Mexico: A Water Opportunity
Business Summary
In 2011 bottled water sales in Mexico were $9 billion, and expected to reach $13 billion by 2015. 70% of the bottled water, by volume, is sold or delivered in large volume containers (2.5 or 5 gallon jugs). Single serve sizes are approximately 10 times more profitable (price per milliliter); this is where the large brands are focused. The jug water segment is served by literally thousands of local companies throughout the country.
Proudcts and Services
As we see on a regular basis, current technologies can create quantum leap solutions to meet market needs and establish a competitive advantage.
Point of Use (POU) water dispensers are ergonomically designed equipment that incorporates standard water treatment components to render "municipally-treated" water into safe, fresh tasting drinking water. This equipment can now incorporate sterilizing technologies (e.g. ozone , UV treatment) that provide the added level of safety against bacteria, parasites and viruses; a concern in Mexico that deters consumers from drinking tap water.
“It isn’t just tourists who won’t drink the water in Mexico. It’s nearly everyone, making the country one of the most valuable markets in the world for beverage companies” - Forbes: Mexico’s Water Wars, March 2012
The Market
The category can be segmented into residential ($5.32 Billion) and commercial ($1.68 Billion) opportunities. The residential segment can be further broken down into our focus: "high end" At-Home consumption of 5 gallon jugs ("garrafones"), 5 to 7 per week. This share of the residential market is 16% or $850,000,000.
Similarly, if we target the High-Volume commercial sub-segment - those companies currently paying $80 to $100+ per month for delivered garrafones (approximately 10%) - this targeted segment could then be valued at $168,000,000. Our aggregate focus is valued at $1,018,000,000.
The Strategy
Our intent is to understand the trigger points (coded language) that will resonate with the Mexican consumers through a well-defined and planned market research strategy. This strategy departs from traditional qualitative approaches in multiple ways, differentiating both the process and the output.
In addition to the information gained from qualitative market research – engaging University of Guadalajara International Business Management Sciences Department – we have enlisted a prominent Marketing Consultancy, Keen Strategy. Keen is highly experienced in leveraging qualitative feedback to: a) Identify the statistical and formulaic basis to pinpoint the catalysts of behavior change; and b) Create a concept matrix to validate highest potential ideas for each market space.
The key to a winning Strategic Model is not just to create the opportunity for a premium product / service, but to develop a brand and proposition that consumers trust. Heretofore prior market place efforts have not cracked the code on the real barriers to consumer resistance.
The Business Model
Features a lease and service program that replicates market strategies that have been successful in Europe and the U.S. – adapting the model for cultural differences in Mexico. The target focus will be commercial (traditional venues plus develop local market concepts) and residential accounts that already spend equivalent dollars in bottle water delivery. We will differentiate from current technology through convenience, safety, security and pricing.
The initial focus will be the commercial sectors where we will create the grand visibility for a solution that meets the “trust requirements” of the customer. Though this will open the overall market across broad demographics (it is not our strategy to be all things to all markets), it will also enable our target market focus (high margin) to embrace a premium product / service. This creates not only brand visibility but brand aspiration for the residential market.
Management Team
Our Team has accomplished this before; the infrastructure and process model we are preparing to deploy will mirror the approach we took years ago with The Coca-Cola Company to successfully introduce the Fountain Dispensing concept into Mexico.