A Taste of the Tropics
February 1, 2007
A Taste of the Tropics
By SARAH THEODORE
Fiji Water offers an ‘untouched’ image and luxury positioning
Some of the most popular beverage flavors these days are exotic and tropical, and thanks to Fiji Water, the rapidly growing bottled water brand imported from the Fiji islands, even plain water has taken on a tropical twist. With 40 percent growth in 2006, and another 40 percent expected this year, Fiji Water is one of two hot brands from Roll International, Los Angeles, which also owns the Pom Wonderful pomegranate business. The brand first hit the U.S. market in 1996, and made its name in high-end hotels, restaurants and spas. Lately Fiji has proved that its premium positioning carries equally well into the retail world.
Fiji Water was developed by David Gilmour, owner of the exclusive Wakaya Club resort in Fiji. The water was bottled for the resort and Gilmour saw the potential to sell the brand to visitors through other upscale venues once they were back home. It caught the attention of celebrity chefs such as Charlie Trotter, Jean Georges Vongerichten and Nobu Matsuhisa who featured Fiji Water in their restaurants. The brand developed a reputation for eye-catching packaging and a unique, smooth taste. Roll International acquired the water business in late 2004, and says one of the first priorities was to show that the unique properties of the brand were a direct result of its island source.
“What makes the brand and the business great is multiple things,” says John Cochran, Fiji Water president and chief operating officer. “The foundational part of it is really Fiji itself and the brand. It is the most fabulous part of our story and what really makes this product and this brand so sustainable for us going forward. I think what we’ve tried to do over the past few years is build upon what was a very good foundation that the original owners established.”
More than a pretty face
Fiji Water’s striking packaging, with its square bottle and three-dimensional labeling, served it well in upscale on-premise locations, but expanding the brand to a wider audience meant educating consumers about other attributes of the product as well.
“Prior to the acquisition, a lot of the marketing was done surrounding our on-premise presence,” says Grace Jeon, vice president of marketing and national accounts. “It was touting the aesthetic value and the luxury or premium positioning of the product.
“Where we’ve started to educate our consumers is the truly unique selling proposition of the brand,” she says. “First and foremost, a very small percentage of the folks knew it was from Fiji. We knew it was really important to reinforce that because once you reinforce that, you open all these other doors to talk about the other sustaining values of the brand.”
Those values include the virgin ecosystem of Fiji, the product’s flavor and health benefits. Fiji Water, the company says, gets its unique, smooth flavor from silica that is present in the volcanic rock of the underground aquifer in Fiji. Its plant is located in Viti Levu, directly over the artesian aquifer from which the water is sourced. As the water is filtered through the rock, it absorbs silica, which gives it a softer quality than many waters. Fiji Water contains 85 mg. of silica per liter.
“One comment that we continue to hear back from consumers is that Fiji Water is smooth, it’s silky, it has this really soft texture,” Jeon says.
While flavor is the primary benefit, the company points to scientific studies touting the health benefits of silica as well. Information on Fiji’s Web site includes details on silica’s benefits to skin, hair, nails, bone density, and even reduced incidence of Alzheimer’s disease.
“But we don’t lead with the scientific proposition. We lead with everything else first,” Jeon says.
In addition to the Web site, the company has placed information on its “foundational elements” on the back of its bottles. A series of six labels communicate the attributes of the Fiji islands, its unpolluted ecosystem, the artesian aquifer source, the “untouched” value of the company’s plant operations, the unique taste of the water and the benefits of silica.
One thing that has not changed as Fiji Water has taken on a wider audience is its premium positioning, although the company admits that the bottled water segment fights the pressure to “stack it high and sell it cheap.” Cochran says sticking to its guns on pricing actually has helped Fiji in some channels, particularly in single-serve markets such as convenience stores. “The penny profit is so good on this product,” he says. “Combined with great velocity, it’s a huge win.”
“One of the biggest challenges we face on a day-to-day basis is that there is only so much of that entire beverage area [at retail] and everyone is so desperate to take price down and drive volume and to get pallets on the floor,” he says. But he says the higher margins and quick turn rates on Fiji often persuade retailers to provide space for the product.
Jeon adds that the bottled water industry should heed the experience of other beverage segments as reason for protecting its price points. “If you’re not careful, it could follow suit of carbonated soft drinks at some point, where you become a loss leader and volume growth is higher than dollar growth,” she says. “You want to always make sure you have that parity. That’s why we’re always collaborating with our buyers when we try to position this product and carve out space for this product.”
Fiji Water is present in most retail channels and also has tried to maintain the on-premise focus that gave the brand its start. The company says its retail business, which is serviced by distribution partners such as independent soft drink bottlers, comprises about 80 percent of its sales. The remaining 20 percent can be found in on-premise venues, which are handled by beer, wine and spirits wholesalers.
“I wouldn’t say that selling into that channel is easy,” Cochran says. “We have a whole separate sales force just focused on on-premise because of all the requirements and the way they make decisions. But it’s a great part of our business and we continue to build and invest in it.”
“It’s a great tribute to the founder and former president for essentially building the brand awareness and equity through an on-premise presence,” Jeon adds. “If we had just shown up and gone to retailers, I don’t think it would be as successful as it is today.”
She says the company continues to nurture the relationships it has developed with the epicurean crowd. “We continue to give support to the folks who have taken us on from the early days, which includes a host of chefs,” she says. “They are so meticulous about every aspect of the presentation, visual as well as for the palate, that they saw Fiji Water as the only water worthy of being on that table.”
Several years ago, the company developed a decorative silver sleeve to dress up restaurant tables and help owners put aside reservations about serving water in plastic. On the retail side, Fiji Water is available in half-liter, 1-liter and 1.5-liter bottles, as well as the new Lil’Fiji 330-ml. size. The 1.5-liter bottle has surpassed the 1-liter size as the company’s best-selling SKU in the natural products channel, and Lil’Fiji, which made its debut in Target stores last year, is set for a national rollout during the first quarter of this year.
“Believe it or not, there is a huge following of kids and Fiji Water,” Jeon says. “[Lil’Fiji] becomes a great little showcase item in lunch boxes and mothers feel great about putting such a unique product in their lunch boxes as well. The small [bottle] also lends itself to toting around in your purse or bag.”
Fiji uses more substantial plastic packaging than some bottled water products, and Cochran says it serves both a functional and aesthetic purpose. “We use the highest grade plastic that you can buy for bottles like this,” he says. “That is a big part of why the taste doesn’t change and why the taste is so pure when you open the bottle. That substantial feeling is not only good from a tactile perspective, but it protects the product.”
He adds that the package’s see-through labeling also was developed to be both visually dramatic and recycling friendly with easy-to-wash adhesives.
Packaging additions aside, the company has no current plans to join its competition in flavored, enhanced waters. Cochran says the product’s “pure play” would not be served by the addition of carbonation or other ingredients. “That’s not to say that it will never happen, but right now it’s off-brand,” he says. “We have so much opportunity, both domestically and internationally, without having to consider either of those options.”
A celebrated following
Outside of the United States, Fiji Water is available in Canada, Mexico, the Caribbean, the United Kingdom, Russia, Hong Kong, Singapore, Korea and Australia. The company’s international sales team will double this year as it also plans to add Japan, South Africa, Brazil, Taiwan and China. Stateside, it says its strongest markets are Southern California and the New York metropolitan area, and it counts Northern California, Florida, Texas and Chicago as rapidly emerging markets.
From its base in Los Angeles, the company can observe and nurture a special kind of marketing that resonates in markets all over the country — Fiji Water’s celebrity fan base. Like any good company in the proximity of Hollywood, Fiji uses a placement agency for product guest appearances on TV shows such as “Desperate Housewives.” Outside of that, Jeon says the company does not actively seek celebrity endorsement, but is happy to have it nonetheless. “It’s difficult to flip through Us magazine or People magazine and not see one or two celebrities toting Fiji Water, totally on their own,” she says. “That provides an aspirational factor to not only folks in L.A., but outside of this area. We have consumers write us and say, ‘I saw this celebrity drinking it on this show, and that’s why I drink it.”
One celebrity partnership in which the company was actively involved was a collaboration with fashion designer Michael Kors. Last summer Kors released a seasonal perfume called Fiji that contained a splash of Fiji Water. “It provided us with great coverage and it also was very unique because you don’t see a lot of water companies doing something like that,” Jeon says. “We also were able to have a presence in alternative channels that we normally wouldn’t be in, like Sephora.”
While the added exposure through alternative retail was a nice marketing boost, Fiji Water says it has more than enough potential in existing channels for the time being. The brand already is the leading bottled water in the natural food channel, and it sees the growing focus on health and wellness as the key to future opportunities. “If you accept the hypothesis that health and wellness will continue,” says Cochran, “then as consumers become more enlightened and as the natural products segment grows, it’s nothing but good news for us.”
Straight from the source
Fiji Water is bottled at a state-of-the-art plant that sits above the water’s source in Viti Levu, Fiji. The remote location is both its greatest asset and its biggest challenge. The company points to Fiji’s virgin ecosystem in promoting the purity of the water, but as President and Chief Executive Officer John Cochran says, “Getting it from the plant, which is in the middle of nowhere, in the middle of nowhere in Fiji, all the way to the retailer’s shelf or a great hotel’s bedside table is a ton of work.”
He says Roll International has put a great deal of effort into fine-tuning execution and supply chain functions since it acquired the brand in 2004. The 300,000-square-foot plant houses three bottling lines. Its operations are vertically integrated with the company creating its own bottle preforms and caps onsite. It generates its own power to run the plant, and is building its own trucking business to augment the current fleet that gets the water to port for shipping.
“We have invested heavily in the business in terms of technology — everything from materials receiving to finished goods output,” Cochran says. “It’s really now taken on what most people in North America would view as world class operations.”
When it comes to marketing, the company’s “untouched” message has as much to do with its bottling operations as the unpolluted environment of Fiji. “That has to do with our bottling facility being literally on top of the aquifer,” says Grace Jeon, vice president of marketing and national accounts. “The way we bottle is within a sealed environment so the water, until you unscrew the cap, is never exposed to the earth’s environment.”
One thing it does not use for marketing purposes but considers a big part of its business is the investment the company has made in the community in Fiji. Cochran says Roll International owners Stewart and Lynda Resnick are private about their philanthropic activities, but “One of the biggest reasons the original owner had an interest in selling this business to Stewart and Lynda was born out of the fact that he wanted the business to be in the hands of someone who would not only nurture the business but would continue to nurture and care for our role in Fiji, which is environmental, financial and philanthropic.”
The company employs about 200 people in Fiji, provides funding to build homes and schools as well as water projects for villages in the area, and gives to projects promoting the health and wellness women and children.