Fiji Water - Expansion into Austrtalian and Uk Market

CASE SUMMARY

FIJI WATER, THE COMPANY

The company was founded in the early nineties by David Gilmour, who developed the concept to bottle Fiji natural artesian water which is claimed to be of purest quality and of distinct taste, and to market it internationally as a unique and exotic product. There has been a growing trend in consumption of bottle water in US market since 1997 as more people are becoming health conscious. The company benefited from this trend to expand its market share in the US market through unique product positioning, innovative packaging, premium-product pricing, effective distribution, and image-creating publicity (case, page 6).

EXPANSION INTO AUSTRTALIAN AND UK MARKET

The company then expanded into the Australian market because of its proximity to Fiji and the market potential. However, there is a competitor, Island Chill, with similar product entered before the company did a few years ago and because of the similarities in bottle shape and label design between the Fiji water and Island Chill, a trademark dispute has been invoked in both Australia and US. UK is the company's next target market to enter after Australia. The company experienced a backlash in the UK market because the environmentalist, conservation group, and the media all resisted the Fiji water in favor of tap water because of the product's carbon footprint and the massive consumption of fuel in the product transportation process. In response to the environmentalists' criticism, in 2008 FIJI Water LLC launched a "carbon negative" PR campaign, claiming that it was the first bottled water company to release carbon footprint of its products (case, page 11). Part of the campaign objective is to offset its total carbon footprint by 120%, which proves its slogan----"every drop is green". However, the conservationists don't buy the story because the FIJI Water failed to provide detail calculation and they argued that the new slogan was straightforward greenwashing pushed to its limit. At the same time, the conservationists pointed to the basic carbon footage advantage of consuming local tap water.

RELATIONS WITH THE FIJI GOVERNMENT

In 2007, the Fiji water brought FJ$105 million in export earnings to FIJI government, ranked number two in product categories exported from FIJI (case, page 14). The Fiji government wanted to profit from the rapid growth in export of FIJI Water, as a result, it imposed a 20-cents-per-litre export duty on all mineral water exports. The FIJI Water subsidiary in Fiji responded by laying off all its employees and shut down operation. As the crisis continued, Fiji would lose FJ$3 million on export revenue every week. On July 25, 2008, the Fiji government decided to drop the tax. The FIJI Water's operation was resumed but the company decided to withdraw its sponsorship of the Fiji Exporter of the Year Awards because the FTIB did not provide any support during the taxation dispute. In January 2008, the government concerned that FIJI Water was engaging in transfer price manipulation and feared that the company would not reinvest their revenue in local economy. As a result, the government halted the company's 200 containers loaded with FIJI water. The Fiji's high court decided that the company can not resume shipment without FJ$5 million payment. In November 2008, the Fiji government re-introduced the disputed water tax as part of the 209 budget in a different form (case, page 16).

RELATIONS WITH LOCAL COMMUNITY

The company has established and maintained good relationship with the local community. The company not only provided its staff with on-the-job training but also supported children's education through construction of kindergarten classroom in each village and supply of equipment, educational material, teacher training. The company also provided financial aid for improvement of hygiene and sanitation of the community.

SWOT Analysis

Strength

 FIJI Water has a very unique taste due to its light mineralization, which is characterized by a smooth taste and no aftertaste.

 FIJI Water has its distinct purity because of its unique location which is 1500km away from any industrial area and also because it was formed 450 years ago before industrial pollution could affect its purity.

 FIJI Water has the unique packaging that differentiates itself from its competitors.

 FIJI Water has found itself an excellent distributor, Cadbury Schweppes, which contributes to the company's aggressive expansion and success in the US market by making the FIJI water available at tens of thousands of outlets.

 FIJI Water has fully utilized the celebrity effect to market its product.

Weakness

 Too long a distance from the target market, which would incur high transportation cost.

 The company failed to provide calculation to prove the negative carbon emission claim, which can not convince environmentalists and conservationists.

Opportunity

 Among the top three consumers in the world for bottled water, China has the fastest growing rate, who is expected to be the largest consumer of bottle water in the world in the next decade.

Threat

 The relation between the company and the Fiji government is bad which will have a negative influence on its profit. Moreover, the Fiji government has been proved as capable of altering taxation environment dramatically overnight without consultation with the industry.

 Media and governments in target market are threats to the company because they can influence consumer's choice by creating negative image for FIJI water, which would lessen the sales volume.

INDUSTRY ANALYSIS (porter five forces)

The supplier of the industry is the bottle manufacturers, their power is very low because they depend on the production level of bottled