1. UNIVERSITY OF STRATHCLYDE, , DEPARTMENT OF CIVIL ENGINEERING, DAVID
LIVINGSTONE CENTER FOR SUSTAINABILITY
Evian the implications on its business strategy following the introduction of
legally binding carbon emission targets on governments.
Environmental Business Strategy
Sofia Diaz Rivera Ollivier
1/6/2012
2. 1. Executive Summary
Evian bottle water comes from the French Alps and is sold worldwide. Following climate change,
the risk of water shortage and stakeholder pressure especially bottle water bad press; Evian had to
have a Sustainability Strategy to secure its business in the future. They started by protecting their
water source and identifying that their carbon footprint came primarily from transportation and
packaging, followed by manufacturing. They took some actions to reduce its carbon footprint by
shipping 59% of their production within EU by train and using boat for exports. In the packaging
area they did some lightweigthing and are using recycled PET. They also have set many actions to
protect the water source in Evian –Les-Bains. They want to be carbon neutral by the end of 2011,
and what they can´t reduce they are going to compensate it by reforesting a mangrove in Senegal.
Even though they have done a lot to reduce their carbon footprint, they are things Evian isn´t
considering. For instance, their growth will come from outside the EU where their transport
footprint is larger, because distributors transport Evian mainly through ground increasing its GHGs
emissions. Also even though the water source is protected it may become scarce if they extract
more water than the spring can produce. Finally even though they have done a lot to have more
environmentally friendly packaging consumers are responsible of the end of life disposal of Evian.
This report contains recommendations on what Evian can do to tackle these new environmental
challenges.
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4. 2. Background
Evian is part Danone Group Water Division; as such its shares its values. Danone places
sustainability in the heart of its business strategies, having its Nature and Sustainability programs
as one of the companies 5 growth pillars. Franck Riboud its CEO says “My vision for Danone is a
company that creates economic value while creating social value” (Grosser et al., 2010), so it is
committed to reduce CFP by 30% from 2008 to 2012 (Sacchi, 2010).
Evian water is bottled in Evian-Les-Bains, France. It takes 15 years for the water to filtrate through
the French Alps, so it is perfectly pure and balanced in minerals. It is untouched by human hand,
so it is free from pollution (Evian, 2011). Evian is the number 1 premium brand on the market, it
had a retail value share of 2% in 2010 (Euromonitor, 2011).
Evian is sold in 110 countries in Europe, Asia, America and Middle East. In some countries it uses
its own sales force and distribution system, mainly within the EU and outside it uses distributors.
In total it uses 150 distributors. It´s top national markets: France, UK, Japan, Germany and USA
accounts for 74% of its sales (Eurmonitor, 2011).
Evian needs a sustainable strategy, to ensure that their actions today don´t limit their business in
the future, especially to ensure their water supply. First I will go through a brief PESTEL,
stakeholder, risk and Porter 5 forces analysis. Then I will describe Evian sustainability strategy, and
analyze it with a SWOT analysis. Finally I will give recommendations.
3. Macro Analysis -PESTEL
3.1 Politics
After Kyoto, governments are using different tools to encourage and re-enforce
companies to reduce their GHGs emissions: regulatory pressure; subsidies, tax, voluntary
agreements, etc. (Stone & Ozimek, 2011).
3.2 Economics
The cost of reducing GHGs emissions is about 1% of the GDP, it is something we have to
afford otherwise we will have serious economic consequences on growth (Stern, 2007).
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5. Carbon trading schemes motivates business to reduce their GHGs emissions by either
buying or selling carbon allowances, which are reduced over time (Stone & Ozimek, 2011).
3.3 Social
Consumers are not well informed about GHGs emissions and how they can reduce them,
they aren´t willing to sacrifice their own convenience or prices (Stone & Ozimek, 2011).
Most consumers don´t reward companies that are environmentally friendly but they
punish those that they think are acting bad (Stone & Ozimek, 2011), for example
consumers are substituting bottle water with tap water in EU, because they consider it
bad for the environment (Eurmonitor, 2011).
3.4 Technological
Governments are incentivizing the development of technologies that reduce GHGs
emissions such as renewables through funding and subsides (Coninck et al., 2008).
3.5 Environmental
If GHGs emissions aren´t reduced and temperature rises above 2°C, there will be problems
with water supplies and availability, among other consequences (Stern, 2007).
The world needs to reduce emissions to 500-550 ppm CO2, that is about 25% of current
emissions by 2050 (Stern, 2007), or otherwise businesses will need to adapt to new
conditions.
3.6 Legislative
New laws like Chicago $5 cent tax on bottle water (Swedloff, 2008) can come into place in
more countries.
EU has various environmental such as the EC packaging waste directive that dictates that
25-45% of packaging must be recycled (Freire et al., 2001).
4. Stakeholder analysis
Stakeholders are of main importance to Evian, some of them posing a serious threat, see figure 1
for Evian´s stakeholder classification.
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6. Figure 1: Evian´s Stakeholder classification
Since 2007 Evian has been receiving bad press. NGOs and Green Consumers are promoting to
drink tap water because bottle water packaging and transport is damaging the environment
(Euromonitor, 2009). This bad press added up to the economic crisis 2008-2009 made a massive
drop in Evian sales in Western Europe which represents 60% of the market (Euromonitor, 2010)
see figure 2. Also they have lost 30% of turnover in UK and England since 2007 (FAME, 2010).
Figure 2: Evian off trade Volume-Western Europe (MM lts) (Euromonitor, 2010)
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7. After 2007 Evian monitors carefully stakeholders especially the ones with high power and has a
risk mitigation strategy (Valdez, 2011). For further information on Evian´s stakeholder
environmental motivators and the risk they pose to Evian business see Appendix I.
5. Environmental Risk
An environmental risk becomes a company risk if it has economic consequences on the business
(Schaltegger et al., 2003).Evian currently has two risks that put in danger its current business
model and profitability:
1. Bottle water bad press for damaging the environment (Eurmonitor, 2011).
2. Climate change, if temperature rises above 2°C water supply and availability will decrease
(Stern, 2007), and can put in risk Evian´s water supply.
Evian needs to address this risk in its Sustainability Strategy to secure business in the future,
working closer with stakeholders, developing greener packaging and protecting its water
resources. It also needs to develop a contingency plan of production if Evian-les-Bains is left with
no more water to produce.
6. Porter 5 Forces Analysis
6.1 Threat of entry
Barrier of entry are low so many private label brands are now competing on price with big brands
(Euromonitor, 2011). Evian strategy is to try and differentiate itself from private label brands with
high quality water, appealing to a certain lifestyles and investing lots of money to maintain its
brand awareness (Valdez, 2011).
6.2 Threat of substitutes
Tap water and water filters are the main threat to bottle water. Tap water is of special treat in
Europe and North America where tap water is safe to drink. Several studies compared bottle vs.
tap water and concluded that while some bottle waters have better quality than tap water, it is
not always the case (Hunter, 1993; Olson, 1999; Lalumandier & Ayers, 2000 in Doria, 2006). It
becomes a stronger threat when consumers and organizations start promoting tap water, for
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8. example in the video the story of bottle water by Annie Leonard (2008) where she gives the
example of Cleveland’s tap water which is safer and cleaner than Fiji. Evian also has other
substitutes which include soft drinks since it is competing for consumer share of throat
(Euromonitor, 2011).
6.3 Power of buyers
Mass market retailers and distribution chains such as Walmart, Tesco and Carrefour are seeking to
work with suppliers that are environmentally friendly (Grosser et al., 2010). Walmart for example
has its own product sustainability index that uses to compare different products (Walmart, 2009).
So there is pressure from buyers to turn green or otherwise they will stop buying. Supermarkets
account for more than one third of bottle water sales (Euromonitor, 2011).
Other buyers are Evian ´s distributors outside the EU, for them Evian represents 10% or less of
what they sell, so Evian doesn´t have a strong power over them to make them incorporate Evian´s
sustainability strategy (Valdez, 2011).
6.4 Power of suppliers
Costs of PET are really volatile, and will tend to rise especially since China, India and Indonesia are
producing clothes with polyester (Boswell, 2011). This affects Evian price structure because when
PET price raises Evian isn´t able to negotiate with suppliers. RPET suppliers are still few, and
recollection rates of PET are still small for example in the UK 39% of the PET used is collected and
17% of the PET recollected in the EU is sent to China (Welle, 2011), making it difficult to have
sufficient recycled PET to make new bottles.
6.5 Competitive Rivalry
Bottle water Industry is a competitive market, with top leading multinationals Pepsico, Coca-Cola,
Nestle and Danone fighting for market share. Even though there are top players the market is
fragmented, with only 18% of the volume coming from the 10 top brands (Euromonitor, 2011).
The soft drink industry has moved to a more environmentally friendly production so there is an
ongoing war between main producing companies to see which has the most eco-friendly
packaging in the market, for example in 2009 Coca-Cola launched its plant bottle in Dansani water
bottle (Hill, 2010) .
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9. 7. Evian Sustainability Strategy
With all the factors mention in the above analysis, Evian needs a strategic management in order to
survive, overcoming today’s environmental situation and reducing its carbon footprint, while
maintaining the company profitable and competitive. Evian has high environmental opportunities
as well as high treats so it should have an innovative environmental strategy which includes
anticipation, differentiation and acceptance of change (Schaltegger et al., 2003).
That´s why Evian did a lifecycle analysis and found its carbon footprint comes mainly from
packaging and transport, followed by manufacturing (Grosser et al., 2010). Their strategy is to
reduce its carbon footprint as much as possible through the use of EMS and an eco-efficiency
strategy to reduce materials, enhance its recyclability, reduce energy etc… Their reduction target is
50% by 2011. When they can´t reduce any more, they will compensate reforesting a mangrove in
Senegal in partnership with Ramsar (Valdez, 2011). Evian has the objective to become carbon
neutral by 2011 (Grosser et al., 2010). If it achieves it, Evian will become a green star with high
economic and environmental performance (Schaltegger et al., 2003). I will go briefly into the
things Evian is doing to reduce its carbon footprint through it´s supply chain and production.
7.1 Manufacturing
The factory in Evian-Les-Bains is certified with ISO 140001. It also is has an internal EMS called
GREEN (Global Risk Evaluation for Environment), that review the environmental risks in the
industrial site, and it is audited by an external partner (Grosser et al., 2010). Evian hasn´t
incorporated EMS into its supply chain.
7.2 Packaging
Evian packaging mix is 85% PET and 15% glass sold mainly in HORECAS1 (Valdez, 2011). They are
doing lifecycle analysis of all their product range and know for example that the carbon footprint
of Evian 1.5 L bottle is 133 g CO2/L. They are working to reduce its packaging footprint in PET
bottles through light weighting, and the use of recycled pet (Perthuisot & Jouin, 2010).
They have light weighted all its PET packaging, having a 40% reduction from 1995 to 2010, see
table 1. The progress was slower than expected because older lines where harder to convert
(Grosser et al., 2010).
1
Hotels, Restaurants and Cafeterias
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10. Table 1: Evian light weighting through its product line
0.33 L 0.500 L 1L 1.5L
Before 12.8 g 15.8 g 27 g 32 g
Light weighted 11.8 g 14.3 g 24 g 28 g
(Perthuisot & Jouin, 2010)
They also use 35% to 50% recycled PET depending on the format (Grosser et al., 2010). PET bottle
Carbon Footprint can be reduced by more than 50% if the PET is recycled (Pasqualino et al., 2011).
All of Evian´s efforts are in PET bottles and they aren´t considering that glass water has a higher
environmental impact that PET bottled water (Pasqualino et al., 2011). Go to appendix II to see
further information on the carbon footprint of different packaging.
7.3 Transport
As said before transportation of Evian bottles accounts for an important part of its carbon
footprint. To reduce it they are increasing train shipment, 59% of the product departing from the
factory is transported thorough railway mainly within Europe (Grosser et al., 2010), rail
transportation has a lower carbon footprint than planes and ground delivery (Cholette & Venkat,
2009). For Asia, America and Middle East they signed a partnership with Maersk shipping to
transport Evian by boat. This partnership helped reduce transport footprint by 5% from 2009 to
2010 (Grosser et al., 2010).
Each distributor has a different Incoterm agreement. An Incoterm outlines the obligations of buyer
and seller in an international transaction (Biederman, 1999). Once the product is delivered to the
distributor where agreed in the Incoterm, Evian’s responsibility ends. As soon as the distributor
has the product in the port or its distribution center they can transport it by plane or ground
increasing again the carbon footprint that was reduced by transporting it by sea. When Evian
negotiates Incoterm agreements, the priority are savings not reducing Evian’s transport footprint
(Valdez, 2011).
Today almost 60% of Evian volume comes from Europe where transportation is more
environmentally friendly. But Evian´s growth is expected to come from outside the EU because of
market saturation (Euromonitor, 2011), increasing this way distributor’s non-ecologically friendly
transportation.
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11. 7.4 Nature & Water protection
Evian needs to protect the water bodies in Evian-Les-Bains to secure its business in the future.
That is why in 1992 they created the Association for the Protection of Rainwater Catchment for
Evian Mineral Waters (APIEME). Its main function is to ensure there is a sustainable development
and management in the region to maintain its biodiversity, promote sustainable agriculture, and
avoid the use of pesticides and fertilizers that might infiltrate the water. In 2004 Frank Riboud,
CEO, signed the Groundwater protection policy, so they don´t withdraw more water that what the
spring can naturally produce (Grosser et al., 2010). In 2008 the Evian Water protection Institute
was created in partnership with Ramsar to help protect and restore wetlands, and have an
effective water management with local community participation (Ramsar, 2010). In 2009 Evian
was classified a Ramsar zone, as such they have to protect the biodiversity within (Grosser et al.,
2010). Evian complies with policies and goes beyond its area of expertise, in 2010 promoted a
framework agreement with APIEME, council of Haute-Savoie and the community of municipalities
of the Evian region, to decrease the use of salt in roads during winter and avoid the soil and water
being contaminated with chloride compounds (Grosser et al., 2010).
7.5 Consumers & other Stakeholders
Business need to walk the talk, and be sure that the claims they make are substantiated by facts
and are communicated to consumers clearly (Stone & Ozimek, 2011). Danone created with British
agency Futerra an internal policy on environmental claims that is applicable for Evian since 2011.
This will help avoid green washing consumers (Grosser et al., 2010). Evian also did training to
employees and key stakeholders called “Protect purity training”, that explained Evian´s
sustainability strategy (Grosser et al., 2010) and was used to engage with them.
8. Analysis on Evian Sustainability Strategy
8.1 SWOT
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12. To analyze Evian’s current Sustainability Strategy and be able to give recommendations I did a
SWOT analysis, see Table 1.
Table 2: SWOT analysis of Environmental Strategy
STRENGTHS OPPORTUNITIES
- Use of up to 50% of recycled pet in its - Consumer environmental education: lack of
packaging, which has a lower CFP awareness of sustainable alternatives
(Pasqualino et al., 2011). continues to be a significant barrier to
- Light weighting by 40% in PET packaging. purchase (Quadir, 2011).
- Use of train transport within EU and by - Cause-related marketing has potential to
boat outside the EU. boost sustainable brands (Quadir, 2011).
- Water protection in Evian-Les-Bains - Use the power of new media to
- Third party partner Ramsar. communicate sustainability initiatives and
- CO2 Compensation by reforestation of a engage with key stakeholders (Belle, 2011).
mangrove in Senegal. - Develop a plant bottle like Volvic to reduce
- EMS system in plants. its dependence on PET.
- Environmental claim policy.
- Employee and main stakeholders
involvement through “Purity Training”.
WEAKNESSES THREATS
- Grow will come from developed markets - Water filters and private label competition
where tap water quality is poor in countries where tap water isn´t clean.
(Euromonitor, 2011), increasing the - Increased consumption of tap water.
transport footprint. - Bad image of bottle water, because of its
- EMS only in production sites not in the environmental impacts.
whole supply chain. - Water contamination or shortage in Evian-
- European bottle water business remains Les-Bains.
weak and accounts for about 60% of the
business (Danone Euromonitor 2011).
- Not doing anything in Glass packaging
which accounts for 15% of volume.
- Communication of its sustainable strategy
to green consumers, and social media
management.
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13. 8.2 Recommendations: Strategic Response
Evian is going in the right path but still needs to consider other factors to be a green star brand
and secure its future growth. They need to work on engaging more with key stakeholders through
social media and other communication mediums, so they can act as ambassadors and reduce
bottle water bad press. They have to put their sustainable actions in their website so that green
consumers that are interested can find them. They also need to educate consumers, since they are
responsible for the end of life of Evian´s bottles.
It should also be a good strategy to extend their EMS to the supply chain, especially transport
were the main carbon footprint comes. They should also evaluate that Incoterms agreements
benefit Evian´s transport footprint and try to work with distributors to have a more sustainable
transport where they operate.
In the packaging area they should substitute glass bottles with PET, they might need to, make a
nice PET bottle suitable for HORECAS. They can also incorporate plant based material to their PET
bottle as it was done by Volvic its brother company.
I think that what they are doing to protect the water source and their partnership with Ramsar is
outstanding. They were really intelligent to protect their water resource since 1992, but a
contingency plan needs to be drawn if the effects of climate change are severe and Evian-Les-
Bains is left without water or if they extract from the spring more water that it can produce.
Looking more into the future, and considering that Evian can´t produce elsewhere because of its
origin, and most of its growth is coming from outside EU in developing countries where usually tap
water isn´t safe to drink. I would suggest them to create Evian water filters to sell in these
developed markets. The filters should have the same kind of rocks there are in the French Alps and
simulate a 15 year filtration so the water taste is the same. This eliminates the current problem of
transportation and packaging that contribute the most to Evian´s carbon footprint and can also
help if the spring runs out of water.
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14. 8.3. Conclusions
In this report I analyzed Evian Marco and Micro operating environment through a PESTEL and 5
forces analysis. I identified the primary stakeholders and the threats green consumers and NGOs
are posing to its business with bottle water bad press. Then I identified the risks climate change
brings to Evian´s business, especially if they run out of water in Evian- Les-Bains. Finally I went into
Evian´s current sustainability strategy did a SWOT on it and gave recommendations for
improvement like engaging more with key stakeholders through social media, and doing some
innovations such as plant bottles, and water filters that simulate Evian´s filtration through the
French Alps. It can be concluded that even though a company has an environmental business
strategy and it is making progress it should evaluate it once in a while to see if it is still valid, or if
changes need to be made. Businesses need to adapt quickly to the operating environment so their
environmental strategy should change accordingly.
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17. 10. Appendix I – Stakeholder Analysis
In table 3 you can find Evian´s main stakeholder´s their motivation in the company and the risk
they pose to Evian.
Table 3: Stakeholder Analysis
Stakeholder Motivation Risk
Shareholders Maintain and increase their revenues. If They don´t invest any more in Evian because
and investors environmental conscious they will invest they think it won´t survive in the future and it
in companies in the Down Johns is risky.
Sustainability Index
Employees Work for an organization that share the Many environmentally conscious employees
same values as them, and obtain if they think Evian is damaging the
environmentally healthy work. environment will leave the organization.
Suppliers Adopt new environmental quality If they don´t adopt new environmental
criteria, to continue selling. criteria Evian will need to find new suppliers.
Media Searching for information to write Widespread media coverage of the negative
about. environmental impact of bottle water
packaging and transport had negative results
in growth in Western and USA (Euromonitor,
2011).
Local Maintain and improve the conditions in They can put in danger the production of
Community which they live. Evian if they think Evian is threatening the
Evian-les Bains conditions in with they live.
NGOs Act as advocates for the environment Can ruin Evian´s reputation and convince
and watchdogs. They promote consumers to stop drinking bottle water. For
environmentally friendly behavior in example Clean Up Australia campaigned
businesses. against bottle water saying it has the same
environmental impact as driving a car for 1
km (Williams, 2008).
Green Want eco-friendly products and are on Can damage the reputation with their opinion
16
18. Consumers the watch for greenwashing. on social media or create a consumer
boycott. For example the video about the
story of bottle water has been seen by
around 2 million people (Leonard, 2008),
encouraging them to bring back tap water.
Clients/ Buyers They want more ecologically friendly Stop buying Evian if you don´t supply what
products for their stores, as they are they expect, or don´t comply with their
also turning green. standards.
Governments & Protect and conserve the environment Punish if you don´t comply the law or set the
Authorities on behalf of the society example, like SCOTS council that planned to
ban bottle water from departments and
meetings (Paisley, 2008).
Motivation taken from (Schaltegger et al., 2003)
11. Appendix II – Packaging Materials Environmental Impact
Pasqualino et al. (2011) did an environmental evaluation of the impact of manufacturing and
disposing different types of packaging for beverages: plastic HDPE, plastic PET, aseptic carton,
aluminum and glass. They found that the more environmentally friendly packaging is plastic and
aseptic carton for sizes greater than 1, and the glass bottles have the highest environmental
impact. Packaging that contains more volume content > 1 L has lower environmental impacts. In
selecting the best packaging material for beverages it is important to consider their transport and
secondary materials, as well as final disposal. The most environmentally friendly way to dispose
any packaging is recycling, followed by landfilling and finally incineration. They recommend the
consumption of local products over those that require transport to minimize the environmental
impact as much as possible.
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