The document analyzes the bottled water industry in Argentina. It finds that Argentina has a growing bottled water market, dominated by large European brands. The market is concentrated among a few major players and local/regional companies. Bottled water consumption has increased significantly in recent years in Argentina. However, most production is consumed domestically as export volumes remain relatively low. The industry faces competition from substitute drinks but opportunities exist to expand in Argentina and abroad given the country's favorable economic and industry conditions.

1.  Global Industry Analysis
 Corporate Crisis
 Crisis Management
 Our Safety Net for the Future (Country Analysis)
BOTTLED WATER INDUSTRY

2. GLOBAL INDUSTRY ANALYSIS
. Average growth rate per year: 12%
. Main markets: Europe; US
. Important growth market: Pacific
. Growing and high consumption in South America
Brazil (26 liters/person/year in 2004)
Argentina (18 liters/person/year in 2004)
. Production: 89 billion liters (2004), turnover: US$ 22 billion (2004)
Annual growth in consumption (2000-2004), in %
.
Source: Dir. Nac. Alimentos – SAGPyA - sobre la base de
.http://www.wateryear2004.org.

3. Negative publicity: « Greedy Western corporation that
does not care about human rights and only wishes to
make profit. »
« Free access to safe water is basic human right » Ban-Ki
Moon
Criticism concerning the disrespect of environment
followed by calls for boycotts by influential consumer
groups
Affect on sales (-30% within one month) and stock price
(-10%) in the US and Western Europe (main markets)
Corporate Crisis

4. Crisis Management
Communication :
Ensure internal and external
information flow
Launch publicity / communication campaign
Improve corporate communication
Environment
Use / introduce glass bottles
Focus on recycling
Create or support a foundation in Africa
(« Water for the world »)
Press :
« Green Number » for questions related to
environmental policy
Develop a good relationship with the press
Corporate / product :
Change the name of the
product before
introducing to a new market
Identification of responsabilities
Crisis management department
Use glass bottles

5. Find a country…
 With higher annual temperatures.
 Where the tap water quality is not acceptable.
 Where water is making up an important share in the
beverage market.
 Where health consciousness is growing.
Our Safety Net for the Future

6. ARGENTINA : EL PAYS
AZUL
A Country Analysis
Franziska Bormann
Hermann Cilliez
Raphaël Henriquez
Arnaud Jonquet
Isabelle Thille

7. ARGENTINA’S BACKGROUND
 Spanish colonisation 16/18th century (independance 1816).
 Turbulent history: From prosperous country to chaos in the 20th century
 2001 : Argentine crisis
 2003 / 2007 : Economic recovery (8,5% average annual GDP’s growth for
5 years)
 Limited impact of global crisis
Source : http://www.edc.ca/english/docs/gargentina_e.pdf
2009
0.9%
2010
6.5%
2011
5%
GDP Growth previsions

8. POLITICS IN ARGENTINA
• 2009: Cristina Kirchner crashed into a mid-term
crisis that threatened her survival.
• Today: Popularity increases (consequent economic
recovery) one year before the presidential elections.
http://www.affaires-strategiques.info/spip.php?article3933 22 sept. 2010
CONS PROS
- Bad relationship with
the press.
- Litigation with Great
Britain on oil
exploration around
the Falklands.
- 8% growth rate
projected for 2010
- 40% of approval rates
- Divided opposition

9. Recent Political problems
THE MEDIA: THE FALKLANDS:

10. ARGENTINA’S ECONOMY
September 2010 Argentina Outlook Update
Exceptionally loose macroeconomic policies, a strong rebound in agricultural
output […] are supporting overall economic activity. […] [T]he export-oriented
industrial sector grew 9.2% YTD to July, mainly driven by strong growth in
Brazil, which is Argentina’s largest trading partner and accounts for 34% of
total exports. Meanwhile, strong fiscal spending (32% YTD to July), highly
accommodating monetary policy (-15% real interest rates) and substantial
wage increases (30% average) - together with some improvement in domestic
confidence and limited capital flight - are pushing consumption and
investment higher. […] [T]he construction and retail sectors, as well as public
services and the automobile sector […] are showing positive dynamics into
Q3 2010. Economic activity grew 9% y/y in H1 2010.
http://www.reuters.com/article/idUSN1321562620100913

11. ARGENTINA’S ECONOMY
+ + + + - - - -
Abundant natural resources
Export-oriented and globally competitive
agricultural sector
Rich industrial base
GDP growing strongly (between 6.5 and 8-
10%)
Infrastructure well-developed for Latin
American countries
Foreign trade growing
Well-educated, young and connected
population
Service economy
Highly indebted but risk of default low
High inflation (178/222) (estimation partly up
to 20%)
Unemployment high 8.7% but decreasing
13.9% of population under poverty line
Unequal society (38/134)
Slow down of economic development for
2011

12. EASE OF DOING BUSINESS IN
ARGENTINA
0
20
40
60
80
100
120
140
160
180
Argentina
France
Source: The World Bank Group 2010

13.  One of the most favorable climate for
FDI in South America.
 Same rights and obligations for
foreigners as for Argentine
companies.
 Opportunities for investors to
participate actively in the country’s
privatisation process in particular in
the water industry.
FOREIGN INVESTMENT POLICIES
Pro’s Con’s
Potential index 60 (2008)
According to the CNUCED, rank on 141 countries Source : www.interex.fr

14.  Water = vital for life and good for health
 Production 2004: 5 million hectoliters (43% rise compared to 2002)
 Turnover 2004 (in ARS$): 500 million for mineral water, 230 million flavoured water
Argentine Water Market
Sales of bottled water on the domestic
market, 2004 (hectoliters)
.Source: Dir. Nac. Alimentos – SAGPyA - sobre la base de
Fortuna.
Estimation of sales of bottled water in
pesos, 2004
Source: Dir. Nac. Alimentos – SAGPyA - sobre la base de
Fortuna.

15. Source: Dir.. Alimentos – SAGPyA - sobre la base de Fortuna.
Division of the Market according to
Water Types
Flavoured water is growing the fastest in the market (60% lemon)
• Attraction of investors and consumers (few calories)

16.  The market is dominated by two European companies with several brands:
Aguas Danone de Argentina SA (around 50%) and Nestlé Water (around30%)
 Others companies: Coca-Cola, Garbin y Pritty
 A lot of local and regional companies
Market Domantion by Foreign
Companies
COMPANY Aguas Danone
de Argentina
S.A.
Nestlé Waters Coca-Cola Garbín Pritty
Country FRANCE FRANCE USA ARGENTINA ARGENTINA
BRAND Villavicencio Eco de los
Andes
Kim Sierra de los
Padres
Magna
Villa del Sur Nestlé Pureza
Vital
Ser Glaciar
Villa de los
Arroyos
Perrier
San Pellegrino

17. Source: Dir. Nac. Alimentos – SAGPyA - sobre la base de Fortuna.
Market Share 2004

18.  1995-2004: Export of only 16 million liters (3% of the production in 2004 and
US$ 3.5 million)
 1995-2004: 8.5 million liters imported (US$ 3.5 million)
 1995-2004: Greatest part of production exported to Chile (33%) and Uruguay
(39%).
2 reasons: (1) Mercosur, (2) Shipping difficulties
 80% of the water is imported from France (High production, popular brands)
IMPORT/EXPORT of bottled water
(1995-2004)

19. Import/export of water
Destination of exported water 2004 (value)
.Source: Dir. Nac. Alimentos - SAGPyA - a partir de INDEC.
Origin of imports of mineral water 1995-2004
.Source: Dir. Nac. Alimentos - SAGPyA - a partir de INDEC.

20. Porter’s 5 Forces Analysis
Substitutes
 Hot drinks like teas and coffee
 Dairy drinks
 Juice
 Soft, sport and power drinks
 Light alcoholic drinks like beer and wine
New Entrants
 Innovation is limited
 Strong competition of established brands
 Great number of new entrants every year
Power of Buyers
 Bargaining power high for mass merchandising and fountain supermarkets
 No bargaining power of buyer for vending
Entry Barriers
 Strong competition by established brands
 Limited access to water supplies
Bargaining Power of Supplier
 Plastic bottle suppliers has great power
 Dependency on government that is supplying water
 Possibly privatisation of water works might increase prices

21. Conclusion
Even if there is a high inflation and a rising debt, Argentina’s economy has shown its
improvements and its competitive performances.
Foreign trade is growing and the opportunities to exchange abroad have evolved in
the last few years.
Water industry has a competitive advantage for Argentina to be a real brand on the
global market.
Argentinian’s consumption’s habits have revealed that Argentina is nowadays more
than a potential market.