Coke and Pepsi's New Marketing Strategy: Pull at Your Heart Strings

World Water Day 2008 (March 22) will see a flurry of announcements from bottled water companies who claim to be helping solve the globe's water crisis. The catch is that these altruistic claims are intimately tied to major advertising campaigns designed to convince the public to buy their products.

Numerous media and industry reports are saying that sales of bottled water are slowing as a result of campaigns targeting the product's environmental and social impact. In a recent article, Brandweek declared that Pepsi and Coke are facing "evaporating sales growth for bottled water and increased concerns about their products' impact on the environment."

Another report, from industry publication Beverage Digest, said that sales and growth of the bottled water industry in 2007 was about half of what it was in 2006. Recently reported annual results from the world's largest bottled water company Nestlé show a slowdown in growth in its bottled water sector from 2006. According to the Beverage Marketing Corporation, global sales growth has consistently dropped since 2003.

The slowdown in growth of bottled water sales combined with industry reports and widespread media attention on the negative impacts of bottled water highlight how the global anti-bottled water campaign is having a major impact.

While campaigners may raise a crystal glass (of tap water) to this news, it is important to keep in mind that the industry is not rolling over and going away. People are still buying huge amounts of the stuff and the corporations will be trying their best to keep existing customers and attract new markets in new regions. The question is how will bottled water companies continue to convince people to buy its products.

How will the BW giants fight the backlash?

Marketing trade publication Brandweek predicts that Coke and Pepsi will fight the growing backlash against bottled water with intense 'ethical' or 'responsible' marketing, understood as tying the purchase of a product to charitable activities. A number of ad campaigns for bottled water already include charitable ties. According to Brandweek, the use of A-list celebrity endorsements of these types of campaigns is likely to increase.

PepsiCo has already started down this path through its relationship with Matt Damon. Earlier this year PepsiCo donated $2.5 million to Damon's H20 Africa clean water initiative. To compliment Pepsi's donation, the movie star is endorsing Ethos bottled water (Starbucks' bottled water brand), which will be launched nationally this spring through PepsiCo and Starbucks' North American Coffee Partnership joint venture.

The Ethos brand is promoted by claiming to donate 5 cents from every bottle sold to help children around the world gain access to clean water. Part of a slogan from the brand's upcoming North American ad campaign states "if you choose to drink bottled water, please choose to make a difference." Until now Ethos water has only been available at Starbucks' 7,000 North American outlets. This will soon change when PepsiCo's huge national distribution system moves the brand out to 40,000 merchandisers in North America.

Not to be outdone, according to Brandweek, Coca-Cola North America is getting ready to launch its own 'socially responsible' water brand. There is speculation that the company will enlist a movie star to co-brand the new beverage. Coke already uses celebrities to shill its various brands, and it is only matter of time until a public figure endorser steps up to push Coke's green message.

Coke is no stranger to this type of marketing and has recently been in hot water for pushing one of its water brands by convincing people that its product will help reforest Australia. In a recent ad campaign for its Mt. Franklin water brand, customers are encouraged to 'plant a tree' by registering the bottle's barcode on the company's website. Once registered, the company along with its partner Landcare Australia will plant a tree in the registrant's name.