Fiji water and corporate social responsibility - green makeover or

greenwashing

INTRODUCTION

Abstract

This case analysis traces the establishment and subsequent operation of FIJI Water LLC and
its bottling subsidiary, Natural Waters of Viti Limited, the first company in Fiji extracting,
bottling and marketing, both domestically and internationally, artesian water coming from a
virgin ecosystem found on Fiji's main island of Viti Levu. The case reviews the growth and
market expansion of this highly successful company with the brand name FIJI Natural
Artesian Water (FIJI Water). The company has grown rapidly over the past decade and a half,
and now exports bottled water into many countries in the world from its production plant
located in the Fiji Islands. In 2008, FIJI Water was the leading imported bottled water brand
in the United States. In the context of great marketing success of the FIJI brand, particularly
in the US market, the case focuses on how the company has responded to a number of
corporate social responsibility (CSR) issues, including measuring and reducing its carbon
footprint, responsibilities to key stakeholders, and concerns of the Fiji government with
regard to taxation and transfer pricing issues. The case provides a compelling illustration of
how CSR challenges may jeopardize the sustainability of a clever marketing strategy.

Ethical marketing focuses on seeking to promote honesty, fairness, and responsibility in all
advertising rather than being a strategy. Socially responsible marketing is taking moral
actions that encourage a positive impact on all the company's stakeholders, this involves the
employees, community, consumers, and shareholders. Marketers should definitely be
concerned about sustainability and more especially putting it into practice. As of late, the
awareness and acknowledgement Corporate Social Responsibility (CSR) in the
businessworld has massively increased. With increasing watchful eyes on companies CSR
work, the marketing department must make sure not only is the company doing as they
promised but also be as transparent as possible in terms of sustainability. As their competitors
are increasingly becoming sustainable, this is not something they can ignore. Factors that
contributed to the success of Fiji water includes skillful marketing strategy, product
positioning, premium-product pricing, innovative packaging effective distribution, and
image-creating publicity. Fiji Water made its strategy revolve around the capture of
international market opportunities, stronglypositioning the brand in large and growing markets
for bottled water with premium-product pricing and innovative packaging. In addition to their
effective distribution they solidified themselves as the first and critical international brand to
conquer the United States. Product wise, Fiji water was branded by its smooth taste with no
aftertaste. This immediately appealed to consumers thus within a short period it had risen to
become a top rated product. Influential magazines and guides such as Cook’s Illustrated Buying
Guides, Men’s Health and Chicago also contributed to brand’s success by making mention of
the product.
Image Credit: WordPress

In July 2008, there was an environmental protest carried out

against bottled water companies in which FIJI water brand was
singled out and targeted on producing humongous carbon
footprint in the United States, United Kingdom and other
developed nations whilst the message on carbon impact of
bottled water was being widely publicized to customers. In
response to this protest, the company launched a new
promotion campaign under a slogan “every drop is
green,” only to be immediately accused by environmentalist
groups of engaging in green-washing activities.

The concept was to bottle Fiji natural artesian water and market
it both locally and internationally as a unique and exotic
product. FIJI Water had made its strategy revolve around
capturing international market opportunities and strongly
positioning the brand in large and growing markets for bottled
water, but markets that were not overly price competitive, as
FIJI Water, right from its inception, was designed to be a
premium brand.

The baby boom generation, which constituted about a third of

the total population in North America, had become obsessively
health-conscious and fitness-oriented. FIJI Water also entered
Australia as it had relatively large market and, more
importantly, its proximity to Fiji made it an attractive market to
delve into.

FIJI water was in the process of developing global channels,

operations and supply chains. Globalization has its benefits and
costs. It gives developing nations access to foreign investment
funds to support economic development as in the case of Fiji.
However, it prevents individual nations from adopting policies
promoting environmental or social objectives, if these
discriminate against products from another country as seen in
the United Kingdom.

FIJI Water had so far been largely unsuccessful in penetrating

the UK market. FIJI Water’s appearance in the United Kingdom
had fueled the debate around the environmental impact of
bottled water. The conservationists pointed out that the price of
bottled water was about 500 to 1000 times higher than that of
tap water. The UK happens to have one of the best qualities of
tap water in the world.
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 put out
the carbon footprint logistics of its products. It further joined
the Carbon Disclosure Project Supply Chain Leadership
Collaboration and had started working with the Carbon
Disclosure Project (CDP), the world’s largest investor coalition
on climate change, to disclose its own and its suppliers’ carbon
emissions.

FIJI Water was relying on a constituency-building

strategy by forming stakeholder coalitions to
influence the Fiji government by mobilizing the
organizational stakeholders mentioned above to
support its agenda.

According to a company press conference held in April 2008,

FIJI Water had already implemented several measures to
reduce its carbon emissions. By optimizing its logistics, the
company had reduced trucking miles by 26 per cent on average.
FIJI Water’s 1.5-liter bottle had been redesigned to reduce the
packaging by seven per cent. The company had also managed to
reduce motor fuel consumption in Fiji by 50 per cent by using
more fuel-efficient trucks in transporting its products from the
plant to ports.

By implementing these measures, FIJI Water demonstrated a

proactive level of stakeholder engagement by anticipating
conservationists’ concerns. It helped in neutralizing critics and
improving corporate reputation for taking constructive action. It
also demonstrated good corporate citizenship by showing a
great deal of environmental commitment.

On July 4, 2008, without any prior consultation with the

industry, the Fiji government imposed a twenty cents-per-liter
export duty on all mineral water exports and the same level of
excise duty on mineral water sold for domestic consumption.
The local media reported that the interim finance minister,
Mahendra Chaudhry, said, “The main purpose of this new duty
was to stimulate conservation of our scarce natural resources.”
The Fiji government was stressing on implementing
an economic public policy by raising tax on FIJI
water in order to achieve public policy, as it had a
much broader purpose.

FIJI Water and the nine other companies immediately mounted

a campaign against the new tax. They first threatened to cease
production and to lay off workers. They issued press releases
that argued the new tax would destroy the whole industry and
greatly undermine foreign investor confidence, which was
already at a low level stating that the government did not have
detailed information on company costs and profitability and
that the firms could not absorb the ill-conceived new tax that
would have a major negative impact on the whole economy. It
would be the death knell of this new export industry and would
greatly reduce export earnings and foreign exchange earnings,
and lead to job losses and slower economic growth.

These companies tried to use constituency-building

strategy by forming a trade association to coordinate their
grassroots mobilization campaigns and then by using
information strategically by lobbying and using expert witness
testimony by providing facts and anecdotes to persuade others
to support the association to consider the export duty tax put on
these companies. As a result of the campaign launched against
the new export tax, on 25 July 2008, the Fiji government made
an announcement that it had decided to drop the new tax. This
decision by interim Prime Minister Commodore Voreqe
Bainimarama was praised by the proprietors of water bottling
companies. Immediately after the announcement of the repeal
of the tax, the major bottled water-exporting companies
resumed production and re-employed the hundreds of workers
who had been laid off.

As a result of demonstrating good corporate citizenship by

working towards a better environment and sustainable
development, and by successfully lobbying and using
constituency-building strategy with other companies, FIJI
Water and other companies came out successful against Fiji
government’s implementation of new export duty.

FIJI Water’s bottling plant drew most of its workforce from

these villages. It employed a young workforce and most of the
workers had not previously had a wage occupation, but had
been engaged in subsistence farming and fishing activities. The
company provided its staff with on-the-job training in operating
the sophisticated production line. In return, its workers
exhibited a great deal of enthusiasm, loyalty, and pride in
working for the company. Through strong leadership, FIJI
Water succeeded in establishing an excellent work environment
with good interpersonal relationships among the workforce. The
company also came out to support children’s education. FIJI
Water has been trying to use a healthy commerce policy where it
is expected to increase the general well-being of its workers
through service, invention and ethical conduct.

In 2009 and beyond, FIJI Water will continue to face complex

CSR challenges. It will have to live up to its promise of becoming
a carbon negative company. Any attempt to engage in green-
washing will be quickly identified and protested by
environmental groups. Keeping true to its slogan “every drop
is green” will require substantial new investment in a
renewable energy plant and equipment and in tree-planting
offset activities. Maintaining good relations with the Fiji
government will prove to be vital in the near future.

At the end of the day, FIJI Water will need to demonstrate good
Corporate Social Responsibility as a corporation, as it would be
safe to presume that it will always be held accountable for any of
its actions that affect people, their communities, and their
environment. As the bottled water market is not an overly price
competitive one and the fact that FIJI water has always been
designed as a premium brand, it has a domination in the water
industry. Therefore, if it fails to vitalize on Corporate Social
Responsibility (CSR) it will lose its power in ways society
considers responsible, according to the Iron law of
responsibility. Consequently, the performance-
expectation gap might increase further in the eyes of its
stakeholders. By demonstrating Corporate Social Responsibility,
FIJI Water can discourage Fiji government export duty
regulation in the future and can reap long-term profits for itself
as it will improve its business value and reputation among the
stakeholders involved. It can use a Corporate Social
Performance Audit by evaluating its social, environmental and
ethical performance by measuring it against its own mission
statement and policy and further by utilizing the triple bottom
line to the greatest extent possible to analyse its financial
performance against its social and environmental performance
in the long run