Bottled Water Industry

Dealing with uncertainty in the Bottled Water Industry



Dealing with uncertainty in the Bottled Water Industry

Introduction

Nestle is the world leading Foods and Beverage company. It is founded in 1864 by Henry Nestle. Nestle waters is a part of Nestle company, which is created, in 1992. Nestle waters operated in 36 countries with around 100 production sites. It has 32,200 employees. Nestle waters has a portfolio of 64 different products. Among these 64 brands, Nestle pure life is one of the brands. Nestle pure life became the leading bottled water brand in 2008(www.nestle-waters.com).

Industry Overview

Global bottled water industry has been one of the growing industries around the globe. Its market is expected to grow by 17% till 2017. Factors such as consumer's spending, lifestyle, growing population and growing health consciousness stimulated the growth of this industry. Europe and USA are dominating the bottled water market(Wood, 2013). However, India and China are the biggest growing market. 30% of the market share has been controlled by four major players i.e. Danone, Nestle, PepsiCo and Coca Cola. Among them, Nestle water is the largest seller of the world(Wood, 2013).

Discussion

PESTEL Analysis

The PESTEL analysis is the analysis of the external environment surrounds the company. It includes political, Economic, Social, Technological, Environmental and legal factors. Below is the PESTEL analysis of Nestle.

Political Factor

Political factor includes governmental policies that directly affect the business. Global operations of Nestle make it an anti-globalist's target(Steve Jones, 2012). Regulatory issues are also a main concern for Nestle. Nestle operates in multiple highly regulated sectors which is affecting its bottled water business such as production regulation, cross border trade, environmental regulations, etc(Steve Jones, 2012).

Economic factors

The economic factors include commodity prices, foreign exchange risk and global economic conditions. Rise in commodity prices especially oil prices place pressure on Nestle. Nestle needs to make adjustment for any demand or price fluctuations in different geographic regions and countries(Steve Jones, 2012). Nestle uses hedging strategies to deal with these price variations. Secondly global operation is not easy as it involves foreign exchange risk. Variations in currency and economic downturn in any country affects the company's strategies. These currency variations may affect the operating profits of Nestle(Steve Jones, 2012).

Social Factors

Social factors such as buyer's preferences, age, and gender affect the buying behavior of bottled water. Now-a-days, there is growing concern towards health issues and people do not consider tap water healthy, this factor is helping nestle pure life to increase its market(Durga, 2010, p. 17). Secondly customers are becoming taste conscious and inclining towards convenience. As bottle water are more tasty, odorless and convenient to carry, buyers preferring bottled water. Secondly income factor also affects the demand of bottled water. Nestle have to take this factor in consideration, as well(Durga, 2010, p. 17).

Technological factors

Due to the competitive environment, competitors are coming up with latest technology. Secondly customer's preferences and health consciousness make companies adopt environmental friendly production methods(Whitworth, 2012). This factor also affects Nestle's business. Nestle continually develop modern technology to keep pace with the current ...