The Coca-Cola Co acquired Glaceau Smartwater in 2007

The Coca-Cola Co acquired Glaceau Smartwater in 2007

Recent activity by The Coca-Cola Co behind Glaceau Smartwater has brought the enhanced water segment under Richard Corbett's nose. What are the company - and the segment's - chances of success?

The Coca-Cola Co is having a real go with its Glaceau Smartwater brand, splashing out on Jennifer Aniston to front its latest activation and readying an assortment of high-level marketing support. Long-term success in the enhanced water category in the US and Europe, however, is by no means a given.

According to GlobalData, the enhanced water category in the US expanded very rapidly after Glaceau's founder, John Darius Bikoff, felt a bit under the weather and stumbled upon the idea of adding vitamins to water in the mid-to-late nineties. By 2008, however, the segment's sales had hit a ceiling and demand had begun to wither: Between 2009 and 2014, volumes dropped by as much as a fifth.

The return to health for enhanced water came about two years ago, driven in part by the emergence of a number of new concepts like high PH, alkaline and caffeinated waters. And, of course, Glaceau Smartwater, sold by Bikoff to The Coca-Cola Co in 2007 for US$4.1bn.

The segment may be moving in the right direction again in the US, but it is yet to return to its 2008 peak. The problem for enhanced waters was that many consumers had begun to question whether they actually delivered a positive impact on wellness, or whether they were in reality just a cleverly-marketed sugared soft drink. The negative publicity was noisy, unforgiving and could be heard in Europe. The segment had lost its halo.

Artificial enhancement fell out of fashion and the new vogue was natural enhancement. Interest shifted to a plethora of so-called 'superfruits' that offered a source of natural enrichment. Products utilising these fruits appealed more to a consumer who was well-educated and very conscious of their dietary intake. (There is no coincidence that during the years of struggle for enhanced waters in the US, coconut waters were gaining visibility and volumes). These are the same US consumers after all who plunged the low-calorie carbonates category into decline because of their concerns over aspartame.

Another problem that enhanced water brands faced was one of shelf space. Many smaller retailers - and even some of the bigger ones - would not give shelf space to more than one or two brands. Their sales did not justify it. This was a sizeable barrier to entry and a considerable constraint for existing products.

Inevitably, part of the recovery of enhanced waters in the US can be accredited to the launch of low-calorie and zero-offerings and the adoption of superfruit flavours. Unfortunately, their perception among many drinkers has soured and this will dilute their longer term opportunities.

I'm confident that Glacéau Smartwater is immune to many of the factors that previously blighted demand for some enhanced waters in the last decade. Glaceau Smartwater falls into the 'clear' water-plus segment, for example, and is not tainted with issues over sugar content. Subsequently, there are fewer barriers to overcome in winning shelf space because bottled water is already a proven seller. Critically, the drink is priced attractively at around $1.30 for 1-litre in Walmart, making it cheaper than, say, Evian. The brand is priced at the mainstream and a larger audience.

The name is also very relevant today: You have a smart phone, why not drink smart water? The brand name also complements the fact that the liquid is 'vapour-distilled spring water with added electrolytes', reinforcing the sense that there is a clean and scientific process to producing it. At the same time, the 'plant bottle' and the 'inspired by clouds' theme gives it a set of natural cues.

In the UK, Coca-Cola has trodden warily with Glacéau Smartwater, still scarred by the Dasani debacle of more than a decade ago. The water is sourced from spring water in the north of the country and not - as Dasani was - from a municipal supply. It was the allegation that the company was effectively selling tap water that triggered the downfall of the Dasani brand in the country and ultimately the aspiration to move into other markets in Europe.

There has still been a trickle of negative publicity in the UK but, so far, Glacéau Smartwater has gone through enough hoops to suggest it is in for the long haul. I would be less optimistic for the newer sparkling variant, though. In its early days, I suspect that many sales will come from people mistaking it for the original non-carbonated version.

Jennifer Aniston won't come cheap either, but she will be worth every penny if she replicates the impact that Kylie Minogue had on the Evian brand. The global popularity of the comedy Friends, and the recruitment of Rachel to market the brand shows that Coca-Cola has big plans to move the brand to the wider international stage.

I can see Glacéau Smartwater go on to do well in both the US and in Europe: It's not priced like normal enhanced waters and - to all intents and purposes - it's just a well-marketed bottled water.

The soft drink graveyard is full of overpriced water-plus brands.