The Message in a Bottle of Mineral Water. Differentiation Strategies and Consumption Patterns in the Bottled Water Industry: the S.Pellegrino case

Abstract  
 
Colourless, odourless, and tasteless. These features do not seem to belong to water 
anymore.  
Whether it is on the desk in an office or in a famous athlete’s hands, nowadays carrying 
a bottle of water around wherever a person goes has become a real commonplace. In the 
last decades, bottled water consumption is witnessing to a large increase both in volume 
and geographical terms. The economic development and the growth of world population 
alone cannot justify this trend and the “paradoxes” characterising the bottled water 
industry. Bottled water is consumed even if cheaper alternatives, such as tap water, are 
available to consumers; the packaging costs more than the water contained; and in some 
countries a bottle of water is more expensive than other bottled beverages, which 
obviously contain water.  
This thesis aims at shading light on all these aspects by recognising the role played by 
companies in exploiting and even fostering the transformation of a primary human need 
(thirst) into a sort of social phenomenon (drinking bottled water). For this reason the 
work focuses on the strategy of differentiation, and, more specifically, on the concept of 
“differentiation of anything”. Taking water as an example of homogeneous and hard to 
differentiate product, given its lack of visible distinguishing features, the analysis 
figures out how the theoretical concepts are implemented in the industry of bottle water 
and, in particular, in the S.Pellegrino water case.  
The work is divided into three main sections. The first chapter offers an overall portrait 
of the industry at world level in its main aspects: from the legal definition of mineral 
water to its worldwide market structure, its major world players, and some of the main 
steps towards a more sustainable industry. The analysis underlines how the success for 
bottled water is both due to social reasons and to companies’ Marketing activities, in a 
vicious cycle. Bottled water is consumed for its convenience, in terms of portability and 
readiness to be used, and for health concerns, as water is not seen anymore as a 
necessary source of hydration but as a low-calorie alternative to sweet and carbonated 
beverages. Moreover, bottled water is considered pure and safe, differently from tap 
water. The second chapter deepens differentiation under a theoretical lens and 
highlights how it can be pursued at any step of the value chain and not just by the 
product alone. Such value drivers are distinguished from their “outcomes”, the elements
of differentiation, which instead stand for what consumers perceive as distinguishing in 
the final proposition. The second part of the chapter applies these concepts to the bottled 
water industry in order to investigate how companies, especially through Marketing 
drivers, are actually able to answer to, and even stimulate, consumers’ need. Finally, the 
third chapter connects the previous ones, by tracing out the strategy implemented by the 
S.Pellegrino brand and the drivers of differentiation leveraged by the company, starting 
from the identification of the elements of differentiation perceived by end consumers. 
People seem to prefer S.Pellegrino not just for its chemical properties but also for other 
elements: its iconic image, ubiquity, packaging and so forth. Despite the undeniable 
importance of Marketing tools, the uniqueness of the final proposition is achieved also 
by other drivers, for example distribution network, R&D, creation of Shared value. 
To conclude, though the generic product is identical (water), the offered one is 
differentiated (S.Pellegrino) and occupies a clear positioning. S.Pellegrino is able to 
differentiate a homogeneous product as it conceives differentiation as a business 
approach, leveraging drivers along the entire value chain. What is differentiated is the 
Marketing mix, not the product alone. Business strategies turn out to be both cause and 
effect of new market ideologies and lifestyles since, at the same time, they are able to 
follow and foster such trends, as the transformation of bottled water into a “super 
premium” product testifies. Bottles are filled up with much more than just a little water.
3 
Introduction 
 
One might think that nowadays human beings, at least in advanced societies, have got 
almost anything they require. Nearly the totality of need, want, and even the most 
undisclosed desires seem to have ultimately found satisfactory response in products or 
services of a globalized world. During the XXI century, coming up with literally 
breakthrough ideas is a tough task. It seems that anything has already been invented, 
realised, or at least though of. Moreover, the increasing competitiveness of aggressive 
emerging markets has stood out with innovative concepts, making the survival and the 
success of developed economies even more difficult. 
However, it is possible to notice that even in the same category of products or services, 
people can actually choose among several varieties of quality, price, availability in time 
and space, visible features, and so on and so forth. In the same way, companies realising 
a same category of offering show very different levels of success and profitability. This 
occurs because they do not actually offer the same thing, but they propose different final 
solutions. Therefore, even though the possibility to find a still unsatisfied human need 
appears to be scarce, the same cannot be said about the ways to serve them. There are 
infinite manners to differentiate the same offer and to satisfy the same need.  
These considerations represent the roots of the decision to deepen the core topic of this 
work: the “differentiation of anything”. The starting point of the analysis resides in the 
relevance of differentiation as one of the most important strategies to be implemented 
by companies to face competition, offering a unique solution to the market. Then the 
attention is narrowed down to those products that are not apparently characterized by 
any distinguishing feature and, consequently, tend to be difficult to differentiate. Indeed, 
taking as an example any material object belonging to everyday life, it is possible to 
notice that even minor changes, such as to the colour of the object, can more or less 
bring forth a different outcome. When material and visible characteristics are easy to 
recognise, it is also simpler to characterize the final product. But what happens when 
products are difficult to differentiate by their physical properties perceived by final 
consumers? And what better than water, known since childhood for its apparent absence 
of distinguishing characteristics, being described as colourless, odourless, and tasteless, 
can represent an example of apparently homogeneous product?
4 
These observations matched with other ambiguities, later defined as “paradoxes” of the 
industry of bottled water, have prompted the author to deal with the differentiation 
strategies of this industry, and in particular, to recognise the role of Marketing. Such 
“paradoxes” concern the reasons that push consumers to spend much money for a 
commodity that they can easily get in alternative cheaper ways (such as by drinking tap 
water), the fact that when consumers purchase a bottle of water what they pay for is the 
packaging more than the product itself, and that in some countries a bottle of water 
costs more than other bottled beverages (which obviously contain water). This work 
attempts to answer these questions and it intends to disclose how bottlers and bottled 
water producers manage to differentiate apparently the same product. The basic 
assumption is that if differentiating a “homogeneous” product is feasible, then any other 
product can possibly be differentiated.  
In addition, the choice of this specific industry has also been favoured by other motifs, 
such as the willingness to deal with a modern topic concerned with environmental and 
societal aspects as well. Entire streams of literature are nowadays dedicated to this kind 
of topics and are taken into consideration by companies all over the world to elaborate a 
solution for unsustainable consumerist systems and lifestyles.  
Finally, for what concerns the practical application of the subject investigated, it has 
been chosen the case of the S.Pellegrino water since it offers a perfect example of how a 
simple commodity has been differentiated by attaching the set of values of an iconic 
image. The brand, symbol of Italian lifestyle all over the world, has achieved a clear 
positioning in people’s mind insomuch as mineral water is now compared to refined 
wines. The main sources of information are represented by the brand (S.Pellegrino) 
website and the corporate (Sanpellegrino S.p.A.) one, as well as journal and peer 
reviewed articles. In addition, other pieces of information have been directly gathered 
during a company visit to the Ruspino plant on August 13, 2015.  
For what concerns the structure, the analysis carried out in this work is divided into 
three main chapters, which all address under different lenses the issue of differentiation 
strategies and consumption patterns in the bottled water industry. In particular, the first 
chapter offers an overall portrait of the industry at world level in its main aspects: from 
the legal definition of mineral water to its worldwide market structure and its increasing 
volumes, the major world players both at aggregated and per capita level and some of
5 
the main steps towards a more sustainable industry. Consumers’ behaviours are 
observed both in quantitative and qualitative terms in order to understand the 
transformation of a human primary need (thirst) into a sort of social habit (drinking 
bottled water). Particular attention is attributed to the Italian market, one of the greatest 
both for consumption and for production of bottled water.  
The second chapter, instead, address more in depth the concept of differentiation, and 
“differentiation of anything”. An overview of the existing literature is followed by an 
analysis on the main differentiation drivers for companies to highlight how 
differentiation can be pursued at any activity of the value chain, from delivery to post-
sale services, and not just by the product alone. Such value drivers are then 
distinguished from their “outcomes”, the elements of differentiation, which instead 
stand for what the consumers perceive as different in the final proposition. The second 
part of the chapter aims at applying these concepts to the bottled water industry in order 
to investigate how companies are actually able to exploit and even foster the substantial 
increase of bottled water consumption. For this reason, it is recognised the great 
importance of Marketing activities, even proposing examples of differentiation based on 
the physical properties of mineral water.  
Finally, the last chapter is dedicated to the S.Pellegrino case. In particular, after a 
general description of the brand, the analysis wants to trace out the differentiation 
drivers and the Marketing strategy of the company in the promotion of a simple product 
like mineral water, by firstly studying the elements of differentiation appreciated by 
consumers. Hence, first it is pointed out what final costumers regard as distinguishing in 
S.Pellegrino, then it is researched what are the company’s drivers that permit to 
transform competitive advantages into elements of differentiation. The example of 
S.Pellegrino allows noticing how an historic brand implements the most modern 
management systems and embodies a society-oriented approach.
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Chapter 1 - The Scenario of Bottled Water Industry  
 
Before starting with the analysis, some preliminary specifications about the sources of 
information are necessary. Most of information about the industry of drinking bottled 
water in terms of its market, classification, legislation, the qualitative and quantitative 
standards of waters, and everything else concerning their production and consumption 
can be found in the official websites of international trade associations of the sector. In 
turn, such websites report information elaborated by other sources. For example, data 
regarding the volume of consumption of the bottled water industry are generally 
elaborated by research companies, like Marketing Beverage Corporation; whereas the 
legislative requirements necessary for the recognition and the commercialization of 
bottled waters correspond to the current regulations, either at national or international 
level.  
European Federation of Bottled Waters (EFBW, 2015)
1
, based in Brussels and 
representing more than 650 European bottled water producers and bottlers, is the trade 
association of the European bottled water industry. This institution operates in some 
major fields such as regulation, technical issues, health and environmental concerns in 
order to protect and, at the same time, promote the “safety, quality and environmental 
standards” of bottled waters. EFBW also cooperates with CIAA, Confederation of the 
food and drink industries of the European Union.  
The American “counterpart” of EFBW is the International Bottled Water Association 
(IBWA, 2015)
2
, whose 640 American and international members, for the majority small 
companies, are involved in the activities of bottling, distribution and supply of water. 
IBWA works as advisor and guarantor of the safety of bottled waters through the 
development of a sustainable industry. It collaborates with the U.S. Food and Drug 
Administration (FDA) and state governments in setting rigid standards to regulate 
bottled waters, intended as packaged food products. In addition, for its members IBWA 
has elaborated the IBWA Bottled Water Code of Practice, which includes further rules, 
even more severe than federal ones.  
                                                
1
 European Federation of Bottled Waters. (2015). Retrieved October 13, 2015 from: 
http://www.efbw.org. 
2
 International Bottled Water Association. (2015). Retrieved October 13, 2015 from: 
http://www.bottledwater.org.
8 
For what concerns the following section about the industry of bottled water, its 
production and its consumption, if not cited differently, information is sourced from the 
official websites of EFBW (2015) and IBWA (2015).  
 
1.1) Consumption and Production Modern Patterns   
 
To clearly understand the evolution of the bottled water industry and the strategies of 
differentiation of an apparently homogenous product, such as drinking water, first, it is 
fundamental to give a general overview of the whole industry. As expected for a staple 
commodity, the industry of bottled waters represents a huge and complex sector. The 
packaging of what could seem to be the most common and simple product of the world 
hides very complex dynamics, which characterize the industry of bottled water with its 
rationalities and its paradoxes. Bottled water involves totally different reasoning respect 
to other ways of its supply and distribution, as a bottle of water increasingly stands for a 
mainstream commercial beverage more than a fundamental human right. Indeed, the 
industry under consideration has always been characterised by a profound heterogeneity 
for its geographical location and for the deep dynamism, which will likely characterize 
the future even more.  
Concerning the collocation of production of bottled drinking water, the less developed 
countries often lack both the bare infrastructure and the regulation necessary to 
guarantee its safe production and provision. The global production is dominated by the 
presence of a few giants of the market from the developed world, constantly threatened 
by numerous minor competitors, which proliferate in a very attractive industry 
(Rodwan, 2014)
3
.  
Regarding the consumption of bottles of water in the last years, the already huge sales 
turnover is steadily increasing. A special role is played by developing countries, 
particularly attractive for their potential huge markets and for their high growth rates of 
consumption. The phenomenon of consuming bottled waters, first rooted in the daily 
routine of Western European inhabitants, has spread almost all over the world with 
different intensities (Rodwan, 2014, p. 20). At first glance, the reason of the bottled 
                                                
3
 Rodwan, J. G. (2014). Bottled Water 2013: sustaining vitality. U.S. and international developments and 
statistics. Bottled Water Report, pp. 12-22. Retrieved October 13, 2015 from: 
http://www.bottledwater.org/economics/industry-statistics.
9 
water consumption growth could be merely attributed to the world population increase 
and the deriving higher consumption of commodities. Moreover, safe bottled water is 
increasingly used to offer a prompt response in case of extreme events, such as fires, 
earthquakes, droughts, floods, and any other event that seriously obstructs the access to 
commodities to population (Brookes et al., 2014, p. 2009)
4
. Nevertheless, how it will be 
deepened later on, this sole explanations cannot justify why people are willing to pay 
water in a bottle from 500 to 1000 times more than they could actually spend with other 
kinds of cheaper sources, like tap water (Ferrier, 2001, p.118)
5
. Despite consumers, 
especially in developed world, do have alternative ways to quench their thirst, available 
data shows an impressive increase of bottled water consumption occurring in the last 
decades, both at country and per capita levels. The following tables and graphs 
representing such trend contain information provided by Beverage Marketing 
Corporation in its market reports from 2005 to 2013, published on Bottled Water Report 
magazine and accessible from International Bottled Water Association official website 
(2015).  
Image 1 shows the growth tendency characterising the global consumption of bottled 
waters from 2005 to 2013. The positive trend of the consumption line of these nine 
years, more broadly, can be considered as representative of the growing tendency of the 
market of the last decades, which has reached his peak in 2013 with more than 70,3 
billion gallons of bottled water drunk in a year (one American gallon is equal to 
3,78541178 litres) (Metric Conversions, 2015)
6
. 
 
 
 
 
                                                
4
 Brookes, J. B., Carey, C. C., Hamilton, D. P., Ho, L., van der Linden, L., Renner, R., and Rigosi, A. 
(2014). Emerging Challenges for the Drinking Water Industry. Environmental Science Technology, 48, 
pp. 2099-2101.    
5
 Ferrier, C. (2001). Bottled Water: Understanding a Social Phenomenon. AMBIO: A journal of the 
Human Environment, 30 (2), pp. 118-119. 
6
 Metric Conversions. (2015). Retrieved October 13, 2015 from: http://www.metric-
conversions.org/volume/us-liquid-gallons-to-liters.htm.