Glacau: Marketing Vitaminwater

The case highlights the marketing strategies of US based

Energy Brands Inc., maker of the Glacau range of enhanced
water products. Glacaus Vitaminwater was highly
successful and in some markets in the US, it outsold Dasani
and Aquafina. Vitaminwater was different from other
products, in several aspects including packaging,
appearance, labels and ingredients; it was a category creator.
Vitaminwater was promoted through Vehicle Marketing
Program, Retail Sampling Program, banners & posters, and
Campus Ambassadors, a college outreach program. By
2006, several famous celebrities from sports and
entertainment arena endorsed Glacau products. The case
also describes Glacaus unique distribution strategies.
Notwithstanding the success of Vitaminwater, industry experts
felt that the product may face stiff competition from the
established players in the industry like Coca-Cola and Pepsi,
which were launching their own line of enhanced water
products owing to their growing popularity.

Glacau: Marketing Vitaminwater

Enhanced waters have the potential to deliver flavor variety and a number of
positive added benefits, including nutrition, rehydration, energy, etc., thus placing
them in the sweet spot of consumer demand. Enhanced water is catching on among
consumers of all ages, genders and income levels.1
Bill Pecoriello, Analyst, Morgan Stanley2, in 2006.
Vitaminwater has hit those three prongs (physical, emotional and spiritual) by
balancing the spiritual need of overall health and wellness with the physical of
refreshment and the vitamins that you need, plus the emotional with the packaging
having words on it that are cheeky and fun. I think its one of the best new product
introductions that Ive seen in the last few years. 3
Heather Dupre, Director Innovation, Kindred Keziah4, in 2005.

Introduction
In September 2006, PepsiCo Inc. (Pepsi)5 announced that it had agreed to change the
packaging, label, and cap of its SoBe Life Water6, as per the settlement it had reached
with Energy Brands Inc., (Energy Brands), maker of the Glacau range of enhanced
water products. In April 2006, Energy Brands Inc. had filed a lawsuit against Pepsi,
alleging that SoBe Life Waters packaging, label, and cap were similar to those of
Glacau vitaminwater and that Pepsi intended to confuse the consumers with its new
packaging. As per the lawsuit, Pepsi had resorted to trade dress infringement and
dilution and its label and bottle resembled that of vitaminwater. It was also alleged
that Pepsi had launched SoBe Life Water after it failed to acquire Energy Brands in
early 2006. On reaching the settlement with Pepsi, Founder CEO of Energy Brands,
Darius Bikoff (Bikoff), said, We were pleased with the overall settlement. There has
been a history of attempts to ride the success of vitaminwaters coat tails. And it is
kind of a shame because I think our competitors are better served trying to come up
with their own innovation ... 7

3
4

Caroline Wilbert, Enhanced Waters Popularity has Many Taking the Plunge, Cox News
Service, December 28, 2005.
New York based Morgan Stanley is a global financial services firm and operates in four
business segments including institutional securities, global wealth management, asset
management and Discover credit card. In 2005, the company recorded revenues of US$
52.49 billion.
Heather Todd, Rising Stars, Beverage World, January 15, 2005.
Kindred Keizah Inc. is Colarado, US based marketing and brand strategy firm. In September
2005, Kindred Keizah was renamed Egg Strategy Inc. The companys clients include CocaCola, Toyota, and Royal Caribbean among others.
PepsiCo Inc. is a global manufacturer and marketer of beverages and food products. In
2006, the companys revenue was at US$ 35.14 billion. Some of the well known brands of
Pepsi are Mountain Dew, Tropicana, Twister soda, Aquafina, and Gatorade.
SoBe Life Water is water with added vitamins and antioxidants. It was available in five
flavors pomegranate cherry, blackberry grape, orange tangerine, strawberry kiwi and
passionfruit citrus.
Pepsi, Energy Brands Settle, SoBe Label to Change, Reuters, September 05, 2006.

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Strategic Marketing

Analysts opined that the lawsuit and its subsequent settlement indicated the growing
insecurity of the soft drink majors, which were facing a threat from companies
promoting healthy alternatives to soft drinks. Energy Brands, the parent company of
Glacau, was one such company, which advocated healthy living through low-calorie,
low sugar drinks, and non-carbonated water with additional nutritional supplements.
Glacaus line of enhanced water products comprised vitaminwater, Smartwater, and
Fruitwater. Energy Brands was credited with creating a new category of drinks
popularly known as enhanced water products.
According to analysts, Glacaus success in a scenario in which major soft drinks and
beverage manufacturers like Coca-Cola and Pepsi had a strong hold over the
distribution network and spent aggressively in marketing their products, illustrated
that even the most saturated markets could accommodate innovative products. In
2005, less than a decade since it began as a small start-up, Glacau earned revenues of
over US$ 350 million, with compounded annual growth of 200% per year. It found
prominent shelf space at the stores of several major retailers across the US. In the
process, Bikoffs efforts were also recognized. In 2000, Bikoff was awarded
Brandweeks Marketers of the Next Generation and in 2001, Crains Weekly named
him New Yorks Top Entrepreneur. He was among the finalists in Ernst & Youngs
Entrepreneur of the Year in 2003.

The Beginning
In the early 1990s, when Manhattan was hit by water contamination, Bikoff8 set out to
buy bottled water and found that except for the brand name, there was very little
difference between the different brands of bottled water sold. Bikoff was looking for
additional nutritional value rather than plain water. Finding none, he started
conducting an in-depth study about different companies making bottled water. He
found that he could use vapor distillation9 to create an alternative to bottled water.
Bottled water was generally procured from springs and contained some dissolved
minerals, which could be removed using vapor distillation.
Bikoff then came up with the idea of starting a company that could offer a healthy
alternative to soft drinks and plain water. He decided to name the company Glacau
a combination of the words glace (ice) and eau (water) to signify clean water.
Bikoff started the venture in the year 1996, from his fathers office in Queens, New
York. He worked with R&D professionals to develop the companys first product
Glacau Smartwater, which was sourced from glacial aquifers in Connecticut, vapor
distilled, and supplemented with electrolytes 10. According to Bikoff, We founded the
company with the idea of creating bottled water that was biologically better than
spring water; something more pure and less susceptible to the natural variations and
contamination that can occur with spring water. Then we added natural electrolytes
8

10

Bikoff studied liberal arts and joined his father in his metals business. He began supplying
metal cans and containers to several customers including Pepsi, Anheuser-Bush, and Quaker
Oats.
Vapor distillation involves heating the water to 100oC and applying pressure, through which
water is vaporized into oxygen and hydrogen molecules. These molecules are condensed
again to obtain water that is free of contamination.
Electrolytes contain free ions. Electrolytic drinks containing sodium and potassium are
frequently used to replenish the bodys water and electrolyte levels.

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Glacau: Marketing Vitaminwater

calcium, magnesium, and potassium whose specific function was to create a

naturally balanced pH in the water, which enables it to be rapidly absorbed by the
body.11
With his previous expertise in packaging, he asked Philippe Starck12 to design a 20ounce13 bottle instead of the conventional 16 ounce bottle. Another unique aspect of the
bottle was its sports cap. Subsequently, the bottle was on display at Smithsonian14 for its
iconic packaging. With the popularity of the packaging, several beverage manufacturers
started using sports caps on the bottles. Bikoff then got the bottle redesigned and the
bottle was made available in half liter, one liter, and one and a half liter sizes.
The next product was Fruitwater, introduced in 1999. This was Smartwater with the
added flavor of fruits and it was sugar free. Fruitwater was the first non-carbonated
water with a fruit flavor. The water was subjected to pasteurization due to which it
had a long life though no preservatives were added. Fruitwater was available in
several flavors including watermelon, mint, pineapple, and guava.
It was in the year 2000 that Bikoff realized the potential of water enhanced with
vitamins. What sparked the realization was a tiring yoga session after which he had a
drink of water along with a Vitamin C wafer. The water-Vitamin combination proved
extremely refreshing and planted the idea of water enhanced with Vitamins in his
mind. To devise the formula for water with vitamins, he started working on the
product along with a team comprising a dietician, a microbiologist, and a food
scientist. According to Bikoff, A lot of people who think theyre healthy start off
their day by taking a pocketful of supplements, washed down with one or two
swallows of water and thats all the water theyll have all day. One, thats not
enough water. Two, that doesnt do anything for the supplements, which require water
to carry the nutrients to your bloodstream. So we decided to merge supplements and
water, and came up with vitaminwater. 15
Bikoff felt that the name should reflect the fact that the product was not merely water
but water with additional vitamins and nutrients. Alex Frankel, author of Wordcraft16
opined that vitaminwater is an example of the bottom-up approach to naming. The idea
is water with an asterisk something different from both un-enhanced bottled waters
and sodas. And water spiked with vitamins sounds so . . . sensible.17
11
12

13
14

15
16

17

Laurie Russo, Water a-Go-Go, Beverage Aisle, October 15, 2000.

Philip Starck is a well-known French designer, who designs, houses, apartments, interiors,
and several consumer products. Some of his famous works include interiors for Target
stores and apartments of former French President Mitterand, mouse for Microsoft, etc.
20 Ounces = 0.59 Liters.
Smithsonian is an educational and research institution and museum complex located in
Washington D.C. Museums associated with Smithsonian include the National Design
museum, Air and Space museum, Gallery of Art, and the Center for African American
History and Culture.
Laurie Russo, Water a-Go-Go, Beverage Aisle, October 15, 2000.
Wordcraft the art of turning little words in big business, written by Alex Frankel discusses
how companies name themselves and their products. The companies and names that were
discussed in Wordcraft include BlackBerry, IBMs e-Business, Pfizer, Accenture, Porsche
Cayenne.
Rob Walker, The Way We Live Now: 8-22-04: Consumed; A Spoonful of Attitude, The
New York Times, August 22, 2004.

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Strategic Marketing

It was not long before Bikoff realized that he was creating a new category of product,
enhanced water. According to Bikoff, Weve created a new category that we call
nutrient-enhanced bottled water. Its a category based on delivering value-added
nutritional benefits in a hydrating beverage, so that people can drink more water with
more usage occasions.18
Once the products were ready, the challenge was to get shelf space from vendors.
There were problems in distributing this product through major retailers, as they were
not willing to give expensive shelf space for new products. According to Bikoff, For
me when I got started that meant walking up and down the streets of Manhattan with a
cooler bag on my back with samples of Vitaminwater in it trying to convince people
in delis to buy it who were rejecting me one after the other. 19 But his repeated trials
did have some effect. He said, Vendors would buy just so they wouldnt have to see
my face again.20
There were several small retailers who were ready to try out new products. These
retailers were highly impressed by the fact that Bikoff was delivering and promoting
the products himself and it was they who gave him a chance. By initially targeting
smaller stores, the company built up demand. The products unusual appearance and
unconventional packaging attracted the customers.
In 2001, LV Capital, the investment arm of LVMT Mot Hennessy Louis Vuitton
SA21, made an investment in Energy Brands. LVMH invested US$ 5 million for a
minority stake in the company. In the year 2002, Glacau products were distributed in
43 states in the US through 160 distributors. In April 2003, Energy Brands received
equity investment from The Shansby Group, a private equity investment partnership.
Initially, companies like Pepsi and Coca-Cola dismissed the Glacau products as a
passing fad, but with the product gaining popularity and outselling their products like
Dasani and Aquafina in areas like New York and the Northeast of the US, the giants
were forced to sit up and take notice. In 2002, Coca-Cola introduced fortified water,
Dasani Nutriwater, and Pepsi came up with Aquafina Essentials. However, neither
fared well in the market and both products were later discontinued.
By 2005, Glacaus products were being sold in all the 50 states in the US. Compared
to January 2004, the sales had grown by 80% in value terms in January 2005. As of
2005, the company was selling around two million bottles per day, with vitaminwater
accounting for 75% of the total sales. For the year ending January 2006, the
companys revenues registered a growth of 90%.

18
19

20

21

Laurie Russo, Water a-Go-Go, Beverage Aisle, October 15, 2000.

Homa Mojtabai, Glacau Founder and CEO Shares Tips for Start-up Success, The
Wharton Journal, December 04, 2006.
Rishi Modi, Vitaminwater Entrepreneur Visits the RSB, www.themsj.com, November 07,
2005.
Headquartered in Paris, France, LVMT Moet Hennessy Louis Vuitton is a holding company
of a group of international companies. It comprises five principal business groups wines &
spirits, fashion & leather goods, perfumes & cosmetics, watches & jewelry, and selective
retailing. Some of the famous brands from the company are Moet & Chandon, Louis
Vuitton, Mercier, Givenchy, Fendi, De Beers LV, Parfums Christian Dior, and TAG Heuer.

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Glacau: Marketing Vitaminwater

In August 2006, India-based business conglomerate, the Tata Group22 acquired a stake
of 30% in Glacau for US$ 677 million. Tata acquired the stake from TSG consumer
partners23. In 2005, Tata Groups revenues in the US stood at US$ 1.97 billion. The
companys products in the US included Tetley Tea, Good Earth Tea, and Eight
OClock Coffee.
The companys association with the Tata Group, at a time when companies like CocaCola and Pepsi were making efforts to acquire Glacau, came as a surprise to industry
observers. According to Bikoff, Were not in the Coke system and were not in the
Pepsi system domestically, to speak of, but we are in what youve referred to as the
independent system, and Im hoping that after todays announcement, were all going
to agree to re-brand that independent network, the Glacau network. 24 After the
agreement with the Tata Group, Bikoff, his associates, and distributors held 50% of
the company and venture capitalists held the remaining 20%. By then, the company
had more than 760 employees.

The Marketing Strategies

Glacaus products were priced higher than the other soft drinks, at US$ 1.49 per 20ounce bottle while Coke was priced at 50 cents. Glacau targeted consumers who
were ready to pay a premium for healthy alternatives to soft drinks. It defended the
higher price citing the higher value that the product provided.
Energy Foods had always maintained a close contact with the consumers in order to
understand their tastes and preferences. According to Rohan Oza (Oza), Senior Vicepresident, Marketing, Glacau, The insight came from consumers. When you start
with the consumer giving you the answer, its always easier. But you have to spend a
lot of time with consumers to do that. Whenever our folks go into stores, we talk to
people, talk to retailers, chat with consumers at the shelf 25
For the 52-week period ending April 2006, Glacau vitaminwater was among the top
10 bottled waters in the US, when sales through food, drug, and mass merchandisers
was taken into consideration (Refer to Exhibit I for top bottled waters in the US).
Several factors like new innovative product features, right from the label to the
content of the bottle, unique promotional strategies, and distribution helped the
company in connecting with the customer.

22

The Tata Group is one of the largest business conglomerates in India, with total revenues
equal to 2.8% of Indias GDP. The group operates in 40 countries and its products are
sold in more than 140 countries. The Tata Group has interests in the engineering,
materials, IT, communication, automotive, chemicals, and energy sectors. The company
employed more than 240,000 people across the world, and its revenues in 2005 were at
US$ 21.9 billion.

23

San Francisco, US based TSG Consumer Partners was founded in 1997. The private equity
firms primary focus is on branded consumer companies.

24

Glacau Investment Means DSD Dividends, Beverage Spectrum, www.bevinsights.com,

September 2006.

25

Sarah Theodore, Marketers in the Spotlight: Creating a Category, Beverage Industry,

January 2003.

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Strategic Marketing

Exhibit I

Top Bottled Water Brands (2006)*

Brand

Sales in US$ 000

Market Share (%)

Aquafina

472,807

14.3

Private Label

459,662

13.9

Dasani

393,605

11.9

Poland Spring

227,367

6.9

Propel

193,928

5.9

Arrowhead

159,511

4.8

Dannon

156,874

4.8

Deer Park

121,857

3.7

Glacau vitaminwater

116,411

3.5

86,882

2.6

Ozarka

* For 52 weeks ending July 16, 2006, sales through food drug and mass merchandise
(excluding Wal-Mart).
Source: Information Resource Inc.

Enhanced Water
The products from Glacau were targeted at health-conscious customers. The launch of
the products coincided with the growing health consciousness among the consumers in
the US, who were looking for healthier alternatives to high calorie soft drinks. Instead of
using artificial sweeteners, Glacau used crystalline fructose, a purified sweetener
derived from fruits. For making vitaminwater, flavors, vitamins, natural colors, and
other nutrients were added to Smartwater. The product was positioned as water with
additives that were good for the consumer. According to Bikoff, Youve got a lot of
people stuck on soft drinks who know they should be drinking more water, but theyre
not ready to give up the flavor and variety that comes with soft drinks. How do you help
those people get to bottled water? In my mind, the answer was to build a bridge, and
vitaminwater has become the bridge for millions of people.26
Once vitaminwater was ready, instead of sticking to the usual names, the company
came up with names that suggested their properties, like Power-C for water with
Vitamin C, Endurance for peach mango flavored water with Vitamin E, and Multi V
for multivitaminwater. Vitaminwater was available in several flavors, each with a
distinct name and color (Refer to Exhibit II for visual of vitaminwater). Each flavor
was for consumption at a specific time. For example, vitaminwater Essential had a
deep orange color, and had to be consumed in the morning and contained calcium and
Vitamin C. Vitaminwater Focus contained Vitamin A and Leutin. It had a dark pink
color with a kiwi strawberry flavor, and was to be consumed during the afternoons
(Refer to Exhibit III for the details of different flavors of vitaminwater).

26

Becky Aikman, Trendy, Successful Vitaminwater has LI Roots, www.newsday.com,

October 01, 2006.

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Glacau: Marketing Vitaminwater

Exhibit II

Vitaminwater Formula 50

Source: www.amazon.com.

Exhibit III

Vitaminwater Flavors
Flavor

Ingredients

Power C Dragonfruit

Vitamin C + Taurine

Focus Kiwi Strawberry

Vitamin A + Lutein

Balance Cran Grapefruit

Vitamin C + Glucosamine

Essential Orange

Vitamin C + Calcium

Endurance Peach Mango

Vitamin E + Ribose

Energy Tropical Citrus

Vitamin B + Guarana

Vital T Lemon Tea

Vitamin C, E

Rescue Green Tea

B Complex + Chamomile

Multi V Lemonade

Essential Vitamins and minerals from A to Zinc

Defense Raspberry Apple

Vitamin C + Zinc

Revive Fruit Punch

Vitamin B + Potassium

Formula 50% Grape

50% of Vitamin B, C, E + Folic acid required

every day

Adapted from www.vitaminwater.com.

Glacau used packaging as a means of communication and to build a bond with its
customers. The bottles were made of clear plastic so that the color of the water could be
seen through it. The labels were in simple black and white, with a color stripe running
through them. Gary Hemphill, Managing Director of Beverage Marketing Corp, a
research and consulting firm in Manhattan, said, The packaging is great. People walk
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Strategic Marketing

into a store because theyre thirsty, and they dont know what theyre going to buy until
they open up the cooler. The packaging plays a role in selling the product.27
Humor was a part of all Glacau products. The label on one of the bottles read, Note:
although this product contains more of the right electrolytes you need, its not just for
serious athletes. Sure, jocks seeking more oomph to go extra innings, play a fifth-set
tie-breaker or nail a triple axel benefit from drinking this beverage. However, it has
been said that the athletically challenged can also use it while engaging in their own
forms of strenuous activities, like, well, becoming a dungeon master or playing a
game of full-contact pictionary. Vitamins + water = all you need.28
Another label read, Recommended for gymnasts, ballerinas, tight-rope walkers,
people who do yoga, clowns who ride unicycles while juggling chain saws, ninjas,
peg-legged pirates and/or individuals simply requiring equilibrium in their lives. 29
All the labels had details about the ingredients, their use, total calorie count, and a
table of nutritional facts. The bottom of the label read, The inside is natural, the
outside is plastic. From time to time, the labels on the bottles were changed and this
generated lot of interest in the consumers, who looked forward to the next change.
According to Mike Repole (Repole), President, Glacau, Our brands have
personality, people bond with our personality because of the great packaging and the
little surprise they get when they read the label. I think that sets us apart.30 (Refer to
Exhibit IV for some of the labels of vitaminwater).
Exhibit IV

Vitaminwater Labels

27

28
29
30

Product
Energy

Label
We rebut any offers by professional sports leagues to become the
official water of anything. Although this is a great alternative to
sports drinks we do not believe in succumbing to commercialism.
Unless, of course, theres a lot of cash. Then well talk.

Endurance

Professional athletes have not endorsed this product ... excessive use
will not lead you to have a desire to be like Mike, Magic or even
athletes named Ned.

Multi v
Lemonade

In a recent government study that cost our country billions of

dollars, a bunch of science guys . . . came to this brilliant conclusion:
people dont eat right . . . we created this product . . . so you dont
feel so bad next time you get an urge to indulge in a bloomin onion.
Here is lemonades story: Remember the Jetsons? All they had to
do was push a button to get dressed, microwave a pill to eat a threecourse meal and throw Astro out on that treadmill thingy to walk
him. Talk about the good life. Well, we created this all-in-one
product containing more of the nutrients you need from vitamins A
to Zinc. Think of it as a drinkable Swiss army knife. Ok, so we
didnt invent the flying car or legless robot maids, but come
onlike thats ever gonna happen.

Becky Aikman, Trendy, Successful Vitaminwater has LI Roots, www.newsday.com,

October 01, 2006.
Eric Creamer, Vitaminwater Packs in Daily Essentials, www.zwire.com, August 24, 2005.
Karen Herzog, Caffeine Concoctions are the Latest Buzz, JS Online, May 22, 2001.
Eric Creamer, Vitaminwater Packs in Daily Essentials, www.zwire.com, August 24, 2005.

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Glacau: Marketing Vitaminwater

Product
Formula
50% Grape

Power C
Dragonfruit
Vital T

Essential
Focus

Rescue

Defense

Label
Inspired by todays most talked about artist, hottest record producer,
and soon-to-be movie star, this not-so-hypnotic tonic contains (hint,
hint) 50 percent of many of the important vitamins that you need
every day.
Despite having the word dragon in its name, no actual dragons
were harmed in the making of this product.
Grow up but dont grow old, thats why weve created this drink
packed with antioxidants to keep you looking and feeling young at
heart.
Although this product is not part of a so-called nutritious
breakfast, it does contain many vitamins.
Focus provides natural support for healthy eyes and skin and is
therefore good for: kids with tape on their glasses, people who
thread needles, seeing eye-dogs and anyone else who could use a
little more perspective.
We love happy hour one entire hour devoted to your happiness.
Thats why we created rescue with a stiff shot of B vitamins and
other good stuff to help you unwind after eight hard hours devoted to
making bank.
The world is a wonderful place, but it sure is germy. Doorknobs,
computer keyboards, and anything inside a mass transit vehicle
they are putting your immune system to the test. Thats why we
created defense, so you wont be crying like a baby at the doctors
office.

Compiled from various sources.

For Celebrities, Sports Starsand Everyone

Initially, Glacau did not spend much on advertising and the promotional activities
were limited to giving away free samples. Another aspect that helped the company in
its initial years was the backing by the celebrities. Several celebrities including pop
stars Britney Spears, Madonna, Eve, actress Nicole Kidman, and socialite Paris Hilton
were photographed sipping vitaminwater. Some of the popular magazines featured top
celebrities having vitaminwater. It was widely publicized that actor Dustin Hoffman
always stocked up on vitaminwater while shooting.
It took Glacau four years to launch a major ad campaign for which the company
spent US$ 10 million. The promotional campaigns were initiated by Oza and Matt
Kahn, Director, Brand Marketing. Oza joined Glacau in 2002 as Vice President,
Marketing, after his experience with Sprite and Powerade 31. Oza and Kahn were
responsible for launching Coca-Colas energy drink, KMX.
The first national advertising campaign was launched in 2004 and was titled, every
day needs more. For the first phase of the campaign, Glacau allocated a budget of
US$ 5 million. The billboards of vitaminwater were placed in major metro markets
including New York, San Francisco, Los Angeles, Miami, Chicago, Philadelphia,
Boston, Seattle, and Detroit. All round promotional programs involved various
interactive sessions with the consumers (Refer to Exhibit V for the different mediums
used by the company). The campaign, created by the marketing department in
31

Powerade is a sports drink by Coca-Cola and was introduced in the year 1998.

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Strategic Marketing

Glacau with the support of a creative agency located in New York, aimed at
educating the consumers about the features of vitaminwater like low calories and
enhanced vitamins. It illustrated the functionality of the vitaminwater through
animated figures. The humorous advertisements caught the attention of the consumers
all across the country.
Exhibit V

Mediums Used for Promoting Vitaminwater

Vehicle Marketing Program, Glacau vitaminwater Tasting Vehicle, with 10
hydration trucks. The trucks resembled television news vehicles and were
decorated with several images. These trucks were stationed at different locations,
and gave away free samples and provided information about the products.
Retail sampling program, called hydrology, where 100 hydrologists trained by the
company were stationed at the locations of the leading retailers and spread
information about the product to the consumers.
Point-of-sale materials like banners and posters in English and Spanish, table tents,
information pamphlets, etc.
Signage, banners, and other merchandising materials distributed at several events.
Campus Ambassadors a college outreach program.
Source: www.bvnet.com.

One of the billboards for vitaminwater Energy had a picture of a mother pulling a
shopping cart full of kids and read Drink Energy. Handle More. According to Oza,
The campaign will give (consumers) who havent experienced Glacau vitaminwater
an opportunity to get turned on to it and current drinkers even more reasons to drink
it.32 Another advertisement released later, read OJ Found Guilty (of being high in
sugar that is) (Refer to Exhibit VI for the Advertisement). The advertisements helped
in attracting the customers and in maintaining contact with them.
Exhibit VI

Advertisement OJ Found Guilty

Source:http://buffaloflickr.blogspot.com.
32

Kenneth Hein, Glacau Puts More into Message, Brandweek, June 28, 2004.

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Glacau: Marketing Vitaminwater

Glacau launched 39 tasting vans, popularly known as Glacau Tasting Vehicles. The
vehicles were parked at some busy locations and a Microphone Jockey played music
and invited passers-by to taste the products. In the retail stores, Glacau set up
hydrology booths, where the customers were educated about the benefits of
vitaminwater.
In a commercial for Reebok33, Rap artist 50 Cent34 appeared holding a bottle of
vitaminwater, after which Glacau decided to team up with him to create a new grape
flavored vitaminwater called Formula 50. The product was released along with a pop
album by 50 Cent.
The endorsements with celebrities continued and in 2005, several athletes and
entertainers were chosen to endorse Glacaus products. These included Kelly
Clarkson35, who co-created a limited edition label with Glacau, David Wright 36,
Kasey Kahne37, and Allen Iverson38 (Refer to Exhibit VII for Advertisement featuring
Kasey Kahne).
Exhibit VII

Advertisement Featuring Kasey Kahne

Source: www.flickr.com.

33

34

35

36
37

38

Reebok International Ltd., subsidiary of Adidas AG, produces athletic footwear, apparel and
accessories.
Curtis James Jackson III popularly known as 50 Cent, is a well-known American hip-hop
and rap artist.
Kelly Clarkson is an actress, singer, and songwriter and was the winner of the First
American Idol in 2002.
David Wright is a baseball player of New York Mets.
Kasey Kahne is auto racer, and drove in The National Association for Stock Car Auto
Racing (NASCAR)s NEXTEL cup.
Allen Iverson is a professional basketball player of the National Basketball Association, and
plays for Denver Nuggets.

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Strategic Marketing

In mid-2006, Glacau launched a program VitaminSchool to promote healthy eating

among school children. In this two week, coast-to-coast road show with 12 stops39,
Glacau conducted a competition for schoolchildren in which they were asked to
prepare nutritious meals and snacks that could be served in the school cafeteria. In
each of the 12 stops, a panel of celebrities chose three of the recipes. The panel
contained a nutritionist, a retail partner of Glacau, and a celebrity. The recipes were
judged on their taste and nutritional value.
VitaminSchool took its shape from an idea generated by Bikoff, who said I was
visiting school lunch cafeteria trade shows, and I had something of an epiphany,
realizing just how appalling the food was that was being sold to the schools, I know I
wouldnt eat any of that food, and I certainly wouldnt give any to my kids. 40 The
company then began educating the school children about a nutritious diet by allowing
them to prepare their own meal.
The finalists whose recipes made it to the top three at each stop were given US$
5,000. One winner from each of the stops was sent to a grand finale in New York. The
winner in the grand finale was given a US$ 100,000 college scholarship.
In February 2007, Metro41 in New York, which had a circulation of 450,000 a day,
provided a freestanding insert, with a scratch-and-sniff advertisement of vitaminwater.
These inserts gave the users a chance to sample products like perfumes and flavored
foods before purchasing them. As a part of its stay healthy, play hooky campaign,
Glacau advertised its dragon fruit scented Power-C Vitaminwater through a
freestanding insert.

Distributing Vitaminwater
Being a category creator had its own advantages and disadvantages for vitaminwater,
as far as distribution was concerned. The supermarkets and retailers demanded
slotting fees, sometimes running into thousands of dollars, for displaying new
products. Bikoff avoided supermarket chains till he could afford the slotting fee,
concentrating instead on mom-and-pop stores. He then realized that in order to
enhance the reach of the product, it was necessary to move to delis42 and other smaller
stores to cater to different customers. From there, vitaminwater moved on to organic
food stores43 and retailers like Whole Foods, who gave a chance to small vendors to
display their products. Vitaminwater was later sold in Albertsons and Safeway stores.
Just getting the product placed on the shelf was not enough; it was important to ensure
that consumers bought the product. In a deliberate plan, Bikoff made the distributors
place vitaminwater along with bottled water rather than sports beverages.
Vitaminwater with its bright color stood out from the scores of water bottles.
39

40
41

42

43

The 12 stops were Houston, Dallas, Los Angeles, San Francisco, Seattle, Chicago, Detroit,
Atlanta, Washington DC, New Jersey, New York, and Boston.
Bob Phillips, Back to School, Progressive Grocer, June 01, 2006.
Metro is free daily newspaper, published from Monday to Friday. In the US, Metro is
published from New York, Boston, and Philadelphia. Metro International publishes in 88
cities in 19 countries across the world.
Delicatessen popularly known as Deli is a type of store which offers a wide range of fresh
food. Deli stores are smaller than grocery stores. The products offered by Delis include
freshly made sandwiches, green salads, wet salads, and a few precooked products.
Organic food stores are grocery stores that typically sell natural and organic foods. Organic
foods are produced according to certain standards which include not using pesticides,
artificial fertilizers, etc. Organic food is processed without preservatives.

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Glacau: Marketing Vitaminwater

Instead of tackling several markets at once and going in for a national launch,
vitaminwater was launched in one market at a time. After the product was successful
in New York, it was launched in California. Citing the distribution network in New
York, Bikoff convinced the distributors in California to distribute the products.
Vitaminwaters launch in California was a highly publicized event, in which Bikoff
told the sales force of the distributor to start selling the product near the beach. Soon
several celebrities in California were photographed holding bottles of vitaminwater.
To establish a good market position in California, Glacau conducted a competition
between two of their distributors in 2003, to see who could open more new accounts
in a span of one week. In order to lend their support to the distributors, all the staff
from Glacau headquarters, including the top executives and receptionists, in New
York were flown in to California and they worked with the distributors. The
competition was called Mike-Ro Classic, with Mike referring to Repole, then
executive Vice-president at Glacau, and Ro referring to Oza, who headed the two
distribution teams. According to Repole, Every market is different. The easiest thing
we could have done would have been to hire more people in these markets. But for us,
its more about taking the people who know about the brand best and who are
passionate about it to the markets themselves. If we want to connect with consumers
in LA and San Francisco, we have to be in LA and San Francisco. We have our entire
team out here to build the brand. We even have our finance and operations people out
in the trade actually selling cases, merchandising, attending samplings and being part
of the blitz team.44
The support was provided by Glacau in terms of free samples that were distributed
through Glacau Tasting Vehicles in high traffic locations, DJ events in the local radio
stations, and other in-store activities like tasting and setting up hydrology booths,
where the people operating the booths told the consumers about the merits of
vitaminwater.
The distributor who opened the maximum number of new accounts was declared the
winner, and the best salespeople from the winning distributors team were flown by
Glacau to New York for a holiday. Through this strategy, multi-product distributors,
who had earlier been reluctant to channel their resources to one product, were made to
direct their efforts toward vitaminwater. This resulted in vitaminwater making its way
to several new territories. The fact that the companys employees were also involved
in the competition encouraged the distributors to put in even more effort. The results
were better than expected. According to Bikoff, We went from shipping 1,000 cases
a month to 100,000 a month. 45 With the success of the first Mike-Ro Classic, every
year, Glacau conducted a similar event in different locations.
By 2004, Glacau had identified ten target markets, in which to locate marketing
managers. These markets were New York, San Francisco, Los Angeles, Boston,
Chicago, Detroit, Miami, Philadelphia, Seattle, and Washington. The marketing
managers were responsible for carrying out sampling activities and coordinating
media activities in the area.

44
45

Jeff Cioletti, Go West, Beverage World, August 15, 2003.

Don Longo, Reporters Notebook: On the Road, with Super Water, Progressive Grocer,
September 01, 2005.

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Strategic Marketing

In April 2005, the Mike-Ro Classic targeted the Midwest and Southern regions in
the US. The southern team was headed by Repole and it conducted the promotional
events in Miami, Tampa, Orlando, and Fort Lauderdale. The Midwest team headed by
Oza conducted the events in Chicago, Minneapolis, Columbus, and Cincinnati. The
employees of Glacau pitched in to extend support to the teams.
Retailers like Dominicks, Kroger, White Hen, Jewel, 7-Eleven, Albertsons, and
Certified Oil participated in the event and extended their support. The event had a
positive effect on sales. In Orlando, 7-Eleven, in order to promote Formula-50, gave a
full tank of gas for 50 cents for the first 50 customers who asked for vitaminwater.
During the promotional event, Glacau opened 1,500 new accounts and sold more
than 50,000 cases of vitaminwater.
Analysts termed the event as grassroots, guerilla marketing. They said Glacau had
been successful in bringing the customers into the retail stores for its product through
this event. It also illustrated the fact that without a huge advertising campaign, small
niche players could create a buzz around the product. By the end of 2005, Glacau had
more than 250 distributors, serving several thousand retailers all across the US.
Bikoff was a firm believer in maintaining the personal touch with distributors. Instead of
a cooler bag, he used his cooler fitted Cadillac Escalade to take Glacau products to the
distributors. This helped him maintain contact with the distributors and small retailers,
who were the ones who helped him break into the market in the initial years. Many
small retailers supported Glacau and refused to sell other products in a similar category.
By 2005, several big and small retailers across the US began selling vitaminwater.
Walgreens started selling the products through its 4,800 outlets spread across the US
in early 2005. In early 2006, Glacau targeted the Middle America market through
beer distributors and other small beverage distributors. By late 2006, vitaminwater
was available all across the US, through 50,000 freestanding branded coolers. From
early 2007, vitaminwater was made available across 5,000 Wal-Mart stores in the US.

The Road Ahead

With the rising demand for vitaminwater, there were several instances of the products
being sold out within no time. At the same time, the company was trying to increase
its shelf space among the retailers in the US. Vitaminwater was also facing a
challenge from some exclusive stores, which provided specialized products with
natural ingredients and lower calories.
With the capital infused by the Tata Group, analysts opined that Glacau would be
able to expand its operations further and could consider entering international
markets. By 2011, Glacau was estimated to be a US$ 10 billion company.
By the end of 2005, vitaminwater accounted for more than 80% of the total sales of
Glacau. Fruitwater and Smartwater were available only at specialty food stores and
not through a direct store delivery network. The company entered into a distribution
deal with Dr Pepper/Seven Up with which the availability of Smartwater and
Fruitwater was expected to improve.
Glacaus next target was the captive market, where the soft drink majors had entered
into exclusive contracts with several high-end stores, schools, airports, and stadiums.
These stores did not stock the products of the competitors and the customers were
forced to buy the stocked products.
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Glacau: Marketing Vitaminwater

Several schools in the US, which were looking for healthy alternatives to colas, opted
for vitaminwater. The demand from the schools was expected to increase further
especially after Alliance for Healthier Generation, a combined initiative of William J.
Clinton Foundation and American Heart Foundation, worked out an arrangement with
the soda makers. As per the arrangement, the vending machines in schools would
provide only low calorie and nutritious beverages.
By mid-2006, Glacau was selling five million bottles a day. The sales through drug
stores increased by 280%, in grocery stores by 100%, and through convenience stores
by 130% as compared to 2005 according to Information Resources 46.
As of 2006, the health and wellness market in the US was valued at US$ 22 billion,
according to Richard Perkal, Senior Managing Director specializing in retail deals in
Bear Stearns Merchant Banking (Refer to Exhibit VIII for a note on health and
wellness market in the US). With several established and new players entering the
market, the competition was increasing day by day. Glacaus competitors included
established players like Pepsi, Coca-Cola, Snapple, and Gatorade and new players like
Vitamin Shoppe, which provided specialized products with low calories. In March
2007, Tropicana planned to launch Fruit squeeze, a combination of water and fruit
juice with just 50 calories.
Exhibit VIII

Health and Wellness Beverage Industry in the US

With growing health concerns, people all across the globe prefer food and drinks
that support healthy living. Foods that promote weight loss are among the fastest
growing food categories in the world. The US and the UK markets account for over
30% each and Japan for 20% in the worldwide health and wellness foods market.
Most of the consumers in the US prefer foods that promote heart health and weight
loss. Health and wellness products like natural and organic foods, nutritional
supplements, and low carb items, which were earlier limited to specialty stores, are
being stocked by retailers due to the growing demand for them.
In the US, the consumption of milk, sports and energy drinks, and bottled water
was at 19 billion gallons in 2005. The consumers in the US prefer soy-based
products, bars, cereals, and beverages.
According to Beverage Marketing, New York, the sales of functional and wellness
beverages stood at US$ 41 billion in 1999 and grew to US$ 55 billion in 2005.
With consumers preference shifting away from carbonated drinks having sugar
and high calories, the market for functional and wellness beverages is estimated to
grow further.
In 2006, the largest beverage category in terms of volume was carbonated drinks,
with Coca-Cola and Pepsi dominating the market. The other major players in this
category are Pepsis Mountain Dew and Cadbury Schweppes Dr.Pepper. The
second largest category among beverages is bottled water, followed by fruit
beverages, sports drinks, and ready-to-drink teas. The other major categories are
energy drinks and ready-to-drink coffee.
Contd

46

Chicago, US based, Information Resources Inc. is the leading provider of enterprise market
information solutions and services.

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Strategic Marketing

Contd

Beverage manufacturers across the world are looking at providing users something
in addition to refreshment. In 2007, several drinks that would induce weight loss
and contain natural energy and low calories are being launched. In order to take
advantage of the growing demand for energy drinks, Coca-Cola and Pepsi have a
slew of products in the pipeline. In 2007, Pepsi planned to launch more than 12
products which include Pepsi Natura, Sierra Mist Essence, Tava, Tropicana
Essentials, Ocean Spray Refreshers, Lipton pure leaf tea, Propel power packets,
Tropicana Organics, and SoBe Essentials. The products that Coca-Cola planned to
launch include Enviga green tea, H2Odwalla enhanced water, the nutraceutical
version of diet coke, full throttle Blue demon, Respect, and Swiftwater. Other
smaller companies are not far behind; coming from Glacau is vitaminwater Triple
X, and there is Snapples Out of the Blueberry.
Compiled from various sources.

Glacau was looking at consolidating its position in the US market and then
expanding into other markets like Canada, Mexico, and the Caribbean. With its
association with the Tata Group, Glacau was expected to explore other markets in
which Tata had a strong presence like India and the UK in the coming years.
Though vitaminwater was marketed as a drink to promote healthy living, it was still
high on calories with a 20-ounce bottle having 125 calories (12 ounces of Coke had
140 calories). Health experts warned that consumption of enhanced water was not
beneficial. According to Shan James, Physiologist at Duke Health and Fitness Center,
The sugar levels in these drinks can actually inhibit the bodys water- and vitaminabsorption and cause stomach cramping. 47
Analysts felt that the major threat Glacau faced was competition from Pepsi, CocaCola, and Cadbury Schweppes which were entering the enhanced water market. They
opined that these players with their wider reach and distribution network could get
ahead of vitaminwater in no time. Glacau had only around 200 independent
distributors selling its products, and to expand its distribution it would require an
additional investment. In the long run, it could become necessary for Glacau to enter
into an alliance with the distributors of Coca-Cola and Pepsi. The established players
could also challenge Glacau in terms of its price. The long-term sustenance of
Glacau could depend on bringing out new products in different categories and
widening its customer base.

47

Carole Buia, Water, Water Everywhereand Calories Too, Time, August 19, 2002.

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Glacau: Marketing Vitaminwater

References & Suggested Readings:

1.

Laurie Russo, Water a-Go-Go, Beverage Aisle, October 15, 2000.

2.

Gerry Khermouch, Handbags, Cognacand Water, BusinessWeek, April 02, 2001.

3.

Karen Herzog, Caffeine Concoctions are the Latest Buzz, JS Online, May 22, 2001.

4.

Laurie Joan Aron, Making Waves in Bottled Water, Crains New York Business,
August 13, 2001.

5.

Kenneth Hein, A Day in the Trade, Brandweek, August 12, 2002.

6.

Carole Buia, Water, Water Everywhereand Calories Too, Time, August 19, 2002.

7.

Hillary Chura, Oza Wants Vitaminwater to be a 'Category Creator', Advertising Age,

December 16, 2002.

8.

Sarah Theodore, Marketers in The Spotlight: Creating A Category, Beverage Industry,

January 2003.

9.

Christine Y. Chen, Darius Bikoff vs. Coke and Pepsi, Fortune, February 03, 2003.

10.

Jeff Cioletti, Go West, Beverage World, August 15, 2003.

11.

Kenneth Hein, Energy Fortifies Glacau With Another Coke Alum, Brandweek,
November 17, 2003.

12.

Kenneth Hein, Glacau Puts More into Message, Brandweek, June 28, 2004.

13.

Jonah Bloom, Vitamin Water Thrives with Sampling, Just a Bit of Cheek, Advertising
Age, July 05, 2004.

14.

Vitaminwater Launches Hip New Campaign, Beverage Aisle, August 15, 2004.

15.

Rob Walker, The Way We Live Now: 8-22-04: Consumed; A Spoonful of Attitude,
The New York Times, August 22, 2004.

16.

Michael Applebaum, Brand on the Campaign Trail, Brandweek, November 15, 2004.

17.

Heather Todd, Rising Stars, Beverage World, January 15, 2005.

18.

Kenneth Hein, Repole Gets a Presidential Nod, Brandweek, February 14, 2005.

19.

Don Longo, Grassroots Blitz Drives Higher Beverage Rings, Convenience Store
News, June 20, 2005.

20.

Eric Creamer, Vitaminwater Packs in Daily Essentials, www.zwire.com, August 24,

2005.

21.

Don Longo, Reporters Notebook: On the Road, with Super Water, Progressive
Grocer, September 01, 2005.

22.

Kate MacArthur, Pepsi Picks Water Fight with Surging Glaceau, Advertising Age,
October 17, 2005.

23.

Rishi Modi, Vitaminwater Entrepreneur Visits the RSB, www.themsj.com, November

07, 2005.

24.

Caroline Wilbert, Enhanced Waters Popularity has Many Taking the Plunge, Cox
News Service, December 28, 2005.

25.

Gwendolyn Bounds, Winning Shelf Space in a Competitive Market, The Wall Street
Journal Online, February 01, 2006.

26.

Bob Phillips, Back to School, Progressive Grocer, June 01, 2006.

27.

Andrea Foote, Victory for Vitaminwater, Beverage World, June 15, 2006.

28.

Kenneth Hein, Note to Coke: Glacau Biz Plan is Heating Up, Brandweek, August 07,
2006.

251

Strategic Marketing

29.

Steve Rosenbush, Tata Takes a Swing of Vitaminwater, BusinessWeek Online, August

24, 2006.

30.

Glacau
Investment
Means
DSD
www.bevinsights.com, September 2006.

31.

I Made the Brand For Myself: EBI Chief, The Times of India, September 02, 2006.

32.

Pepsi, Energy Brands Settle, SoBe Label to Change, Reuters, September 05, 2006.

33.

Surajeet Das Gupta, Why the Tatas 'Bought a Piece of the Future', Business Standard
September 09, 2006.

34.

Purvita Chatterjee, Testing the Waters, The Hindu Business Line, September 14, 2006.

35.

Becky Aikman, Trendy, Successful Vitaminwater has LI Roots, www.newsday.com,

October 01, 2006.

36.

Homa Mojtabai, Glacau Founder and CEO Shares Tips for Start-up Success, The
Wharton Journal, December 04, 2006.

37.

Kenneth Hein, Pepsi Squeezes out Another Enhanced Water Entry, Brandweek,
February 05, 2007.

38.

Nicole Smith, Metro New York to Run Scent-Strip Insert Ads, www.dmnews.com,
February 15, 2007.

39.

www.glaceau.com.

252

Dividends,

Beverage

Spectrum,