala, which is reflected on the design of the bottle as well, and can be seen as an advantage in the luxury water markets. It should also be noted that as VEEN continues to internationalize, sales volume will increase and this will allow VEEN to at least slightly lower its high price, which will also help when competing with companies like VOSS.
ReplyDeleteThanks for the reply. :)
DeleteThose are very good points that VEEN relies on the "Finnishness" of the product. Together with pure sources of water, Finland is very famous for design and innovation so the bottle design and making it "new" every time is very valuable.
The most famous Finnish glass bottle design is Tapio Wirkkala's Finlandia Vodka Bottle (See: http://www.designophy.com/designpedia/article.php?UIN=1000000096&sec=product). This product is globally known and differentiates itself from the other vodka brands because of the bottle design. I think Finlandia is a good example of how a commodity like an alcohol product can become global player because of design.
Bottle design has taken Finlandia far, but another innovative packaging solution, PULP water bottle designed by Stefan Lindfors, has been a falure since the beginning. This bottle was expected to be a hit because the design symbolized a life-buyo and part of sales were going to save the Baltic Sea. Even for a good cause, the bottle has not been returnable for the Finnish bottle recycling system which did not get compliments from the public. The product got also the prize of "the most useless product of the year".
Two articles of this product failure can be found here(unfortunately only in Finnish):
http://www.hs.fi/talous/artikkeli/S-ryhm%C3%A4+haukkuu+Lindforsin+ymp%C3%A4rist%C3%B6pullon+Lindfors+haukkuu+S-ryhm%C3%A4n/1135239938648
and
http://www.suomenluonto.fi/arkisto/2008/9-08/pantiton-on-turhake
BR,
Carita R.
I also liked this section that you have written. It seems to me that building the brand presence is the prime challenge, and they should be able to convey their message in a way that is particularly appealing to the Saudi mindset. Although VEEN has shown great capability in advertising efforts, utilizing one of the international agencies that are present in Saudi-Arabia could also give them a slight edge if they have some unique insights. The emphasis on bottle design and glass is also very interesting as that is one distinct area where differences can be made. Will look forward to hearing about this on monday!
ReplyDelete