Nestlé - Danone and the bottled water sector. Franck BRULHART. Tim WHITE. Paris : CCMP, 2004.
Nestlé and Danone are the historical leaders in the bottled water industry and account for between 18 and 46% of market share depending on the geographical area. However, these companies are working in a particularly turbulent environment since high growth rates are likely to lead to a reshuffle in terms of market share, spring water and purified water are likely to surge ahead at the expense of mineral water, and new high potential segments such as HOD are appearing. There is also the emergence of new and very aggressive competitors moving in from the soft drink sector. From the detailed information about the development of the different markets, the industry's structure, the competitive environment and the different players in the bottled water industry in 2003/2004 worldwide, the case will enable students to carry out a strategy diagnostic of this industry and they will analyse the situation of the two historical leaders before commenting on the real threat posed by the two new entrants (Coca-Cola and Pepsi). The case also allows learners to assess the difficulties associated with defending a strong position in an increasingly competitive high growth industry. « Nestlé-Danone and the bottled water sector" is a strategic analysis exercise. From the in-depth analysis of the two industry leaders, the main objective is to show how some specific structural features of an industry can influence the strategies of the different players who are present.
- Here the aim is to get students to do a complete diagnostic of the business environment and identify the options that are open to Nestlé and Danone to maintain their market shares and develop a competitive advantage.
This issue will be analysed in the next two phases:
- Presentation of the structural features of the bottled water industry: strategic segmentation, key success factors, analysis of the competitive systems, assessment of the attractiveness of this industry using competitive forces analysis.
- Assessment of Danone and Nestlé's current situation: growth options and methods of the two companies (notably on the international front), analysis of their strengths and weaknesses, evaluation of the situation of the two firms taking into account that of the new entrants.
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