New Product Development by Highland Spring - Research Paper Example

New product development by Highland Spring Introduction The bottled water industry is growing at a rapid rate as the business takes a pervasive shape. A significant increase in demand of bottled water can be observed even in countries where tap water of excellent quality is available. This fact suggests that bottled water is not preferred merely because clean tap water is unavailable. Studies suggest that consumers have numerous reasons for availing bottled water and they express their dissatisfaction towards tap water because of taste and smell beside health concerns (Doria, 2006). In past one decade, the demand of bottled water has grown consistently and the trend has been noticed worldwide, although the growth rate differs in different countries. Bottled water industry is gradually capturing majority of market share of non-alcoholic beverages. Bottled water is also being considered as substitute of unhealthy sugared beverages. Presently, variety can be observed in bottled water as they can be classified as natural spring water, still water, sparkling water, mineral water and flavoured and unflavoured water (Doria, 2006). The paper focuses on bottled water business of Scotland based company, Highland Spring. In the following sections of the paper, the product family of the company will be discussed briefly along with its demand and competitors in the market. Additionally, a new product in the product portfolio of the company will be proposed in the paper and its potential scope of success will be evaluated. Rationale behind selection of Highland Spring product portfolio The bottled water industry has gained significant importance since late 1990 and within a decade, large number of companies entered into the venture. The primary reason for selecting Highland Spring as the subject organisation is that, it is one of the leading bottled water producer and is presently the largest producer and supplier of bottled water in the United Kingdom (UK). The company’s current production capacity is 700 million litres of water per year and is a prominent player in UK’s soft drink industry. The product portfolio of the company is highly diversified which present ample opportunity for product assessment and comparison (Highland Spring Group, 2014a). Alongside, the diversified portfolio will also contribute towards development of a highly competitive new product. In other words, when a company has a number of products in its product family, it is comparatively easy for the company to evaluate pros and cons of each product and address the deficiencies in the new product. New product from a renowned brand always helps in increasing market share which is again the long term strategy of the company. It is also expected that the new product will address certain latent demands of consumers. Existing product description and comparison The present product portfolio of Highland Spring comprises Speyside Glenlivet, Highland Spring, Highland Spring Country, Hydr8 and Private label (Highland Spring Group, 2014b). Speyside Glenlivet Speyside Glenlivet was bought in 2009 along with two other bottled water producers by Highland spring as it became the largest distributor of bottled water in the UK. Speyside Glenlivet is a premium brand of packaged drinking water with carefully balanced mineral level and subtle flavour. The mineral water is available in three different sizes of bottles (330ml, 500ml and 750ml) and in two forms, namely, perfectly still and lightly sparkling. The brand image of the product reflects exclusivity and sophistication. However, Speyside Glenlivet is devoid of additional flavours so that when it is served with food and other beverages, it enhances the overall flavour of the primary food instead of suppressing the same. The product has further been projected as a representative of social class and is available only at luxurious establishments such as high-class restaurants and hotels (Highland Spring Group, 2014b). Highland spring Scotland is well-known across the globe for high quality of pure and fresh water. The brand Highland Spring represents bottled form of Scottish water in still and sparkling variants. The company has one thousand hectares of privately owned catchment area in Ochil Hills, Perthshire where farming activities, agricultural spraying, habitation and construction is prohibited so that organic status is maintained in the bottled water. Studies suggest that about 80 percent of UK households purchase Highland Spring still bottled water. The water is available in different packaging forms such as PET bottle, sports cap and glass; which has been carefully crafted keeping in view consumers’ convenience. The highland spring sparkling water is highly preferred by consumers for preparation of fruity beverages and cocktails. Lastly, the Highland Spring active pack is a smaller bottle (330ml and 500ml) which can be conveniently carried in small bags so that consumers stay hydrated even when they are travelling (Highland Spring Group, 2014b). Highland Spring Country Highland Spring Country is yet another variety of the bottled spring water. However, this brand specifically contains sparking water in different flavours. Highland Spring Country is a relatively new variety of naturally flavoured water. The company ensures that home-grown British fruits are blended with sparking spring water in such a manner that the taste appeals to the consumers. Highland Spring Country does not comprise on vitamins and minerals and is a healthy choice for consumers because it does not contain artificial flavour and sweeteners. The product is offered in four variants of traditional British fruit flavour such as apple, elderflower, strawberry and blackcurrant. The product is available in take-home and impulse format and mainly target adult consumers of soft drinks industry. The drink can be consumed at different occasion such as lunchtime refreshment and entertainment drink (Highland Spring Group, 2014b). Hydr8 The term hydr8 was originally coined from the word ‘hydrate’. The product was launched in 2010 keeping in view the daily requirement of water by human being. The product promotes healthy hydration (1-1.2 litres water daily) at an affordable price, keeping the idea consistent with advice of Food Standards Agency (FSA). Hydr8 comprises naturally sourced British water collected from rural catchment areas. The product is relatively inexpensive and has been designed for price conscious bottled water buyers. Additionally, the product is available at two different variants, namely, unflavoured and sugar free flavoured water. The product is available at 500ml PET bottles in three different flavours- Orange & Passion fruit, Strawberry & Kiwi and Lemon & Lime (Highland Spring Group, 2014b). Private label Besides its brands, the company supplies bottled water under private label to supermarket groups, food service companies and individual consumers. Private label generally contain wide range of flavoured and unflavoured waters delivered at mass scale (Highland Spring Group, 2014b). Market outlook for bottled water in the UK In past four decades, the bottled water industry has shifted from a mere business prospect to an industry worth billion pounds (BBC, 2010). The present net worth of the industry is approximately £776 million. Studies suggest that, while the basic offering remains same, the credit of growth in bottled water industry goes to advertising and marketing techniques adopted by most companies (IBIS World, 2014). Market research suggests that, about 2135 million litres of bottled water was consumed by UK consumers in 2012, where still water comprises about 86% and sparkling water comprises about 14% of total consumption. Additionally, demand for natural mineral water was found to be around 62%, share of spring water was 31% while that of bottled drinking water was around 8% (SRUC, 2013). Competitors in the Bottled water industry According to certain studies, the bottled industry is dominated by only a few companies, that have more than few brands to capitalise on the segmented market. However, large number of regional producers with their own products further contributes to the existing brands. According to the Food Security Agency, total 72 natural mineral water producers were registered in the UK in April, 2014 (Food Standards Agency, 2014). A total of eight companies including Highland Spring are registered with the Natural Hydration Council of the UK. These seven companies, namely, Brecon Carreg, Danone Waters UK & Ireland (Brands: Volvic and Evian), Iceni Waters, Nestle Waters, Ty Nant, Harrogate water Brands and Wenlock Springs can be considered as prime competitors of Highland Spring (Natural Hydration Council, 2014; The Guardian, 2013). Consumer demographics Studies suggest that between 1994 and 2013, the bottled water industry of the UK has grown from 690 million litres to more than 2.3 billion litres. The British Bottled Water Producers suggests that, children under the age of 6 months should be administered still bottled water after boiling it. The organisation further added that, bottled water is safe for older children as it is free from unpleasant cleansing agents and chemicals unlike tap water. Other research recommended that, individuals belonging to middle to high income group and students (age group: 25-34 years) are frequent users of bottled water. Report by Mintel suggests that, around 26 million adults in the UK consider bottled water to be comparatively safe (The Guardian, 2013; British Bottled Water Producers, 2014a; 2014b; Mintel, 2011). Evidence supporting the need of bottled water in the UK It has already been highlighted that the net demand of bottled water was 690 million litres in 1994 which has grown to 2.3 billion litres in 2013, which clearly suggest that consumers are expressing greater preference towards bottled water. Companies such as Danone, Highland Spring and Nestle Waters are frequently launching new varieties of bottled water such as flavoured water. This would not have happened unless a demand of the same existed. Additionally, most consumers expressed that they consider bottled water to be purer than tap water while others added that they prefer bottled water because it is devoid of foul odour and taste (Doria, 2006). 64% of bottled water buyers, according to Mintel study, agreed that the drinks kept them hydrated throughout the day, while 25% believed that bottled water with minerals and vitamins is healthier than tap water. Reports suggest that, until recently European bottled water brands dominated the industry but the growing demand of bottled water has resulted in significant growth of British brands as well. Further studies proposed that, the sale of bottled water is expected to increase by £50 million by 2016. Presently, the market of soda based soft drink is being heavily challenged by the bottled water industry (Mintel, 2011; The Guardian, 2013). A number of consumers also suggested that bottled water is comparatively useful as and when they are travelling. According to the Daily Mail (2012), flavoured and vitamin enriched bottled water have comparatively greater demand. One third of packaged water buyers advocated that, drinking flavoured drink with vitamins is a healthier and tastier choice. It is also noteworthy that, the industry is growing at a rapid rate which is impossible if consumers do not purchase bottled water. Reports suggest that in 2013 Highland Spring replaced Evian as most preferred bottled water company. Additionally, it was also observed that the sparkling water by Highland Spring Group was largely preferred among consumer. From these data, it can be suggested that consumer demand for bottled water is growing rapidly (The Guardian, 2013). Primary consumer group that exhibit preference towards bottled water According to the Guardian (2013), largest consumers of bottled water belong to the age group ranging between 25 years and 34 years. However, industry body, British Bottled Water Producers added that, bottled water can be administered to children above 6 months as well and bottled water save time of parents that they invest in purifying tap water. They further revealed that, bottled water is being consumed more than fruit juices, nectars, spirits and wines and consumers perceived flavoured bottled water as healthier choice compared to sweetened beverages that are loaded with calories. The consumer demographics also consist of students and individuals belonging to working class as buyers of bottled water. Many consumers perceive certain bottled water brands such as Speyside Glenlivet, Perrier and Tau as status symbol. Studies suggest that, not only health conscious women but men are also increasingly showing interest towards consumption of bottled water. Although the maximum buyers of bottled water are generally regular travellers, it was also gathered from facts that number of buyers of bottled water for household consumption is increasing at a rapid rate. National statistics suggest that bottle water has become a part of standard shopping basket of consumers since 2010. General shopper and corporate clients from public and private organisations were also found to be buyer of bottled water. Other consumer sectors of bottled water include local authorities, schools, hotels, factories, leisure clubs, various business sectors and the National Health Services. Bottled water is also preferred by international and domestic travellers according to hotels and resorts (The Ecologist, 2013). New product development Bottled water is gaining increasing importance as prime drink choice in various developed economies such as Europe and the United States. The industry has grown from a business prospect to a billion dollar sector in the UK alone. In the UK, companies such as Highland Spring Group, Nestle Waters and others are vying for acquiring greater market share. This approach has led to introduction of multiple brands by these companies. Recently, Highland Spring has secured the position of most preferred bottled water among UK consumers and to maintain its position and market share, it was ascertained by the management that a new product should be introduced so that along with product differentiation, they can capture the unexplored areas of the market. Internal research and government reports suggest that a number of microbes such as cryptosporidium are found in various water sources such as lake and river, which are highly resistant to chlorine based water treatment and can only be treated using process such as ultraviolet radiation and reverse osmosis. The company will launch new bottled water, Pure Glacier, which will undergo various processes such as distillation, reverse osmosis and ultraviolet radiation treatment so that the purity level of the water is high enough to be recommended to infants and people with weak immune system along with mass consumers. The product idea is consistent with the new product development theory which suggests that prior creating a product, an organisation need to access the market and recognise latent demand in the existing consumer base. The company after conducting a market survey concluded that the product, Pure Glacier will be one of its kinds in the bottled water industry. The company will be further diversifying the product so that mass consumers are served. Pure Glacier will be produced in four variants, namely, still and sparkling while each of the variants will available in flavoured and unflavoured form. The unflavoured still water will be mostly recommended for infants and individuals suffering from chronic diseases. The flavoured water will be sugar free so that health conscious consumers also purchase it. The addition of Pure Glacier in the product family of Highland Spring Group is expected to yield long term strategic benefits. The new product development is being considered as a strategic move because selling of distilled product in four variants has not yet been undertaken by any of the competitor of the company. Additionally, Highland Spring Group is one of the reputed bottled water suppliers in the UK, which will help the product gain significant recognition within a small period of time. In this context, it is noteworthy that for increasing consumption of a particular product, the quality of the product being exceptionally high is not sufficient. Instead, the company will have to invest in appropriate promotion of the product so that the latent demand can be converted in actual need (Urban and Hauser, 1993). Benefits offered by the new product, Pure Glacier Every product should have certain unique selling propositions or USPs which act as the differentiation point with respect to the competing products. The company will be marketing Pure Glacier as a product that overcomes deficiencies in most bottled waters. The primary benefit of the product is that, even infants can drink this water without conducting any precautionary measures such as boiling. Studies suggest that, individuals with delicate immune system are most vulnerable to water borne diseases. The product will be beneficial for such patients as well, since the water will undergo processes such as reverse osmosis and ultraviolet radiation treatment. Another interesting fact about pure glacier is that, the bottled water even after opening will not be affected by air borne microbes and can be stored up to 72 hours since opening. It has been observed that, tap water are mostly treated in such a manner that the taste and odour of the water changes. Highland Spring Group will maintain taste of natural water in Pure Glacier unlike tap water and most bottled water brands. Generally, taste of distilled water feels flat and consequently consumers refrain from drinking the same. Pure Glacier presents a unique solution to this problem. The flat taste of the product will be mitigated by additional of necessary minerals in traceable amount unlike general mineral water. The overall flavour of the still unflavoured Pure Glacier will be very mild so that drinkers with delicate taste bud do not feel difficulty. The Pure Glacier flavoured drinks will not have added artificial sweeteners and will bear natural flavour of fruits such as apple, strawberry and passion fruit. Consumers can use this bottled water in preparing various beverages such as flavoured iced tea and fruit crush. The sparkling water can be used instead of soda and fizzy drinks (strong carbonated water) and the management will ensure that Pure Glacier sparkling water contains gentle amount of carbon dioxide. The product will be prepared while keeping in view the increasing level of unhealthy environmental factors. The fruit flavoured water will be prepared using natural fruit extracts so that it comprises healthy enzymes and antioxidants which will boost the immunity system of consumers. The product will be available in different sizes such as 330ml, 500ml, 1litr and 1.5litres so that consumers can purchase the water as per their need. Additionally, the company is planning to launch the product at a reasonable price so that mass consumers can easily afford. Key difference between Pure Glacier and Competitors’ products The key competitors that were recognised are Brecon Carreg, Evian by Danone Waters, Buxton and Nestlé Pure Life by Nestle, and Harrogate Spring and Thirsty Planet by Harrogate. All these brands sell bottled mineral water while distillation factor associated with Pure Glacier will act as an added advantage for the brand. It was further observed that, these bottled water brands are not recommended for infants and children and no test has been conducted regarding their impact on ailing individuals. However, Pure Glacier will be safe for consumption by infants and individuals with delicate health condition. Unlike Pure Glacier, most companies are focussed on label designing and promotion of the products. Pure Glacier will be launched by the company with an aim to deliver value for product to consumers since many consumers complain that bottled water is relatively expensive which has a negative impact on affordability. Additionally, the flavoured water of Pure Glacier is not only refreshing, but also relatively healthy due to presence of natural antioxidants. Pure Glacier is a specific kind of distilled water that has added minerals in traceable amount and therefore, it is a better choice over other mineral waters that are often considered unsuitable of certain individuals. Additionally, Pure Glacier does not include additives to enhance taste of water which is often practiced in a number of companies. Overall, it can be suggested that Pure Glacier is a relatively better product compared to various other international and regional brands. Conclusion Water is essential for survival, but continuous degradation in water quality has resulted in rapid growth of bottled water producers. Bottled water is generally available in still and sparkling form where the sparkling water comprises limited amount of carbon dioxide for extra bubble. The paper discusses growth of bottled industry in the UK. Among various bottled water producers, the paper focuses on Highland Spring Group, who has recently become the most preferred bottled drink supplier in the UK. It was gathered that company sold around 200 million litres of water including flavoured as well as unflavoured variants. It was observed that the company has a number of products; among which, certain products are meant only for elite class. In this paper, market outlook and consumer demographics for bottled water have been discussed in an elaborate manner. Considering the increasing competition in the bottled water industry, a new product (Pure Glacier) has been proposed so that the company is able to strengthen its market position in long run. Reference List BBC, 2010. Bottled water has become liquid gold. [online] Available at: [Accessed 17 October 2014]. British Bottled Water Producers, 2014a. Water Vital Statistics: Industry Data. [Online] Available at: [Accessed 17 October 2014]. British Bottled Water Producers, 2014b. Children and babies. [Online] Available at: [Accessed 17 October 2014]. Daily Mail, 2012. No sign of our thirst for bottled water being quenched with sales to rise to £2billion a year in the UK by 2016. [online] Available at:   [Accessed 18 October 2014]. Doria, M., 2006. Bottled water versus tap water: understanding consumers’ preferences. [pdf] Journal of Water and Health. Available at: [Accessed 17 October 2014]. Food Standards Agency, 2014. Food standards: labeling, durability and composition. [online] Available at: [Accessed 17 October 2014]. Highland Spring Group, 2014a. History. [online] Available at: [Accessed 17 October 2014]. Highland Spring Group, 2014b. Product family. [online] Available at: [Accessed 17 October 2014]. IBIS World, 2014. Bottled Water Production in the UK: Market Research Report. [online] Available at: [Accessed 17 October 2014]. Mintel, 2011. Bottled Water: UK. [online] Available at: [Accessed 18 October 2014]. Natural Hydration Council, 2014. Bottled water company members. [online] Available at: [Accessed 17 October 2014]. SRUC, 2013. Bottled Spring Water: Market information. [online] Available at: [Accessed 17 October 2014]. The Ecologist, 2013. Britains love affair with bottled water - a national scandal?. [online] Available at: [Accessed 18 October 2014]. The Guardian, 2013. Highland Spring now Britains favorite bottled water. [online] Available at: [Accessed 17 October 2014]. Urban, G. L. and Hauser, J. R., 1993. Design and marketing of new products. Englewood Cliffs, NJ: Prentice Hall. Read More