Product: Nestle Pure Life (Bottled Water)

Industry Overview
Pakistan’s bottled water industry is a rapidly growing segment of the

beverages sector. The country’s market is comparatively very small on a global

scale and was estimated at 33 million litres a year by end of 1991. However, with
swift increase in the number of bottled water producers during the last three
years, the country’s market is estimated to have grown to 70 million litres with per
capita consumption reaching half a litre. The bottled water market is presently
growing at a robust rate of 40% per annum. According to a study compiled in
2001 by Zenith International, specialist consultants for Asia Bottled Water
Association (ABWA), Pakistan registered the fastest growth of 140% in 2000
amongst the countries in Asia and Middle East region.

There are around 26 players operating in the bottled water sector.

According to industry sources, the number of bottlers scales up well above 70
during summer season due to increased demand for drinking water in summer.
However, the much publicized laboratory report published by the Pakistan
Council of Research in Water Resources (PCRWR) after conducting a survey of
26 brands in the Rawalpindi and Islamabad region declaring that ‘all the 26
brands available in the market are contaminated while 10 of them are unsafe for
drinking’, forced the Pakistan Standards and Quality Control Authority (PSQCA)
to make it obligatory for the companies to obtain license from the authority before
commencing operation. A total of 18 companies have so far been registered by
the PSQCA.
THE BOTTLED WATER INDUSTRY OF PAKISTAN

GLOBAL SCENARIO

‘Bottled Water’ is considered to be the smallest yet fastest growing and

most dynamic segment of the beverage industry. The world bottled water market

represents an annual volume of 89 billion litres and is estimated to be worth US$

22 billion. Western Europeans are the world’s major bottled water consumers
with per capita consumption of 85 litres, but the most promising markets are in
Asia and the Pacific, with an annual increase of 15% for the period 1999-2001.
The average world consumption grows by 7% per annum.

Global Bottled Water Market

The world total bottled water consumption grew from 19.186 billion gallons
in 1996 to 30.103 billion gallons in 2001registering a compound annual growth
rate of 9.4% during the period. The U.S., Mexico and Western European
countries are the leading bottled water consuming countries. However, Asia and
the Pacific regions have witnessed a remarkable growth in consumption during
the last five years. Table below depicts ten leading countries by consumption
along with CAGR during1996 – 2001:
ASIA – The fastest Growing Bottled Water Market

The bottled water industry is one of the fastest growing industries in Asia.

Zenith reports stunning growth of 45% since 1998 across 50 countries in Asia,

Middle East and North Africa. Total sales reached 25,270 million litres, more than

double the level of 1995. The region now represents 23% of global consumption

with market value at US$ 4,700 million. According to Zenith Research and

Development Director, ‘the Asian Market is still very young and it is anticipated
that

volumes will double again to over 50 million litres by 2005.

Per Capita Consumption of Leading Countries

Per Capita Consumption by leading countries during the years 1996 and

2001 is depicted in table below. It is evident from the table that West European

nations have the highest per capita consumption of bottled water. In 2001, global

average of per capita consumption of bottled water stood at 4.9 gallons against
3.3 in 1996.
Major Global Players

The bottled water market is a lucrative one, dominated by Swiss food giant

Nestlé, with a 16.8 per cent share, and France's Danone, which controls about
14 per cent. Nestle has found a growing market niche for bottled water in non
industrialized and developing countries where safe tap water is rare. In these
countries, its main product line is Nestle pure, a low-cost purified tap water with

added minerals. Nestle Pure Life has sold well in Pakistan and Brazil and have

some other bottled water products in China, Vietnam, Thailand, and Mexico.

Besides Nestle, giants of the global food and beverage industry have also

become purveyors of bottled water, including Coca-Cola, Pepsi and Proctor &

Gamble. With the entry of the big soft drink giants, market growth is expected to
accelerate further. PepsiCo is currently leading the way with its Aquafina line,
while Coca-Cola has launched a North American line under the name Dasani in
addition to its already established international label, Bon Aqua.

STRUCTURE OF PAKISTAN BOTTLED WATER INDUSTRY

Pakistan’s bottled water market comprises of two main segments i.e. the

retail market and the bulk market. The retail market supplies water in 0.5, 1.5, 3.0

and 5.0 litres capacity PET bottles whereas the bulk market makes Home and

Office (H&O) deliveries in 3 and 5 gallons made of Polycarbonate. There are

around 26 players operating in the bottled water sector. However, according to
industry’s sources, this number reaches well above 70 when small unknown
operators crop up during summer owing largely to the lax regulation and
ineffective monitoring of the sector. Nestlé’s Pure Life brand dominates the retail

market with a share of 50 per cent. Other well known brands include Sparkletts of

Hashwanis with a market share of 12 per cent, BSW brand of M/s Wah Valley

Corporation 5 per cent. The rest of the market is in the hands of small players.

There are an estimated 20 brands in the H&O delivery segment of bottled

water. Nestle dominates this segment also with an estimated market share of
over 50 per cent. To expand its H&O water delivery business countrywide, Nestle

acquired major share holdings in both AVA and Fontallia in 2001. While AVA is a
major player in the branded bottled water category, both in PET and H&O
service, Fontallia enjoys strong holding in H&O service in Karachi. In addition,
the Jerry Cane segment makes home and office deliveries in Karachi. This
segment is mostly unorganized supplying low quality water.

BOTTLED WATER MANUFACTURERS

Some of the well-known bottled water manufacturers are listed below

alongwith their brand names, installed capacities and production during 2002:
TARIFF STRUCTURE

The tariff structure for bottled / mineral water is covered under chapter 22

under the H.S. Code 22.01. Following is the tariff structure on various types of

bottled water:
Profit Margins in the Bottled Water Business

At average, it costs the bottled water companies approximately Rs 150 per

carton (12 bottles) of 1.5 litres capacity bottles. The companies average selling

price ranges between Rs 178.0–180.0 per carton including General Sales Tax
plus other taxes (total taxes 18.5 %). The profit margin for the companies at
average ranges between Rs 8.0 – 10.0 per carton. Taking into account the
market price of Rs 22.0 for 1.5 litre bottle, the price of carton containing 12
bottles comes to Rs 264/- giving a margin of Rs 80.0– 85.0 to the middle man. It
is evident from the approximate calculation that the middle man is making huge
profits from the bottled water business which can safely be assumed between Rs
50.0 – 55.0 per carton after factoring out the cost of transportation at the rate of
Rs 5.0 and retailers margin at the rate of 12.0 per carton.

The Quality Issue of Bottled Water

The bacterial and chemical contamination associated with bottled water is

a major global concern and has sparked many controversies even in the US and

Europe. In Pakistan, the issue of contaminated bottled water came to the fore
when Pakistan Council of Research in Water Resources (PCRWR) claimed in its
report that all the major brands available on the market were contaminated and
10 of them not fit for human consumption after conducting a survey in the
Rawalpindi-Islamabad region where it randomly collected 41 water samples of 26
brands from public utility stores and shops.

The source plays a vital role in the in the bottlers ability to produce the
desired quality of bottled water. Spring water and purified water are the two major

types of bottled water sold on the market around the world. While these two

products are generally viewed as high quality, they differ significantly in the

treatment required to obtain the end product.

Regardless of the source, the water must be inspected, tested and

certified by the authorities concerned. In addition, amounts of organics and in-
organics as well as the quantity of Total Dissolved Solids (TDS) help determine if
the source is practicable. A challenge for spring water bottlers is that the water
source must be an actual spring that can supply and sustain the quality and
quantity of water required. Purified water is a highly treated product and offers
the most consistent and high quality water to consumers worldwide. The U.S.
based Natural Resources Defense Council (NRDC) in its march 1999 study
concluded that ‘ yet in contrast to the market image of ‘pure spring water’ that is
projected by the industry, bottled water is not always safer than tap water and in
some case it is less so’. The study claimed that ‘one-third of the 103 brands of
bottled water it studied contained levels of contamination, including traces of
arsenic and E.coli. One-quarter of all bottled water is actually taken from the tap,
though it is further processed and purified to some degree, and in many
countries, bottled water itself is subject to less rigorous testing and lower purity
standards than tap water’. ‘One brand of 'spring water’, reported the NRDC ...
actually came from a well in an industrial facility's parking lot, near a hazardous
waste dump, and periodically was contaminated with industrial chemicals at
levels above FDA standards’. In terms of nutritional value, according to the
United Nations Food and Agricultural Organization (FAO), bottled water is no

better than tap water. The idea that bottled "spring" or "natural" water contains

near-magical qualities and great nutritive value is "false," declares a 1997 FAO
study on "Human Nutrition in the Developing World." "Bottled water may contain

small amounts of minerals such as calcium, magnesium, and fluoride, but so

does tap-water from many municipal water supplies."

All this reflects global controversies surrounding the quality, purity and
safety of bottled water. The issue of sub-standard quality of bottled water could
be more pronounced in the developing countries. The lax regulation and weak
monitoring infrastructure in countries like Pakistan makes the bottled water sector
extremely susceptible to the unscrupulous bottlers. The PCRWR report is an
indication of situation prevailing in the bottled water sector of Pakistan. The
sensitivity of the matter, keeping in view that water is the basic human necessity
and has a major bearing on the health of the society as a whole, be it the future
generation of the country or the major consumer community including
participants of seminars/conferences, foreigners, traveling passengers,
restaurants and residents of lodges and rest houses, forced the Pakistan
Standards and Quality Control Authority (PSQCA) to step into the scene and
formulate measures for strict monitoring of this vital sector.

The quality standards for bottled water have recently been formulated by the

PSQCA. Water standards PSS No 2102 for natural mineral water and PSS No
4639 for bottled drinking water have been declared mandatory for mineral and
bottled water manufacturers under the authority of PSQCA Act IV of 1996 of the

Government vide SRO: 638 (1)/2000,dated September 12, 2001.

The water quality standards are mandatory, and have become legally

enforceable from December 1. After December 1, all brands of bottled water

have to comply with the stipulated standards, failing which legal action could be
initiated against the non- complying bottled water manufacturers. The PSQC has
now made it obligatory for the companies to obtain license from the authority
before commencing operation. A total of 18 companies have so far been
registered by the PSQCA.

ORIGINS AND CATEGORIES OF BOTTLED WATER

Bottled Water is classified according to its origin. Within the

noncarbonated bottled water market, there are two primary products – Spring
Water and Purified Water. These two products account for the majority of the
industry’s sales and consumption. In addition, Artesian, Drinking, Mineral and
Well waters are also bottled and sold in the market but represent a small sales
percentage. While the label on the bottle does give some basic information
required by the monitoring authorities, the average consumer is generally
unaware of what type of water is inside the bottle. The US Food and Drug
Administration (FDA) has defined the following types of bottled water:

Artesian water:

Water from a well that taps a confined aquifer (a water-bearing

underground layer of rock or sand) in which the water level stands at some

height above the top of the aquifer.

Drinking water:

Water that is sold for human consumption in sanitary containers and

contains no added sweeteners or chemical additives. It may be rebottled tap

water treated at a municipal source and retreated by simple filtration.

Mineral water:

It is distinguished by a constant level and relative proportion of minerals

and trace elements (not less than 250 parts per million (ppm) of Total Dissolved

Solids TDS). These minerals and elements must occur naturally from the water

sources and cannot be added at the time of bottling.

Purified water:

Water that has been produced by distillation, de-ionization, reverse

osmosis (RO) or another process and meets the definition of purified water.

Spring water:

Water derived from an underground source from which water flows

naturally to the surface of the Earth. Spring water must be collected only at the

spring or through a borehole tapping the underground spring. Spring water can

be collected with an external force, but must be from the same underground

stratum as the spring and must have all the physical properties, composition and

quality before treatment.

The Origins of Bottled Water - Schematic

Bottled water may be used as an ingredient in beverages, such as diluted

juices or flavored bottled waters. However, beverages labeled as containing

"sparkling water," "seltzer water," "soda water," "tonic water," or "club soda" are
not included as bottled water under the FDA's regulations, because these
beverages have historically been considered soft drinks.

TREATMENT METHODS OF BOTTLED WATER

Bottled water is treated by different methods. Bottled water that has been

treated by distillation, reverse osmosis, or other suitable process and that meets
the definition of "purified water" can be labeled as "purified water." Some of these

methods are briefly described below:

Distillation:

In this process, water is turned into a vapor. Since minerals are too heavy
to vaporize, they are left behind, and the vapors are condensed into water again.

Reverse Osmosis:

Water is forced through membranes to remove minerals in the water.

Absolute 1-micron filtration:

Water flows through filters that remove particles larger than one micron in

size, such as Cryptosporidium, a parasitic protozoan.

Ozonation:

Bottlers of all types of waters typically use ozone gas, an antimicrobial

agent, to disinfect the water instead of chlorine, since chlorine can leave residual

taste and odor to the water.

RECOMMENDATIONS

• The PSQCA should set strict limits or industry guidelines (equivalent to

international standards) for contaminants of concern in bottled water,

including arsenic, bacteria, E.coli and other parasites and pathogens, and

synthetic organic chemicals, including chemicals such as phthalate, which

can leach from plastic.

• The PSQCA should adopt rules for bottled water testing, to control microbial

and chemical contaminants, to protect water sources, to ensure the reporting

of test results and violations to concerned federal authorities, to certify

operators of water bottling plants, and to require the use of certified

laboratories. In addition, PSQCA should do monitoring of the quality of

bottled water sold across the nation and should publicly release the results.

• The bottlers, keeping to their words that bottle water is so pure, should

disclose contaminants, the exact water source, treatment, and other key

information on the bottle labels. This would not only prove that the image

they are projecting for their bottled water is true but also satisfy the right-toknow

requirements of the consumer.

• The PSQCA bottled water program must be better funded. A one rupee per
bottle fee on bottled water needs to be charged to fund regulatory programs,

testing, and enforcement of standards.

Company Profile
History

1866-1905

The key factor, which drove the early history of the enterprise that would become
The Nestlé Company, was Henri Nestlé's search for a healthy, economical
alternative to breastfeeding for mothers who could not feed their infants at the
breast.

In the mid-1860s Nestlé, a trained pharmacist, began experimenting with various

combinations of cow's milk, wheat flour and sugar in an attempt to develop an
alternative source of infant nutrition for mothers who were unable to breast feed.
His ultimate goal was to help combat the problem of infant mortality due to
malnutrition.

He called the new product Farine Lactée Henri Nestlé. Nestlé's first customer
was a premature infant who could tolerate neither his mother's milk nor any of the
conventional substitutes, and had been given up for lost by local physicians.

People quickly recognized the value of the new product, after Nestlé's new
formula saved the child's life and within a few years, Farine Lactée Nestlé was
being marketed in much of Europe.

Henri Nestlé also showed early understanding of the power of branding. He had
adopted his own coat of arms as a trademark; in his German dialect, Nestlé
means 'little nest'. One of his agents suggested that the nest could be exchanged
for the white cross of the Swiss flag. His response was firm: "I regret that I cannot
allow you to change my nest for a Swiss cross .... I cannot have a different
trademark in every country; anyone can make use of a cross, but no-one else
may use my coat of arms."

Meanwhile, the Anglo-Swiss Condensed Milk Company, founded in 1866 by

Americans Charles and George Page, broadened its product line in the mid-
1870s to include cheese and infant formulas. The Nestlé Company, which had
been purchased from Henri Nestlé by Jules Monnerat in 1874, responded by
launching a condensed milk product of its own. The two companies remained
fierce competitors until their merger in 1905.

Some other important firsts occurred during those years. In 1875 Vevey resident
Daniel Peter figured out how to combine milk and cocoa powder to create milk
chocolate. Peter, a friend and neighbor of Henri Nestlé, started a company that
quickly became the world's leading maker of chocolate and later merged with
Nestlé. In 1882 Swiss miller Julius Maggi created a food product utilizing
legumes that was quick to prepare and easy to digest.

His instant pea and bean soups helped launch Maggi & Company. By the turn of
the century, his company was producing not only powdered soups, but also
bouillon cubes, and sauces and flavorings.

1905-1918

The Company formed by the 1905 merger was called the Nestlé and Anglo-
Swiss Milk Company. By the early 1900s, the Company was operating factories
in the United States, Britain, Germany and Spain. In 1904, Nestlé added
chocolate to its range of food products after reaching an agreement with the
Swiss General Chocolate Company.
Condensed-milk exports increased rapidly as the Company replaced sales
agents with local subsidiary companies. In 1907, the Company began full-scale
manufacturing in Australia, its second-largest export market. Warehouses were
built in Singapore, Hong Kong, and Bombay to supply the rapidly growing Asian
markets.

Most production facilities remained in Europe, however, and the onset of World
War I brought severe disruptions. Acquiring raw materials and distributing
products became increasingly difficult. Fresh-milk shortages throughout Europe
forced factories to sell almost all their supplies to meet the needs of local towns.

Nevertheless, the war created tremendous new demand for dairy products,
largely in the form of government contracts. To keep up, Nestlé purchased
several existing factories in the United States. By war's end, the Company had
40 factories, and its world production had more than doubled since 1914.

1918-1938

The end of World War I brought with it a crisis for Nestlé. Government contracts
dried up following the cessation of hostilities, and civilian consumers who had
grown accustomed to condensed and powdered milk during the war switched
back to fresh milk when it became available again. In 1921, the Company
recorded its first loss. Rising prices for raw materials, the worldwide postwar
economic slowdown, and deteriorating exchange rates deepened the gloom.

Nestlé's management responded quickly, bringing in Swiss banking expert Louis

Dapples to reorganize the Company. He streamlined operations to bring
production in line with sales and reduced the Company's outstanding debt.

The 1920s also saw Nestlé's first expansion beyond its traditional product line.
The manufacture of chocolate became the Company's second most important
activity. New products appeared steadily: malted milk, a powdered beverage
called Milo, a powdered buttermilk for infants, and, in 1938, Nescafé.
The Brazilian Coffee Institute first approached Louis Dapples in 1930, seeking
new products to reduce Brazil's large coffee surplus. Eight years of research
produced a soluble powder that revolutionized coffee-drinking habits worldwide.
Nescafé became an instant success and was followed in the early 1940s by
Nestea.

1938-1944

The effects of the onset of World War II were felt immediately by Nestlé. Profits
dropped from $20 million in 1938 to $6 million in 1939. Neutral Switzerland
became increasingly isolated in a Europe at war, and the Company transferred
many of its executives to offices in Stamford, Connecticut.

The first truly global conflict ended forever the traditional Company structure. To
overcome distribution problems in Europe and Asia, factories were established in
developing countries, particularly in Latin America.

Ironically, World War II helped speed the introduction of the Company's newest
product, Nescafé. After the United States entered the war, Nescafé became a
staple beverage of American servicemen serving in Europe and Asia. Annual
production levels reached one million cases by 1943.

As in World War I, production and sales rose in the wartime economy: Nestlé's
total sales jumped from $100 million in 1938 to $225 million in 1945. As the end
of the war approached, Nestlé executives found themselves unexpectedly
heading up a worldwide coffee concern, as well a company built upon Nestlé's
more traditional businesses.

1944-1975

The close of World War II marked the beginning of the most dynamic phase of
Nestlé's history. Throughout this period, Nestlé's growth was based on its policy
of diversifying within the food sector to meet the needs of consumers. Dozens of
new products were added as growth within the Company accelerated and
outside companies were acquired.

In 1947, Nestlé merged with Alimentana S.A., the manufacturer of Maggi

seasonings and soups, becoming Nestlé Alimentana Company. The acquisition
of Crosse & Blackwell, the British manufacturer of preserves and canned foods,
followed in 1950, as did the purchase of Findus frozen foods (1963), Libby's fruit
juices (1971) and Stouffer's frozen foods (1973).

Meanwhile, Nescafe continued its astonishing rise. From 1950 to 1959, sales of
instant coffee nearly tripled, and from 1960 to 1974, they quadrupled. The
Company's total sales doubled twice in the 15 years after World War II. The
development of freeze-drying led to the introduction, of Taster's Choice instant
coffee, in 1966.

Finally, Nestlé management reached the decision to diversify for the first time
outside the food industry. In 1974, the Company became a major shareholder in
L'Oréal, one of the world's leading makers of cosmetics

1975 - 1981

After the agreement with L'Oréal in 1974, Nestlé's overall position changed
rapidly. For the first time since the 1920s, the Company's economic situation
deteriorated as the price of oil rose and growth in the industrialized countries
slowed. In addition, foreign exchange rates deteriorated with the French franc,
dollar, pound sterling, and mark all losing value relative to the Swiss franc.
Finally, between 1975 and 1977, the price of coffee beans quadrupled, and the
price of cocoa tripled. As in 1921, the Company was forced to respond quickly to
a radically changed marketplace.
Nestlé's rapid growth in the developing world partially offset a slowdown in the
Company's traditional markets, but it also carried with it the risks associated with
unstable political and economic conditions. To maintain a balance, Nestlé made
its second venture outside the food industry by acquiring Alcon Laboratories,
Inc., a U.S. manufacturer of pharmaceutical and ophthalmic products.

Taking such a step in a time of increased competition and shrinking profit

margins required boldness and vision. Even more than the L'Oréal move, Alcon
represented a leap into unknown waters for Nestlé. But, as Group Chairman
Pierre Liotard-Vogt noted, "Today we find ourselves with a very wide range of
activities, all of which have one thing in common: they all contribute to satisfying
the requirements of the human body in various ways."

1981 - 1995

Under a new Chief Executive Officer, Helmut Maucher, Nestlé approached the
1980s with a renewed flexibility and determination to evolve. The Company's
strategy for this period was twofold: improve its financial situation through internal
adjustments and divestments, and continue its policy of strategic acquisitions.

Thus, between 1980 and 1984, the Company divested a number of non-strategic
or unprofitable businesses. At the same time, Nestlé managed to put an end to a
serious controversy over its marketing of infant formula in the Third World. This
debate had led to a boycott of Nestlé products by certain lay and religious
organizations. This issue is still alive in some quarters, but there is no longer any
significant boycott activity.

In 1984, Nestlé's improved bottom line allowed the Company to launch a new
round of acquisitions, including a public offer of $3 billion for the American food
giant Carnation. At the time, the takeover, sealed in 1985, was one of the largest
in the history of the food industry.

1996-future
The first half of the 1990s proved to be a favorable time for Nestlé: trade barriers
crumbled and world economic markets developed into a series of more or less
integrated trading areas. The opening of Central and Eastern Europe, as well as
China, and a general trend towards liberalization of direct foreign investment was
good news for a company with interests as far-flung and diverse as Nestlé. While
progress since then has not been as encouraging, the overall trends remain
positive.

Consolidation since 1996 has been demonstrated by the acquisition outright of

the Italian mineral water concern San Pellegrino (1997), the acquisition of
Spillers Petfoods of the UK (1998), and also with the decision to divest the
Findus brand in order to concentrate on high added-value frozen food products
(1999). Since then, Ralston Purina was acquired (2002) and the petcare
business is now joint world leader and known as Nestlé Purina PetCare. In the
same year, the former Perrier Vittel water business was re-named Nestlé Waters,
recognizing the fact that the dynamic bottled water business accounts for a
growing share of Group sales.

Nestlé opened the 20th century by merging with the Anglo-Swiss Condensed
Milk Company to broaden its product range and widen its geographical scope. In
the new millennium, Nestlé is the undisputed leader in the food industry, with
more than 470 factories around the world and sales of more than CHF 81 billion.
In July 2000, Nestlé launched a Group-wide initiative called GLOBE (Global
Business Excellence), aimed at harmonizing and simplifying business process
architecture; enabling Nestlé to realize the advantages of a global leader while
minimizing the drawbacks of size.

There have also been two major acquisitions in North America, both in 2002: in
July, Nestlé announced that the U.S. ice cream business was to be merged into
Dreyer's, and in August, a USD 2.6bn acquisition was announced of Chef
America, Inc. , a leading U.S.-based hand-held frozen food product business.
The Company's strategy will continue to be guided by several fundamental
principles. Nestlé's existing products will grow through innovation and renovation
while maintaining a balance in geographic activities and product lines. Long-term
potential will never be sacrificed for short-term performance. The Company's
priority will be to bring the best and most relevant products to people, wherever
they are, whatever their needs, throughout their lives.

Our Brands
Quality is the essential ingredient in all of our brands and the reason why millions
of people choose Nestlé products every day. Our consumers have come to trust
in Nestlé’s commitment to excellence and turn to Nestlé brands to maintain
nutritional balance in a fast paced world

Baby Foods

“Nutrition that suits the needs of your baby.”

Dairy Products

“From shelf-stable solutions to chilled dairy. “

Breakfast Cereals
“Start your day out healthy with Nestlé Breakfast Cereals.”

Ice Cream

“Discover the world of delicious Nestlé Ice Cream.”

Chocolate & Confectionery

“Delighting the senses with a range of tastes and textures”

Prepared Foods

“Preparing well-balanced meals is a snap with Nestlé. “

Beverages
 “Drink to a healthy, active life with Nestlé beverages.”

Foodservices

“Providing food and beverage professionals with a wide range of solutions.”

Pet Care

“Nutrition, health and wellness for your pet.”

Bottled Water

“Capturing nature in its purest form.”

About Bottled Water

Nestlé began its entry into the water business in 1969 with a 30% stake in the
owners of the Société Générale des Eaux Minérales de Vittel. It acquired a
controlling interest in SGEMV in January 1992, and went on in May of the same
year to buy out the entire Perrier Group.

In 1992, Nestlé was the first company to dare to launch a mineral water, Valvert,
in five different countries at once. Its originality lied in the use of an all-new
plastic, P.E.T. (polyethylene teraphthalate), which is stronger and more elastic
than the PVC used since 1968. Besides, P.E.T. is recyclable.

By the end of 1997, the Group was present on every continent, and the purchase
of San Pellegrino gave it the leadership in the Italian market. In 1998, for the
first time in its history, Nestlé associated its name with a bottled water: Nestlé
Pure Life.

The brand was launched in Pakistan and soon appeared in Brazil, followed by
Argentina, Thailand, the Philippines, China, and Mexico in 2000. In 2001, India,
Jordan, and Lebanon followed, and in 2002, Egypt, Uzbekistan and the United
States.

Nestlé Pure Life is drinking water that has been treated and remineralized using
a standardized industrial process to ensure purity and quality and is marketed in
emerging countries.

A second product with the Nestlé name was launched in May 2000, this time in
six European countries: Nestlé Aquarel. A natural spring water currently from
nine different springs in France, Germany, Belgium, Hungary, Italy and Spain,
Nestlé Aquarel also uses the multi-source concept to satisfy new consumer
expectations, especially for water with a low mineral content that the whole family
can drink.
In April 2002, the Group changed its name to Nestlé Waters, a token of Nestlé's
decisive commitment to the bottled water market, which now represents 9% of its
sales. Today, Nestlé Waters is established in 130 countries and markets about
70 different brands. The Group is able to offer top quality brands and innovative
packaging to meet the individual needs of the water consumer all over the world,
whenever, wherever and however thanks to the wide variety of its offer in terms
of distribution and product.

Nestle Brands

What’s in the Nestlé name

The Nestlé brands are another strategic asset for Nestlé Waters. They originated
in the global need for a safe family drinking water with a pleasant taste,
affordable price and tailored to local preferences. This need gave rise to a new
multi-site production process for bottled water based on a simple idea: a single
brand of water produced at a variety of sites, thus reducing costly logistical,
warehousing and transport constraints – which are particularly high in the bottled
water sector – enabling consumers to enjoy the product at a more attractive price
under a strong brand identity.

Nestle Pure Life, Purity guaranteed

Launched in 1998 in Pakistan, Nestlé PURE LIFE has been the first illustration of
the multisite concept. First meant to answer to the needs of emergent countries'
people waiting for healthy water, Nestlé PURE LIFE is now present on every
continent in Canada, USA, Mexico, Argentina, South Africa, Saudi Arabia,
Jordan, Egypt, Lebanon, Turkey, Russia, Uzbekistan, Pakistan, China, Thailand,
Philippines, Bahrain and the United Arab Emirates. Launched in 2003 on north
American market, Nestlé PURE LIFE is to become the first global brand, the
most worldly distributed in 2010.

Product Packaging Sizes

Nestle has floated its water into market in different packaging sizes. Nestle Pure
Life is available in the size of 500 ml, 1 Liter, 1.5 liters and 3 liters pet bottles,
whereas the bulk market makes Home and Office (H&O) deliveries in 3 and 5
gallons water cartons. These are the packaging size available in the market by
nestle and they made their marketing strategies on the basis of these packaging
size, their marketing strategy and customers changes with the change in the
packaging size.

What is the Basic need they are

satisfying?
The basic need which they are satisfying is the “Thirst”. Thirst was the need
identified by the marketers and then by using the concept of marketing that is to
satisfy the need in better way was implemented and then the final result was the
new product with the value addition that is the Nestle Pure life was developed
which is capturing good market share in Pakistan now.

From the research it has been showed that most of the population of Pakistan is
been using the tap water and satisfying their thirst with that tap water, but this is
the new product with value addition which is trying to capture the market of tap
water user with its value and benefits, even though the basic need what they are
satisfying same but the main thing is that the value they have added they have
find out new way of satisfying that particular need.
Competitors
They have two broad category of competitors, one are those which are producing
the same product and satisfying the same need those are all other bottled water
companies. While the others are those who are producing the substitute products
to satisfy same need. Let us discuss separately.

Competitor with same Product

There are 26 organizations working in Pakistan in the bottled water industry. All
these organizations are the competitors of Nestle Pure life. Nestle is the
commanding brand among all of them as it is haring the major portion of the
market. Nestlé’s Pure Life brand dominates the retail market with a share of 50
per cent. Other well known brands include Sparkletts of Hashwanis with a market
share of 12 per cent, BSW brand of M/s Wah Valley Corporation 5 per cent. The
rest of the market is in the hands of small players.

There are an estimated 20 brands in the H&O delivery segment of bottled

water. Nestle dominates this segment also with an estimated market share of
over 50 per cent. To expand its H&O water delivery business countrywide, Nestle

acquired major share holdings in both AVA and Fontallia in 2001. While AVA is a

major player in the branded bottled water category, both in PET and H&O
service, Fontallia enjoys strong holding in H&O service in Karachi. In addition,
the Jerry Cane segment makes home and office deliveries in Karachi.

This means that the major market of Pakistan is in the hand of Nestle and it is the
most popular brand of Pakistan in bottled water. This is a big real competitive
advantage for nestle, even that there are 26 competitors in market but nestle has
upper hand over all of them because of its “Brand awareness” and market share.
Only 3 companies are there who can give tough time to nestle because of its
market share, but for that they are required to be too much skillful in many things,
while other small companies are even not that fierce competitors for Nestle. So
among competition Nestle is at the top and winning the race right now.

• Competitors with Substitute Product

We know that not importantly our main competitors lie among our same product
category but it is a big possibility that your competitor may lie among those who
are producing substitute product of your core product. And in this case of Nestle
this is quite evident that substitute product are really capturing the market now.
Substitute product includes all beverages other then bottled water those are Tap
water, Soft drinks (Pepsi Cola, Coca Cola), Juices (Nestle, Shezan, Country etc.)
Energy Drinks ( Blue OX etc), Milk and some others. They all are satisfying the
same need but each has its own value and what benefit the customer will prefer
he/she will go for that product, For example if a Person is thirsty and his
preference is Low Price, he will go for the tap water, of his preference is the
product which provides taste along with fulfilling the basic need of thirst her will
go for Soft drinks, if he prefer refreshment he will go for juices, if he want some
energy along with satisfying basic need of thirst he will go for energy drinks, and
if he want something good for health and also useful to satisfy thirst he/she will
be some cold milk. That is how these substitute product will capture the market
and are the competitors of Nestle. In this regards, soft drinks are the top most
competitors of Nestle Pure life and secondly it comes juices.
Value Addition
For any new product the value addition is necessary, a new product only develop
and come into existence when we add some new value into the product which
was previously satisfying the same need. Same is been done by the Nestle as
they been the pioneer of Bottled water industry in Pakistan. They are the first
who introduced this packed water and the value which they have added is the
purity, the difference between the ordinary tap water and the Nestle Bottled water
is the Purity that is how they have added the value, we know that people are
really purity conscious and they are even willing to pay more prices if the are
getting pure water.

With every value addition we know that it increase the price of the product. And
Bottled water is Lot more expensive then the ordinary water but the value is the
key. Another value addition they have done is the packaging we know that the
value can be added either by changing or upgrading the product but it can also
be created by changing the packaging to the product. And they have presented
the water in a best way so that even we can carry it with ourselves and this is the
creation of value and it creates the utility for us that we can carry water with
ourselves because we cannot carry tap water with but we can carry this bottled
water with us.

So the major value additions are both with the product and with the packaging.
They both are combined together and results into a new value added product
with the new market.

Creating differentiation
Value added work is been done by everyone in the industry but what required is
the differentiation. Differentiation leads to the determination of brand that which
brand is the best. Differentiation is to provide that product or service which others
are not providing. These are called the Augmented Product or service.

Expected products/services are those which are expected by the customers

these products do not create differentiation. Now lets see how Nestle provide and
create differentiation.

Differentiation by Nestle Pure Life

They have been creating differentiation by providing augmentation to their

product. That augmentation is:

Augmentation in Nestle Pure Life

Nestle added some useful minerals into their water but these minerals are now
expected product, what is the augmentation they have created is the “Calorie
free Minerals”. These minerals are not been provided by the others uptill now and
that is the way of creating differentiation. They can even create positioning over
this attribute and can create new market where they will be in monopoly and that
market is of those people who are conscious about their health and fitness and
take care of calories taken. So this is the way through which Nestle pure life is
different from others and that is what differentiation demands to make your
product prominent among all the products of your competitors.
Segmentation of Market for Nestle Pure
Life
Nestle has segmented its market differently for their different Packaging of
product. Their positioning is same for both because the product is same but the
market is different on the basis of size. Because, one can carry 500 ml bottle with
him but not the 5-gallon carton, so it means that the market for both packaging is
different. Lets see segmentation of Nestle Pure life by dividing it into two
categories on the bases of its packaging sizes.

1. Segmentation for Bottled Water (0.5,1.0,1.5 Liters)

2. Segmentation for carton (4-5 gallons)
Segmentation for Bottled Water (0.5,1.0,1.5,3.0 Liters)

This included all the bottles of available sizes in market that are 0.5 liter to 3.0
liter. First let us differentiate the market for this type of packaging in broader
terminology.

Market Specification

The whole available market for this type of packaging are the out door users.
That is what the actual market available to us because no one will use these
bottled water at home. These bottles can only work for out door users. Now
among this available market we have to find out our target market by segmenting
the market and comparing the attributes of market and the product.

Basis of Segmentation

The basis of segmentation used for these sizes of Nestle Pure life are the
combination of both demographics and psychographics factors. These variables
are Age, Education, Income and Purity conscious People.

Age

Through the variable of age we have segmented the market into number of
markets and our target segment according to the age is from the age group of
late teen ages to the old ages. That would be from 18 to so on.

Education
Education is one of the key variables for our market segmentation as behavior of
the people changes with the education level and the market that we have
targeted is the market of literate people who knows the worth of Purity in their
lives. Illiterate person even if they have money they would not find any attraction
in this product but the educated people who know what purity means to their life
and health would certainly attract towards them and they will prefer to buy Nestle
pure life instead of ordinary tap water while walking roadside when they feel
thirsty for the sake of purity.

Income Level

Income level is another key factor during the segmentation of market. As income
level increase the luxuries of life going to increase and people comes towards the
quality with the increase in income level and become less price conscious. Our
segmented market on the basis of income level may be:

Low income

Low middle income

Middle income

High Middle income

High income

Our target market according to this aspect is the market of people whose family
income falls in the category of high income and high middle income and middle
income.
Purity Conscious people

This is the psychographics factor that we have added while our segmentation.
The people who are psychologically very much health and fitness conscious and
they care about the cleanliness and purity of every thing are among our target
market.

Our target Market

Among Out door users out target market is the market of those people who are
about 18 in their age and they have atleast basic education which let them know
the importance of quality in life and people with high profile of income and psycho
graphically they need to be Purity conscious. The people having all above
qualities is our target market for our brand Nestle Pure Life.

Segmentation for carton (4-5 gallons)

This included the product size of large carton of 4-5 gallons of water. First let us
once again differentiate the market for this type of packaging in broader
terminology.

Market Specification
The market available to us for this type of packaging is the indoor market. That
uses the product indoor and those are Offices and Home users. So the broader
market for this category is Home and Offices.

Basis of Segmentation

The basis of segmentation used for this size of Nestle Pure life are also
the combination of both demographics and psychographics factors. These
variables are Family size (Organization Size in term of Offices), Income Level
and Purity conscious People.

Family Size

Since our major market is Home and offices therefore for Home market the
Family size is the important demographic variable to identify the target segment.
Here we can divide family size into different categories.

Small families (Parents + 2 children)

Medium families (Parents + 3-5 Children)

Large Families (Parents + More then 5 Children)

Our Target families are Small families in particular while medium families in
general. Because for large families it is too difficult to afford such expensive
water for their drinking purpose because their water consumption is high and
mostly they are not interested in such luxuries this is been the general behavior
of these family sizes in Pakistan’s Society. That is why out target market is the
market of Small and medium families.
And for offices out target market are the medium level and large level
organization. According to the Government of Pakistan the medium organization
is that which has the labour force of more then 35 people.

Income Level

Income level as defined earlier is so important and it can divide into 5 different
categories as defined above and our target segment is the segment with High
and Middle high income for this size of Nestle Pure life. Here we have not added
Middle income for our potential target as they were there for our bottled water
because this packaging of water and use of this water at home is been
discourages at the homes of people with middle income, they will buy this water
when they are on road, in parks or during journey but they will not use it most of
the time for their daily use.

Purity Conscious People

This is the psychographics factor that we have added while our segmentation.
The people who are psychologically very much health and fitness conscious and
they care about the cleanliness and purity of every thing are among our target
market because only they will buy this expensive water for their daily drinking
usage.

Our target Market

Our target market among Offices are medium and large scale enterprises
including restaurants and for hour home market our target market is the segment
of those families with high and medium high income level with the small of
medium family size along with the psychographics attribute of being purity
conscious.
Positioning

They position there product on the basis of product attribute that is pure they say
that Nestle Pure life is a “Pure family water”. This is the positioning of the product
that is pure so they are creating perception in the mind of customer that the
product is pure and whoever wants to have purity in its drinking water should buy
Nestle Pure life. Not only the positioning jingle but the Brand Name itself is
positioning the product in the mind of customer.

The word “Family” in the jingle is actually positioning the nestle that it is not only
for the one person of the family, but it is the whole family drinking water because
purity is important for each and every person of the family.

Nestle Pure life - On the Positioning Map

 On positioning Map Nestle Pure life comes at the place where quality is
high and the price is reasonably high. Because they are providing the value that
permit them to suggest that price because price is never of the product but it is
the price of the value added by the organization.
 References

1.http://www.expertsadvisorycell.org/EAC_Publications/DigestofIndustrialSectors/
Industrial%20Digest%202004/Bottled%20Water/Bottled%20Water.pdf

2. http://www.nestle-waters.com

3. http://www.nestle.com/

Product: Nestle Pure Life (Bottled Water)

Industry Overview
Pakistan’s bottled water industry is a rapidly growing segment of the

beverages sector. The country’s market is comparatively very small on a global

scale and was estimated at 33 million litres a year by end of 1991. However, with
swift increase in the number of bottled water producers during the last three
years, the country’s market is estimated to have grown to 70 million litres with per
capita consumption reaching half a litre. The bottled water market is presently
growing at a robust rate of 40% per annum. According to a study compiled in
2001 by Zenith International, specialist consultants for Asia Bottled Water
Association (ABWA), Pakistan registered the fastest growth of 140% in 2000
amongst the countries in Asia and Middle East region.

There are around 26 players operating in the bottled water sector.

According to industry sources, the number of bottlers scales up well above 70
during summer season due to increased demand for drinking water in summer.
However, the much publicized laboratory report published by the Pakistan
Council of Research in Water Resources (PCRWR) after conducting a survey of
26 brands in the Rawalpindi and Islamabad region declaring that ‘all the 26
brands available in the market are contaminated while 10 of them are unsafe for
drinking’, forced the Pakistan Standards and Quality Control Authority (PSQCA)
to make it obligatory for the companies to obtain license from the authority before
commencing operation. A total of 18 companies have so far been registered by
the PSQCA.

THE BOTTLED WATER INDUSTRY OF PAKISTAN

GLOBAL SCENARIO

‘Bottled Water’ is considered to be the smallest yet fastest growing and

most dynamic segment of the beverage industry. The world bottled water market

represents an annual volume of 89 billion litres and is estimated to be worth US$

22 billion. Western Europeans are the world’s major bottled water consumers
with per capita consumption of 85 litres, but the most promising markets are in
Asia and the Pacific, with an annual increase of 15% for the period 1999-2001.
The average world consumption grows by 7% per annum.

Global Bottled Water Market

 The world total bottled water consumption grew from 19.186 billion gallons
in 1996 to 30.103 billion gallons in 2001registering a compound annual growth
rate of 9.4% during the period. The U.S., Mexico and Western European
countries are the leading bottled water consuming countries. However, Asia and
the Pacific regions have witnessed a remarkable growth in consumption during
the last five years. Table below depicts ten leading countries by consumption
along with CAGR during1996 – 2001:

ASIA – The fastest Growing Bottled Water Market

The bottled water industry is one of the fastest growing industries in Asia.

Zenith reports stunning growth of 45% since 1998 across 50 countries in Asia,

Middle East and North Africa. Total sales reached 25,270 million litres, more than

double the level of 1995. The region now represents 23% of global consumption

with market value at US$ 4,700 million. According to Zenith Research and
Development Director, ‘the Asian Market is still very young and it is anticipated
that

volumes will double again to over 50 million litres by 2005.

Per Capita Consumption of Leading Countries

Per Capita Consumption by leading countries during the years 1996 and

2001 is depicted in table below. It is evident from the table that West European

nations have the highest per capita consumption of bottled water. In 2001, global

average of per capita consumption of bottled water stood at 4.9 gallons against
3.3 in 1996.
Major Global Players

The bottled water market is a lucrative one, dominated by Swiss food giant

Nestlé, with a 16.8 per cent share, and France's Danone, which controls about
14 per cent. Nestle has found a growing market niche for bottled water in non
industrialized and developing countries where safe tap water is rare. In these
countries, its main product line is Nestle pure, a low-cost purified tap water with

added minerals. Nestle Pure Life has sold well in Pakistan and Brazil and have

some other bottled water products in China, Vietnam, Thailand, and Mexico.

Besides Nestle, giants of the global food and beverage industry have also

become purveyors of bottled water, including Coca-Cola, Pepsi and Proctor &

Gamble. With the entry of the big soft drink giants, market growth is expected to
accelerate further. PepsiCo is currently leading the way with its Aquafina line,
while Coca-Cola has launched a North American line under the name Dasani in
addition to its already established international label, Bon Aqua.

STRUCTURE OF PAKISTAN BOTTLED WATER INDUSTRY

Pakistan’s bottled water market comprises of two main segments i.e. the

retail market and the bulk market. The retail market supplies water in 0.5, 1.5, 3.0

and 5.0 litres capacity PET bottles whereas the bulk market makes Home and

Office (H&O) deliveries in 3 and 5 gallons made of Polycarbonate. There are

around 26 players operating in the bottled water sector. However, according to
industry’s sources, this number reaches well above 70 when small unknown
operators crop up during summer owing largely to the lax regulation and
ineffective monitoring of the sector. Nestlé’s Pure Life brand dominates the retail

market with a share of 50 per cent. Other well known brands include Sparkletts of

Hashwanis with a market share of 12 per cent, BSW brand of M/s Wah Valley

Corporation 5 per cent. The rest of the market is in the hands of small players.

There are an estimated 20 brands in the H&O delivery segment of bottled

water. Nestle dominates this segment also with an estimated market share of
over 50 per cent. To expand its H&O water delivery business countrywide, Nestle

acquired major share holdings in both AVA and Fontallia in 2001. While AVA is a
major player in the branded bottled water category, both in PET and H&O
service, Fontallia enjoys strong holding in H&O service in Karachi. In addition,
the Jerry Cane segment makes home and office deliveries in Karachi. This
segment is mostly unorganized supplying low quality water.

BOTTLED WATER MANUFACTURERS

Some of the well-known bottled water manufacturers are listed below

alongwith their brand names, installed capacities and production during 2002:
TARIFF STRUCTURE

The tariff structure for bottled / mineral water is covered under chapter 22

under the H.S. Code 22.01. Following is the tariff structure on various types of

bottled water:
Profit Margins in the Bottled Water Business

At average, it costs the bottled water companies approximately Rs 150 per

carton (12 bottles) of 1.5 litres capacity bottles. The companies average selling

price ranges between Rs 178.0–180.0 per carton including General Sales Tax
plus other taxes (total taxes 18.5 %). The profit margin for the companies at
average ranges between Rs 8.0 – 10.0 per carton. Taking into account the
market price of Rs 22.0 for 1.5 litre bottle, the price of carton containing 12
bottles comes to Rs 264/- giving a margin of Rs 80.0– 85.0 to the middle man. It
is evident from the approximate calculation that the middle man is making huge
profits from the bottled water business which can safely be assumed between Rs
50.0 – 55.0 per carton after factoring out the cost of transportation at the rate of
Rs 5.0 and retailers margin at the rate of 12.0 per carton.

The Quality Issue of Bottled Water

The bacterial and chemical contamination associated with bottled water is

a major global concern and has sparked many controversies even in the US and

Europe. In Pakistan, the issue of contaminated bottled water came to the fore
when Pakistan Council of Research in Water Resources (PCRWR) claimed in its
report that all the major brands available on the market were contaminated and
10 of them not fit for human consumption after conducting a survey in the
Rawalpindi-Islamabad region where it randomly collected 41 water samples of 26
brands from public utility stores and shops.

The source plays a vital role in the in the bottlers ability to produce the
desired quality of bottled water. Spring water and purified water are the two major

types of bottled water sold on the market around the world. While these two

products are generally viewed as high quality, they differ significantly in the

treatment required to obtain the end product.

Regardless of the source, the water must be inspected, tested and

certified by the authorities concerned. In addition, amounts of organics and in-
organics as well as the quantity of Total Dissolved Solids (TDS) help determine if
the source is practicable. A challenge for spring water bottlers is that the water
source must be an actual spring that can supply and sustain the quality and
quantity of water required. Purified water is a highly treated product and offers
the most consistent and high quality water to consumers worldwide. The U.S.
based Natural Resources Defense Council (NRDC) in its march 1999 study
concluded that ‘ yet in contrast to the market image of ‘pure spring water’ that is
projected by the industry, bottled water is not always safer than tap water and in
some case it is less so’. The study claimed that ‘one-third of the 103 brands of
bottled water it studied contained levels of contamination, including traces of
arsenic and E.coli. One-quarter of all bottled water is actually taken from the tap,
though it is further processed and purified to some degree, and in many
countries, bottled water itself is subject to less rigorous testing and lower purity
standards than tap water’. ‘One brand of 'spring water’, reported the NRDC ...
actually came from a well in an industrial facility's parking lot, near a hazardous
waste dump, and periodically was contaminated with industrial chemicals at
levels above FDA standards’. In terms of nutritional value, according to the
United Nations Food and Agricultural Organization (FAO), bottled water is no

better than tap water. The idea that bottled "spring" or "natural" water contains

near-magical qualities and great nutritive value is "false," declares a 1997 FAO
study on "Human Nutrition in the Developing World." "Bottled water may contain

small amounts of minerals such as calcium, magnesium, and fluoride, but so

does tap-water from many municipal water supplies."

All this reflects global controversies surrounding the quality, purity and
safety of bottled water. The issue of sub-standard quality of bottled water could
be more pronounced in the developing countries. The lax regulation and weak
monitoring infrastructure in countries like Pakistan makes the bottled water sector
extremely susceptible to the unscrupulous bottlers. The PCRWR report is an
indication of situation prevailing in the bottled water sector of Pakistan. The
sensitivity of the matter, keeping in view that water is the basic human necessity
and has a major bearing on the health of the society as a whole, be it the future
generation of the country or the major consumer community including
participants of seminars/conferences, foreigners, traveling passengers,
restaurants and residents of lodges and rest houses, forced the Pakistan
Standards and Quality Control Authority (PSQCA) to step into the scene and
formulate measures for strict monitoring of this vital sector.

The quality standards for bottled water have recently been formulated by the

PSQCA. Water standards PSS No 2102 for natural mineral water and PSS No
4639 for bottled drinking water have been declared mandatory for mineral and
bottled water manufacturers under the authority of PSQCA Act IV of 1996 of the

Government vide SRO: 638 (1)/2000,dated September 12, 2001.

The water quality standards are mandatory, and have become legally

enforceable from December 1. After December 1, all brands of bottled water

have to comply with the stipulated standards, failing which legal action could be
initiated against the non- complying bottled water manufacturers. The PSQC has
now made it obligatory for the companies to obtain license from the authority
before commencing operation. A total of 18 companies have so far been
registered by the PSQCA.

ORIGINS AND CATEGORIES OF BOTTLED WATER

Bottled Water is classified according to its origin. Within the

noncarbonated bottled water market, there are two primary products – Spring
Water and Purified Water. These two products account for the majority of the
industry’s sales and consumption. In addition, Artesian, Drinking, Mineral and
Well waters are also bottled and sold in the market but represent a small sales
percentage. While the label on the bottle does give some basic information
required by the monitoring authorities, the average consumer is generally
unaware of what type of water is inside the bottle. The US Food and Drug
Administration (FDA) has defined the following types of bottled water:

Artesian water:

Water from a well that taps a confined aquifer (a water-bearing

underground layer of rock or sand) in which the water level stands at some

height above the top of the aquifer.

Drinking water:

Water that is sold for human consumption in sanitary containers and

contains no added sweeteners or chemical additives. It may be rebottled tap

water treated at a municipal source and retreated by simple filtration.

Mineral water:

It is distinguished by a constant level and relative proportion of minerals

and trace elements (not less than 250 parts per million (ppm) of Total Dissolved

Solids TDS). These minerals and elements must occur naturally from the water

sources and cannot be added at the time of bottling.

Purified water:

Water that has been produced by distillation, de-ionization, reverse

osmosis (RO) or another process and meets the definition of purified water.

Spring water:

Water derived from an underground source from which water flows

naturally to the surface of the Earth. Spring water must be collected only at the

spring or through a borehole tapping the underground spring. Spring water can

be collected with an external force, but must be from the same underground

stratum as the spring and must have all the physical properties, composition and

quality before treatment.

The Origins of Bottled Water - Schematic

Bottled water may be used as an ingredient in beverages, such as diluted

juices or flavored bottled waters. However, beverages labeled as containing

"sparkling water," "seltzer water," "soda water," "tonic water," or "club soda" are
not included as bottled water under the FDA's regulations, because these
beverages have historically been considered soft drinks.

TREATMENT METHODS OF BOTTLED WATER

Bottled water is treated by different methods. Bottled water that has been

treated by distillation, reverse osmosis, or other suitable process and that meets
the definition of "purified water" can be labeled as "purified water." Some of these

methods are briefly described below:

Distillation:

In this process, water is turned into a vapor. Since minerals are too heavy
to vaporize, they are left behind, and the vapors are condensed into water again.

Reverse Osmosis:

Water is forced through membranes to remove minerals in the water.

Absolute 1-micron filtration:

Water flows through filters that remove particles larger than one micron in

size, such as Cryptosporidium, a parasitic protozoan.

Ozonation:

Bottlers of all types of waters typically use ozone gas, an antimicrobial

agent, to disinfect the water instead of chlorine, since chlorine can leave residual

taste and odor to the water.

RECOMMENDATIONS

• The PSQCA should set strict limits or industry guidelines (equivalent to

international standards) for contaminants of concern in bottled water,

including arsenic, bacteria, E.coli and other parasites and pathogens, and

synthetic organic chemicals, including chemicals such as phthalate, which

can leach from plastic.

• The PSQCA should adopt rules for bottled water testing, to control microbial

and chemical contaminants, to protect water sources, to ensure the reporting

of test results and violations to concerned federal authorities, to certify

operators of water bottling plants, and to require the use of certified

laboratories. In addition, PSQCA should do monitoring of the quality of

bottled water sold across the nation and should publicly release the results.

• The bottlers, keeping to their words that bottle water is so pure, should

disclose contaminants, the exact water source, treatment, and other key

information on the bottle labels. This would not only prove that the image

they are projecting for their bottled water is true but also satisfy the right-toknow

requirements of the consumer.

• The PSQCA bottled water program must be better funded. A one rupee per
bottle fee on bottled water needs to be charged to fund regulatory programs,

testing, and enforcement of standards.

Company Profile
History

1866-1905

The key factor, which drove the early history of the enterprise that would become
The Nestlé Company, was Henri Nestlé's search for a healthy, economical
alternative to breastfeeding for mothers who could not feed their infants at the
breast.

In the mid-1860s Nestlé, a trained pharmacist, began experimenting with various

combinations of cow's milk, wheat flour and sugar in an attempt to develop an
alternative source of infant nutrition for mothers who were unable to breast feed.
His ultimate goal was to help combat the problem of infant mortality due to
malnutrition.

He called the new product Farine Lactée Henri Nestlé. Nestlé's first customer
was a premature infant who could tolerate neither his mother's milk nor any of the
conventional substitutes, and had been given up for lost by local physicians.

People quickly recognized the value of the new product, after Nestlé's new
formula saved the child's life and within a few years, Farine Lactée Nestlé was
being marketed in much of Europe.

Henri Nestlé also showed early understanding of the power of branding. He had
adopted his own coat of arms as a trademark; in his German dialect, Nestlé
means 'little nest'. One of his agents suggested that the nest could be exchanged
for the white cross of the Swiss flag. His response was firm: "I regret that I cannot
allow you to change my nest for a Swiss cross .... I cannot have a different
trademark in every country; anyone can make use of a cross, but no-one else
may use my coat of arms."

Meanwhile, the Anglo-Swiss Condensed Milk Company, founded in 1866 by

Americans Charles and George Page, broadened its product line in the mid-
1870s to include cheese and infant formulas. The Nestlé Company, which had
been purchased from Henri Nestlé by Jules Monnerat in 1874, responded by
launching a condensed milk product of its own. The two companies remained
fierce competitors until their merger in 1905.

Some other important firsts occurred during those years. In 1875 Vevey resident
Daniel Peter figured out how to combine milk and cocoa powder to create milk
chocolate. Peter, a friend and neighbor of Henri Nestlé, started a company that
quickly became the world's leading maker of chocolate and later merged with
Nestlé. In 1882 Swiss miller Julius Maggi created a food product utilizing
legumes that was quick to prepare and easy to digest.

His instant pea and bean soups helped launch Maggi & Company. By the turn of
the century, his company was producing not only powdered soups, but also
bouillon cubes, and sauces and flavorings.

1905-1918

The Company formed by the 1905 merger was called the Nestlé and Anglo-
Swiss Milk Company. By the early 1900s, the Company was operating factories
in the United States, Britain, Germany and Spain. In 1904, Nestlé added
chocolate to its range of food products after reaching an agreement with the
Swiss General Chocolate Company.
Condensed-milk exports increased rapidly as the Company replaced sales
agents with local subsidiary companies. In 1907, the Company began full-scale
manufacturing in Australia, its second-largest export market. Warehouses were
built in Singapore, Hong Kong, and Bombay to supply the rapidly growing Asian
markets.

Most production facilities remained in Europe, however, and the onset of World
War I brought severe disruptions. Acquiring raw materials and distributing
products became increasingly difficult. Fresh-milk shortages throughout Europe
forced factories to sell almost all their supplies to meet the needs of local towns.

Nevertheless, the war created tremendous new demand for dairy products,
largely in the form of government contracts. To keep up, Nestlé purchased
several existing factories in the United States. By war's end, the Company had
40 factories, and its world production had more than doubled since 1914.

1918-1938

The end of World War I brought with it a crisis for Nestlé. Government contracts
dried up following the cessation of hostilities, and civilian consumers who had
grown accustomed to condensed and powdered milk during the war switched
back to fresh milk when it became available again. In 1921, the Company
recorded its first loss. Rising prices for raw materials, the worldwide postwar
economic slowdown, and deteriorating exchange rates deepened the gloom.

Nestlé's management responded quickly, bringing in Swiss banking expert Louis

Dapples to reorganize the Company. He streamlined operations to bring
production in line with sales and reduced the Company's outstanding debt.

The 1920s also saw Nestlé's first expansion beyond its traditional product line.
The manufacture of chocolate became the Company's second most important
activity. New products appeared steadily: malted milk, a powdered beverage
called Milo, a powdered buttermilk for infants, and, in 1938, Nescafé.
The Brazilian Coffee Institute first approached Louis Dapples in 1930, seeking
new products to reduce Brazil's large coffee surplus. Eight years of research
produced a soluble powder that revolutionized coffee-drinking habits worldwide.
Nescafé became an instant success and was followed in the early 1940s by
Nestea.

1938-1944

The effects of the onset of World War II were felt immediately by Nestlé. Profits
dropped from $20 million in 1938 to $6 million in 1939. Neutral Switzerland
became increasingly isolated in a Europe at war, and the Company transferred
many of its executives to offices in Stamford, Connecticut.

The first truly global conflict ended forever the traditional Company structure. To
overcome distribution problems in Europe and Asia, factories were established in
developing countries, particularly in Latin America.

Ironically, World War II helped speed the introduction of the Company's newest
product, Nescafé. After the United States entered the war, Nescafé became a
staple beverage of American servicemen serving in Europe and Asia. Annual
production levels reached one million cases by 1943.

As in World War I, production and sales rose in the wartime economy: Nestlé's
total sales jumped from $100 million in 1938 to $225 million in 1945. As the end
of the war approached, Nestlé executives found themselves unexpectedly
heading up a worldwide coffee concern, as well a company built upon Nestlé's
more traditional businesses.

1944-1975

The close of World War II marked the beginning of the most dynamic phase of
Nestlé's history. Throughout this period, Nestlé's growth was based on its policy
of diversifying within the food sector to meet the needs of consumers. Dozens of
new products were added as growth within the Company accelerated and
outside companies were acquired.

In 1947, Nestlé merged with Alimentana S.A., the manufacturer of Maggi

seasonings and soups, becoming Nestlé Alimentana Company. The acquisition
of Crosse & Blackwell, the British manufacturer of preserves and canned foods,
followed in 1950, as did the purchase of Findus frozen foods (1963), Libby's fruit
juices (1971) and Stouffer's frozen foods (1973).

Meanwhile, Nescafe continued its astonishing rise. From 1950 to 1959, sales of
instant coffee nearly tripled, and from 1960 to 1974, they quadrupled. The
Company's total sales doubled twice in the 15 years after World War II. The
development of freeze-drying led to the introduction, of Taster's Choice instant
coffee, in 1966.

Finally, Nestlé management reached the decision to diversify for the first time
outside the food industry. In 1974, the Company became a major shareholder in
L'Oréal, one of the world's leading makers of cosmetics

1975 - 1981

After the agreement with L'Oréal in 1974, Nestlé's overall position changed
rapidly. For the first time since the 1920s, the Company's economic situation
deteriorated as the price of oil rose and growth in the industrialized countries
slowed. In addition, foreign exchange rates deteriorated with the French franc,
dollar, pound sterling, and mark all losing value relative to the Swiss franc.
Finally, between 1975 and 1977, the price of coffee beans quadrupled, and the
price of cocoa tripled. As in 1921, the Company was forced to respond quickly to
a radically changed marketplace.
Nestlé's rapid growth in the developing world partially offset a slowdown in the
Company's traditional markets, but it also carried with it the risks associated with
unstable political and economic conditions. To maintain a balance, Nestlé made
its second venture outside the food industry by acquiring Alcon Laboratories,
Inc., a U.S. manufacturer of pharmaceutical and ophthalmic products.

Taking such a step in a time of increased competition and shrinking profit

margins required boldness and vision. Even more than the L'Oréal move, Alcon
represented a leap into unknown waters for Nestlé. But, as Group Chairman
Pierre Liotard-Vogt noted, "Today we find ourselves with a very wide range of
activities, all of which have one thing in common: they all contribute to satisfying
the requirements of the human body in various ways."

1981 - 1995

Under a new Chief Executive Officer, Helmut Maucher, Nestlé approached the
1980s with a renewed flexibility and determination to evolve. The Company's
strategy for this period was twofold: improve its financial situation through internal
adjustments and divestments, and continue its policy of strategic acquisitions.

Thus, between 1980 and 1984, the Company divested a number of non-strategic
or unprofitable businesses. At the same time, Nestlé managed to put an end to a
serious controversy over its marketing of infant formula in the Third World. This
debate had led to a boycott of Nestlé products by certain lay and religious
organizations. This issue is still alive in some quarters, but there is no longer any
significant boycott activity.

In 1984, Nestlé's improved bottom line allowed the Company to launch a new
round of acquisitions, including a public offer of $3 billion for the American food
giant Carnation. At the time, the takeover, sealed in 1985, was one of the largest
in the history of the food industry.

1996-future
The first half of the 1990s proved to be a favorable time for Nestlé: trade barriers
crumbled and world economic markets developed into a series of more or less
integrated trading areas. The opening of Central and Eastern Europe, as well as
China, and a general trend towards liberalization of direct foreign investment was
good news for a company with interests as far-flung and diverse as Nestlé. While
progress since then has not been as encouraging, the overall trends remain
positive.

Consolidation since 1996 has been demonstrated by the acquisition outright of

the Italian mineral water concern San Pellegrino (1997), the acquisition of
Spillers Petfoods of the UK (1998), and also with the decision to divest the
Findus brand in order to concentrate on high added-value frozen food products
(1999). Since then, Ralston Purina was acquired (2002) and the petcare
business is now joint world leader and known as Nestlé Purina PetCare. In the
same year, the former Perrier Vittel water business was re-named Nestlé Waters,
recognizing the fact that the dynamic bottled water business accounts for a
growing share of Group sales.

Nestlé opened the 20th century by merging with the Anglo-Swiss Condensed
Milk Company to broaden its product range and widen its geographical scope. In
the new millennium, Nestlé is the undisputed leader in the food industry, with
more than 470 factories around the world and sales of more than CHF 81 billion.
In July 2000, Nestlé launched a Group-wide initiative called GLOBE (Global
Business Excellence), aimed at harmonizing and simplifying business process
architecture; enabling Nestlé to realize the advantages of a global leader while
minimizing the drawbacks of size.

There have also been two major acquisitions in North America, both in 2002: in
July, Nestlé announced that the U.S. ice cream business was to be merged into
Dreyer's, and in August, a USD 2.6bn acquisition was announced of Chef
America, Inc. , a leading U.S.-based hand-held frozen food product business.
The Company's strategy will continue to be guided by several fundamental
principles. Nestlé's existing products will grow through innovation and renovation
while maintaining a balance in geographic activities and product lines. Long-term
potential will never be sacrificed for short-term performance. The Company's
priority will be to bring the best and most relevant products to people, wherever
they are, whatever their needs, throughout their lives.

Our Brands
Quality is the essential ingredient in all of our brands and the reason why millions
of people choose Nestlé products every day. Our consumers have come to trust
in Nestlé’s commitment to excellence and turn to Nestlé brands to maintain
nutritional balance in a fast paced world

Baby Foods

“Nutrition that suits the needs of your baby.”

Dairy Products

“From shelf-stable solutions to chilled dairy. “

Breakfast Cereals
“Start your day out healthy with Nestlé Breakfast Cereals.”

Ice Cream

“Discover the world of delicious Nestlé Ice Cream.”

Chocolate & Confectionery

“Delighting the senses with a range of tastes and textures”

Prepared Foods

“Preparing well-balanced meals is a snap with Nestlé. “

Beverages
 “Drink to a healthy, active life with Nestlé beverages.”

Foodservices

“Providing food and beverage professionals with a wide range of solutions.”

Pet Care

“Nutrition, health and wellness for your pet.”

Bottled Water

“Capturing nature in its purest form.”

About Bottled Water

Nestlé began its entry into the water business in 1969 with a 30% stake in the
owners of the Société Générale des Eaux Minérales de Vittel. It acquired a
controlling interest in SGEMV in January 1992, and went on in May of the same
year to buy out the entire Perrier Group.

In 1992, Nestlé was the first company to dare to launch a mineral water, Valvert,
in five different countries at once. Its originality lied in the use of an all-new
plastic, P.E.T. (polyethylene teraphthalate), which is stronger and more elastic
than the PVC used since 1968. Besides, P.E.T. is recyclable.

By the end of 1997, the Group was present on every continent, and the purchase
of San Pellegrino gave it the leadership in the Italian market. In 1998, for the
first time in its history, Nestlé associated its name with a bottled water: Nestlé
Pure Life.

The brand was launched in Pakistan and soon appeared in Brazil, followed by
Argentina, Thailand, the Philippines, China, and Mexico in 2000. In 2001, India,
Jordan, and Lebanon followed, and in 2002, Egypt, Uzbekistan and the United
States.

Nestlé Pure Life is drinking water that has been treated and remineralized using
a standardized industrial process to ensure purity and quality and is marketed in
emerging countries.

A second product with the Nestlé name was launched in May 2000, this time in
six European countries: Nestlé Aquarel. A natural spring water currently from
nine different springs in France, Germany, Belgium, Hungary, Italy and Spain,
Nestlé Aquarel also uses the multi-source concept to satisfy new consumer
expectations, especially for water with a low mineral content that the whole family
can drink.
In April 2002, the Group changed its name to Nestlé Waters, a token of Nestlé's
decisive commitment to the bottled water market, which now represents 9% of its
sales. Today, Nestlé Waters is established in 130 countries and markets about
70 different brands. The Group is able to offer top quality brands and innovative
packaging to meet the individual needs of the water consumer all over the world,
whenever, wherever and however thanks to the wide variety of its offer in terms
of distribution and product.

Nestle Brands

What’s in the Nestlé name

The Nestlé brands are another strategic asset for Nestlé Waters. They originated
in the global need for a safe family drinking water with a pleasant taste,
affordable price and tailored to local preferences. This need gave rise to a new
multi-site production process for bottled water based on a simple idea: a single
brand of water produced at a variety of sites, thus reducing costly logistical,
warehousing and transport constraints – which are particularly high in the bottled
water sector – enabling consumers to enjoy the product at a more attractive price
under a strong brand identity.

Nestle Pure Life, Purity guaranteed

Launched in 1998 in Pakistan, Nestlé PURE LIFE has been the first illustration of
the multisite concept. First meant to answer to the needs of emergent countries'
people waiting for healthy water, Nestlé PURE LIFE is now present on every
continent in Canada, USA, Mexico, Argentina, South Africa, Saudi Arabia,
Jordan, Egypt, Lebanon, Turkey, Russia, Uzbekistan, Pakistan, China, Thailand,
Philippines, Bahrain and the United Arab Emirates. Launched in 2003 on north
American market, Nestlé PURE LIFE is to become the first global brand, the
most worldly distributed in 2010.

Product Packaging Sizes

Nestle has floated its water into market in different packaging sizes. Nestle Pure
Life is available in the size of 500 ml, 1 Liter, 1.5 liters and 3 liters pet bottles,
whereas the bulk market makes Home and Office (H&O) deliveries in 3 and 5
gallons water cartons. These are the packaging size available in the market by
nestle and they made their marketing strategies on the basis of these packaging
size, their marketing strategy and customers changes with the change in the
packaging size.

What is the Basic need they are

satisfying?
The basic need which they are satisfying is the “Thirst”. Thirst was the need
identified by the marketers and then by using the concept of marketing that is to
satisfy the need in better way was implemented and then the final result was the
new product with the value addition that is the Nestle Pure life was developed
which is capturing good market share in Pakistan now.

From the research it has been showed that most of the population of Pakistan is
been using the tap water and satisfying their thirst with that tap water, but this is
the new product with value addition which is trying to capture the market of tap
water user with its value and benefits, even though the basic need what they are
satisfying same but the main thing is that the value they have added they have
find out new way of satisfying that particular need.
Competitors
They have two broad category of competitors, one are those which are producing
the same product and satisfying the same need those are all other bottled water
companies. While the others are those who are producing the substitute products
to satisfy same need. Let us discuss separately.

Competitor with same Product

There are 26 organizations working in Pakistan in the bottled water industry. All
these organizations are the competitors of Nestle Pure life. Nestle is the
commanding brand among all of them as it is haring the major portion of the
market. Nestlé’s Pure Life brand dominates the retail market with a share of 50
per cent. Other well known brands include Sparkletts of Hashwanis with a market
share of 12 per cent, BSW brand of M/s Wah Valley Corporation 5 per cent. The
rest of the market is in the hands of small players.

There are an estimated 20 brands in the H&O delivery segment of bottled

water. Nestle dominates this segment also with an estimated market share of
over 50 per cent. To expand its H&O water delivery business countrywide, Nestle

acquired major share holdings in both AVA and Fontallia in 2001. While AVA is a

major player in the branded bottled water category, both in PET and H&O
service, Fontallia enjoys strong holding in H&O service in Karachi. In addition,
the Jerry Cane segment makes home and office deliveries in Karachi.

This means that the major market of Pakistan is in the hand of Nestle and it is the
most popular brand of Pakistan in bottled water. This is a big real competitive
advantage for nestle, even that there are 26 competitors in market but nestle has
upper hand over all of them because of its “Brand awareness” and market share.
Only 3 companies are there who can give tough time to nestle because of its
market share, but for that they are required to be too much skillful in many things,
while other small companies are even not that fierce competitors for Nestle. So
among competition Nestle is at the top and winning the race right now.

• Competitors with Substitute Product

We know that not importantly our main competitors lie among our same product
category but it is a big possibility that your competitor may lie among those who
are producing substitute product of your core product. And in this case of Nestle
this is quite evident that substitute product are really capturing the market now.
Substitute product includes all beverages other then bottled water those are Tap
water, Soft drinks (Pepsi Cola, Coca Cola), Juices (Nestle, Shezan, Country etc.)
Energy Drinks ( Blue OX etc), Milk and some others. They all are satisfying the
same need but each has its own value and what benefit the customer will prefer
he/she will go for that product, For example if a Person is thirsty and his
preference is Low Price, he will go for the tap water, of his preference is the
product which provides taste along with fulfilling the basic need of thirst her will
go for Soft drinks, if he prefer refreshment he will go for juices, if he want some
energy along with satisfying basic need of thirst he will go for energy drinks, and
if he want something good for health and also useful to satisfy thirst he/she will
be some cold milk. That is how these substitute product will capture the market
and are the competitors of Nestle. In this regards, soft drinks are the top most
competitors of Nestle Pure life and secondly it comes juices.
Value Addition
For any new product the value addition is necessary, a new product only develop
and come into existence when we add some new value into the product which
was previously satisfying the same need. Same is been done by the Nestle as
they been the pioneer of Bottled water industry in Pakistan. They are the first
who introduced this packed water and the value which they have added is the
purity, the difference between the ordinary tap water and the Nestle Bottled water
is the Purity that is how they have added the value, we know that people are
really purity conscious and they are even willing to pay more prices if the are
getting pure water.

With every value addition we know that it increase the price of the product. And
Bottled water is Lot more expensive then the ordinary water but the value is the
key. Another value addition they have done is the packaging we know that the
value can be added either by changing or upgrading the product but it can also
be created by changing the packaging to the product. And they have presented
the water in a best way so that even we can carry it with ourselves and this is the
creation of value and it creates the utility for us that we can carry water with
ourselves because we cannot carry tap water with but we can carry this bottled
water with us.

So the major value additions are both with the product and with the packaging.
They both are combined together and results into a new value added product
with the new market.

Creating differentiation
Value added work is been done by everyone in the industry but what required is
the differentiation. Differentiation leads to the determination of brand that which
brand is the best. Differentiation is to provide that product or service which others
are not providing. These are called the Augmented Product or service.

Expected products/services are those which are expected by the customers

these products do not create differentiation. Now lets see how Nestle provide and
create differentiation.

Differentiation by Nestle Pure Life

They have been creating differentiation by providing augmentation to their

product. That augmentation is:

Augmentation in Nestle Pure Life

Nestle added some useful minerals into their water but these minerals are now
expected product, what is the augmentation they have created is the “Calorie
free Minerals”. These minerals are not been provided by the others uptill now and
that is the way of creating differentiation. They can even create positioning over
this attribute and can create new market where they will be in monopoly and that
market is of those people who are conscious about their health and fitness and
take care of calories taken. So this is the way through which Nestle pure life is
different from others and that is what differentiation demands to make your
product prominent among all the products of your competitors.
Segmentation of Market for Nestle Pure
Life
Nestle has segmented its market differently for their different Packaging of
product. Their positioning is same for both because the product is same but the
market is different on the basis of size. Because, one can carry 500 ml bottle with
him but not the 5-gallon carton, so it means that the market for both packaging is
different. Lets see segmentation of Nestle Pure life by dividing it into two
categories on the bases of its packaging sizes.

1. Segmentation for Bottled Water (0.5,1.0,1.5 Liters)

2. Segmentation for carton (4-5 gallons)
Segmentation for Bottled Water (0.5,1.0,1.5,3.0 Liters)

This included all the bottles of available sizes in market that are 0.5 liter to 3.0
liter. First let us differentiate the market for this type of packaging in broader
terminology.

Market Specification

The whole available market for this type of packaging are the out door users.
That is what the actual market available to us because no one will use these
bottled water at home. These bottles can only work for out door users. Now
among this available market we have to find out our target market by segmenting
the market and comparing the attributes of market and the product.

Basis of Segmentation

The basis of segmentation used for these sizes of Nestle Pure life are the
combination of both demographics and psychographics factors. These variables
are Age, Education, Income and Purity conscious People.

Age

Through the variable of age we have segmented the market into number of
markets and our target segment according to the age is from the age group of
late teen ages to the old ages. That would be from 18 to so on.

Education
Education is one of the key variables for our market segmentation as behavior of
the people changes with the education level and the market that we have
targeted is the market of literate people who knows the worth of Purity in their
lives. Illiterate person even if they have money they would not find any attraction
in this product but the educated people who know what purity means to their life
and health would certainly attract towards them and they will prefer to buy Nestle
pure life instead of ordinary tap water while walking roadside when they feel
thirsty for the sake of purity.

Income Level

Income level is another key factor during the segmentation of market. As income
level increase the luxuries of life going to increase and people comes towards the
quality with the increase in income level and become less price conscious. Our
segmented market on the basis of income level may be:

Low income

Low middle income

Middle income

High Middle income

High income

Our target market according to this aspect is the market of people whose family
income falls in the category of high income and high middle income and middle
income.
Purity Conscious people

This is the psychographics factor that we have added while our segmentation.
The people who are psychologically very much health and fitness conscious and
they care about the cleanliness and purity of every thing are among our target
market.

Our target Market

Among Out door users out target market is the market of those people who are
about 18 in their age and they have atleast basic education which let them know
the importance of quality in life and people with high profile of income and psycho
graphically they need to be Purity conscious. The people having all above
qualities is our target market for our brand Nestle Pure Life.

Segmentation for carton (4-5 gallons)

This included the product size of large carton of 4-5 gallons of water. First let us
once again differentiate the market for this type of packaging in broader
terminology.

Market Specification
The market available to us for this type of packaging is the indoor market. That
uses the product indoor and those are Offices and Home users. So the broader
market for this category is Home and Offices.

Basis of Segmentation

The basis of segmentation used for this size of Nestle Pure life are also
the combination of both demographics and psychographics factors. These
variables are Family size (Organization Size in term of Offices), Income Level
and Purity conscious People.

Family Size

Since our major market is Home and offices therefore for Home market the
Family size is the important demographic variable to identify the target segment.
Here we can divide family size into different categories.

Small families (Parents + 2 children)

Medium families (Parents + 3-5 Children)

Large Families (Parents + More then 5 Children)

Our Target families are Small families in particular while medium families in
general. Because for large families it is too difficult to afford such expensive
water for their drinking purpose because their water consumption is high and
mostly they are not interested in such luxuries this is been the general behavior
of these family sizes in Pakistan’s Society. That is why out target market is the
market of Small and medium families.
And for offices out target market are the medium level and large level
organization. According to the Government of Pakistan the medium organization
is that which has the labour force of more then 35 people.

Income Level

Income level as defined earlier is so important and it can divide into 5 different
categories as defined above and our target segment is the segment with High
and Middle high income for this size of Nestle Pure life. Here we have not added
Middle income for our potential target as they were there for our bottled water
because this packaging of water and use of this water at home is been
discourages at the homes of people with middle income, they will buy this water
when they are on road, in parks or during journey but they will not use it most of
the time for their daily use.

Purity Conscious People

This is the psychographics factor that we have added while our segmentation.
The people who are psychologically very much health and fitness conscious and
they care about the cleanliness and purity of every thing are among our target
market because only they will buy this expensive water for their daily drinking
usage.

Our target Market

Our target market among Offices are medium and large scale enterprises
including restaurants and for hour home market our target market is the segment
of those families with high and medium high income level with the small of
medium family size along with the psychographics attribute of being purity
conscious.
Positioning

They position there product on the basis of product attribute that is pure they say
that Nestle Pure life is a “Pure family water”. This is the positioning of the product
that is pure so they are creating perception in the mind of customer that the
product is pure and whoever wants to have purity in its drinking water should buy
Nestle Pure life. Not only the positioning jingle but the Brand Name itself is
positioning the product in the mind of customer.

The word “Family” in the jingle is actually positioning the nestle that it is not only
for the one person of the family, but it is the whole family drinking water because
purity is important for each and every person of the family.

Nestle Pure life - On the Positioning Map

 On positioning Map Nestle Pure life comes at the place where quality is
high and the price is reasonably high. Because they are providing the value that
permit them to suggest that price because price is never of the product but it is
the price of the value added by the organization.
 References

1.http://www.expertsadvisorycell.org/EAC_Publications/DigestofIndustrialSectors/
Industrial%20Digest%202004/Bottled%20Water/Bottled%20Water.pdf

2. http://www.nestle-waters.com

3. http://www.nestle.com/