When we met with the company, we learned that they do not interact directly with end consumers. Veen chooses a distributor, who is responsible for local research, licensing, brand registration, and brand language adaptations. Veen works only with local distributors due to strict legislation concerning water regulations. It can be more difficult to import water than alcohol since water can carry certain toxins.
The distributor then sells to local bars, hotels, and restaurants. The strategy is to target the HORECA (hotels, restaurants, catering) sector exclusively, specifically quality culinary environments, 5 star hotels and restaurants. It is an advantage for the buyers that Veen is not also sold in retail, as some of its competitors. This means that the hotel or restaurant can charge high prices without the devaluation of the product price in retail. Pricing of Veen water is 5-8 euros for the small bottle and 15 euros for the large bottle. Veen is sold in restaurants where the water purchase is 10-15% of the total invoice (typically 45-50 euro menu prices). Veen specially designed a 660ml bottle for a table of two after research found that 330ml is the perfect size single portion.
· When finding a distributor, Veen looks for an
established HORECA distributor (usually wine and alcohol importers) that are import
trade leaders. In Saudi Arabia, where these alcohol importers
are not present, the company would look for gourmet food suppliers to the hotel
trade. Veen chooses only one partner per market, giving the partner the incentive to grow the brand. Choosing the partner is a crucial step. Veen
talks to many companies to gauge their interest and then chooses which is right
for Veen. The partner should not supply any competitors’ product--Veen should be
the only bottled water in the company’s portfolio. Veen gives exclusive rights to the partner and therefore asks for exclusivity from the partner as well.
We discussed a few challenges Veen faces. Since the distributors have high margins and purchasing the glass bottles is expensive, there is not much room left for Veen's margins. This means that Veen must set a high price for their water products, 30-40% more expensive than the leading premium product. The bottled water industry is a high volume, low margin type of business so reaching economies of scale is very important. For this reason, the non-perishable nature of the product, and the importance of the water source, Veen uses exporting. Since this is the current strategy, we think Veen should also export to Saudi Arabia. Therefore, it was not necessary for us to perform an OLI analysis. Also the the low pH can be a problem in Arab countries. Veen has a pH of 5 while local water has a pH of 6.5-8.5.
Veen's main competition is VOSS, Coca-Cola (Evian), Nestle (Perrier, S. Pellegrino), and Fiji Water. Veen is 25-30% more expensive than VOSS. In the future, Veen's goal is to be at VOSS’s price level but that will require increased volumes and production.
· In advertising, Veen's primary strategy is to focus on product placement in premium environments to establish brand recognition. The target is the kind of people who visit fine restaurants and
hotels. These people have lifestyles related to business, fashion, art, sports, media, etc. Participation in luxury events attended by these types of clients is Veen's second major advertising platform. It was present at the Formula 1 launch
in UK for 3 years, the Frieze Art Fair in London, and the movie
premiere of Knight and Day in Munich (starring Tom Cruise and Cameron Diaz). Veen also uses social networking and media channels, such as Facebook and YouTube. In the past, they have done a collaboration with the Finnish band Nightwish, in which the band members drink Veen Waters in the rehearsal video and offer free concert tickets by visiting Veen's website (http://www.youtube.com/watch?v=rNrTTJrsq_w). Veen says that these types of events and collaborations are fairly cheap and also effective. Veen has low adaptation levels as only the change of the language of the label, social media, and marketing is needed.
· Veen is currently looking to go to Saudi Arabia, which has a good
hotel and restaurant market. Since citizens do not drink alcohol, this means a greater potential beverage market share. Veen would plan to additionally target the royal palaces in Saudi Arabia, while the primary targets would remain 5 star hotels in Riyadh and Jeddah, such as the 4 Seasons and Rosewood Hotels present there. Veen has a fairly good idea and expectations
from other the Arab countries in which it is currently present.
As our consultant, Marianna, pointed out we cannot forget that the Veen brand is closely connected to the culture, art and design of Finland, which can be used as an advantage. It won best bottle of the year in 2007. In 2008, Veen held its first art exhibition titled "Recycled Masterpieces and 15 Minute Originals" which you can see pictures of on their facebook (http://www.facebook.com/media/set/?set=a.10151376630590864.540352.46132730863&type=3).
Also, we are thinking of making some sort of survey for Saudi Arabia. Abby has a friend who lives in Riyadh that could participate and share with a few friends to answer there. Do you all have any ideas about what type of survey or what questions to ask?
This is a good post. Now, I have a better understanding about what Veen waters does. Also, I liked that the most specific competitors were mentioned. I have a quick question, when do you guys plan to launch the survey? I have some ideas.. but I want to know how much time do i have to send it to you.
ReplyDeleteIn general, some ideas is to ask.
- age, sex, income, size of household.
- how often do they buy water bottle
- The importance of the brand of the water bottle. ( Do people buy the different brands while they are in different places? For example, they might buy cheap water for everyday consume but they might buy the most expensive water if they are on date or in a popular place such as the clud or restaurant)
- How the people from that country perceive finland
- Prefer plastic bottle or glass bottles
- The size of the bottle. Do they prefer big bottles or small bottles.
- You should find out if the people from that country perceive import water as better than local brands
Those some ideas that could be useful. Also, you can use http://edu.surveygizmo.com/ to create your survey online. Right now, they have a 14 day free trial period that you can take advantage of.
Dear team, you are making a good progress in your project!
ReplyDeleteWhat about your survey, Jesus already made some good suggestions, so I would just add such questions as:
Factors, which influence your choice of the bottled water?
Is design of the bottle and country of origin important for you? Price (price range) you would pay for premium bottled water.
Good luck in your future research!
Thanks! Here is our survey as of now. We are still taking suggestions! http://www.surveygizmo.com/s3/1103621/Premium-Bottled-Water-in-Saudi-Arabia
ReplyDeleteHello Team Veen Waters,
ReplyDeleteI just checked out your survey. It looks good and will probably give some additional information if you can send it to some local people or expats living there.
What I would add is a question of the competitors products.
For example: "Which of these brands have you seen before: 1) VOSS, 2) Pellegrino, 3) VEEN, 4) Evian, 5) Perrier...", "Which of these brands have you bought before: 1) VOSS, 2) Pellegrino...", or "If you buy bottled water which brand do you prefer?".
These type of questions would give you insights what is really the biggest competing product.
BR,
Carita R.
Good day!
ReplyDeleteI also saw the survey and liked it. One thing that I was thinking though concerns question 10, i.e. the pricing.
I was thinking that it might be usable to add in an example to the end of the question, such as (in average, such a product costs X SAR), which could give out more precise information on how much more/less would the person be willing to pay for the Finnish water.
A type-in box might also give a wider range of results and give room for consideration whether people are thinking between two categories, although I'm sure the categories are reasonable already.