1. STUDENT ID: 9857829
Word Count: 2478 words
Gerolsteiner Future Prospects
Consultancy Report
The University of Manchester – Alliance Manchester Business School
Individual Assignment for the module: BMAN70402 International Marketing

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Table of Contents
Introduction ..................................................................................................................................................................2
Gerolsteiner Brunnen - Business Performance.............................................................................................................2
Potential International Markets ....................................................................................................................................5
Global Market Trends...............................................................................................................................................6
Global Competition and Potential ............................................................................................................................6
Market Entry Proposal..................................................................................................................................................8
Conclusion..................................................................................................................................................................10
References ..................................................................................................................................................................11

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Introduction
The growing worldwide concern regarding tap water quality has raised consumers’ interest for bottled water, the
sales margin of which has been increasing by 6% annually during the last decade (Daneshkhu, 2015). Gerolsteiner
Brunnen GmbH& Co, the German market leader in spring bottled water, along with its flavored and carbonated
alternatives, could provide a solution to this problem and facilitate the increase of the company’s share in the
global market. While international markets such as the one of the USA or China propose an interesting target to
penetrate due to their size, a more thorough analysis of the international markets of Germany, United Kingdom and
France can facilitate decision making and consequently enhance the company’s probabilities for future growth.
On the succeeding report, the possible international options for Gerolsteiner Brunnen GmbH & Co will be
analyzed. The report will provide value adding recommendations in regards to a potential international market
selection and entry mode strategy for Gerolsteiner’s bottled water products. It begins with a background analysis of
Gerolsteiner, drawing attention on the performance of the business and continues with a presentation of the
potential international markets. Following the presentation of the markets, a market entry proposal will be given
and evaluated, leading to the report’s conclusion.
Gerolsteiner Brunnen - Business Performance
Gerolsteiner Brunnen is the German market leader in bottled water sales, proved by the company’s leading position
in off trade sales in 2015 (Euromonitor, 2016c). Gerolsteiner was the first company to introduce exclusive glass
bottles in restaurants, hotels and catering businesses along with recyclable PET bottles in the German market. Due
to the popularity of carbonated bottled water in Germany, the company has established its brand by focusing more
on this particular alternative. The target group of its marketing at home is the quality concerned, with the brand
offering a high level of minerals such as magnesium in their products. In Germany the company displays a parallel

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presence on the categories of flavored water, carbonated fruit spritzers such as the Gerolsteiner Apple Spritz, low-
calorie beverages and still bottled water (Gerolsteiner, 2016).
Gerolsteiner ranked third in still bottled water in off trade value and third in on-trade with 6% and 11.6% value
sales share respectively in 2012. The company maintained a dominant presence in the German bottled water
market share volume in 2014 with a 7.4% share, coming second only to Nestle. The following chart maps the
market share volume for bottled water for the year 2014 in Germany:
The competition in the German bottled water industry has been culminated the last years, with many international
brands concentrating their focus on the market due to the future prospects of its economy in comparison with other
European regions, where Eurozone crisis had a more negative impact (Euromonitor, 2016c). Multinational players
such as Nestle, Coca-Cola and Danone are responsible for the escalation of competition, capitalizing on the
decrease in energy prices which consequently lowered the transportation costs in the region (Euromonitor, 2016c).
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Germany: Bottled Water Market Volume Share- 2014
Nestle Gerolsteiner Danone Coca-Cola Others
Figure 1 Germany: Bottled Water Market Volume Share 2014, Source: MarketLine

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The German buyer market in regards to bottled water is characterised by large retailers operating in the food and
beverages sector (MarketLine, 2015b). The main representatives of this sector are restaurants, supermarkets, other
retailers such as bars and cafes, which have a considerable bargaining power. However, this situation is alleviated
by the fact that these retailers have to focus on their customer’s habits. Therefore, a solid brand establishment and
recognition is a matter of high priority for the competition in order to capitalise on the disadvantage of buyer
power. Quality and variety can provide such an advantage, while companies either advertise the sourcing of their
water or the various alternatives (flavoured water, spring water etc.) in order to differentiate (MarketLine, 2015b).
The above conditions, combined with the German consumer’s preference for carbonated water can provide an
explanation of Gerolsteiner’s orientation and success in the market. The next table includes the relevant
information regarding the segments of the bottled water industry in Germany.
Category 2014 %
Carbonated Unflavored 14,444.1 90.3%
Still Unflavored 1,305.8 8.2%
Carbonated Flavored 233.8 1.5%
Still Flavored 14.7 0.1%
Total 15,998.4 100.1%
Table 1. Germany bottled water market category segmentation: $ million, 2014 - Source: MarketLine
Apart from the products dedicated to the domestic market, the international product range of the brand includes
two options, sparkling (carbonated) and non-sparkling water. By 2012 Gerolsteiner’s international exports
demonstrated roughly 3% of the total volume of sales, generated by the main international export markets of the
United States, Japan, Belgium and the Netherlands.

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The above analysis of the company’s current condition, environment and capabilities along with the success in the
German market can lead to an ambitious yet potentially high profitable consideration of the decision to further
internationalize Gerolsteiner’s brand.
Potential International Markets
The markets of the UK, France and China propose possible options for further internationalization. A comparative
analysis of their bottled water industry in regards to consumer trends, competition and growth potential will
facilitate Gerolsteiner’s decision making.
The total value of the global bottled water market in 2014 culminated to $148,754 million. Europe represents one
third of the world’s market share with Germany holding a 31.4%, United Kingdom 5.7% and France 9.9% share of
the European Region. United States’ market accounts for the 15.5% of the global share, while the Asia region
holds a 22.3% (MarketLine, 2015d). The following graph illustrates the market share for each region:
34.3%
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Global Bottled Water Market Share - 2014
Europe Asia United States Rest of World
Figure 2 Global Bottled Water Market Share. Source: MarketLine

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Global Market Trends
In the USA, sales of every variation of bottled water increased substantially in 2014 (Euromonitor, 2016e). A
growing trend can be observed in the consumption of carbonated bottled water, along with flavored alternatives.
The trend towards a healthier lifestyle kept still water high in consumers’ preferences. This trend is also evident in
the UK market, where an off-trade volume rise of 3% has been recorded between 2013 and 2014. Moreover,
carbonated bottled water sector grew by 10% due to the new consumers’ habit of mixing carbonated water with
other drinks. The on-trade sales in the UK faced a decline of 2%. Consumers tend to ask more for tap water instead
of still along with their meal in restaurants, a possible reason being the narrower economic condition (Euromonitor,
2016d).
In France, a growing trend towards flavored bottled water has led to a 10% rise in its value. Consumers’ health
perceptions have increased demand in this category. Flavored water gained ground in comparison with carbonated,
which faced a decline in demand due to the turn to healthy alternatives. In addition still water sales benefited from
this trend, highlighting a 4% off-trade increase in 2015 (Euromonitor, 2016b).
In regards to the Chinese market, the growing concern for water contamination issues has influenced consumers’
perceptions and has escalated the demand for natural mineral or spring bottled water in 2015. In particular,
carbonated mineral bottled water represented the higher growth, with 59% off-trade volume increase in 2015
(Euromonitor, 2016a).
Global Competition and Potential
The markets of the United States, United Kingdom and France can be characterized as consolidated (MarketLine,
2015a,c,d). Big brands such as Danone and Nestle in France and the UK or Nestle and Coca Cola in the USA hold
the majority of the shares in the bottled water market. Similarities come from the fact that large multinational

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leaders of the sector own many other brands. This situation might not be easily observed by the consumers,
however, it decreases the competition on the bottled water market (MarketLine, 2015c,d). In the USA, leading
international brands such as Nestle use their brand recognition combined with low prices to increase their profit.
However, many retailers increase their sales by targeting the consumers, who do not necessarily prefer any
particular brand (Euromonitor, 2016e). Danone in the UK has been established its brands Evian and Volvic
(Euromonitor, 2016d).
The scenery differs in China, where the ten most profitable companies held 50% of the total off-trade volume in
2015 (Euromonitor, 2016a). Domestic firms have a strong presence, with five of them being in the top ten along
with four multinationals and one Taiwanese company. Competition favors the domestic companies due to their
knowledge of the local sources of water and channel connections. These aspects act as their competitive advantage
against multinationals (Euromonitor, 2016a).
In Germany, the market can be described as fragmented as 26% of the market volume is held by four firms. In
order to decrease rivalry, many firms operating in the food industry have bought bottled water companies. A
particular example is Nestle, which owns Klosterguelle, Uberkingen, Perier and Vitel in Germany (MarketLine,
2015b).
The following table illustrates the expected Volume Growth of bottled water in China, UK, USA, France and
Germany for the period of 2015 till 2020:
China UK USA France Germany
% volume growth 2015/20 Total 2014/19 Total 2014/19 Total 2015/20 Total 2015/20 Total
Carbonated 151.3 18.3 24.3 6.5 1.2
Flavored - 18.8 5.7 31.5 -13.7
Functional 73.6 30.0 17.2 32.5 11.5
Still 36.8 17.8 16.3 9.5 11.3
Sector 38.2 18.1 16.2 9.4 0.6
Table 2 Forecast Off-trade Volume Sales Growth % of Bottled Water by Category and Country - Source: Euromonitor

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In USA, bottled water sales will continue to grow with a consolidated annual growth percentage (CARG) of 3%
between 2014 and 2019 (Euromonitor, 2016e). The increasing environmental awareness, however, may lead
consumers use more filtered instead of still bottled water. Bottled water sales seem to have an 18% total growth in
the UK during the same period. In addition, the UK market favors flavored bottled water due to the popularity of
mixing it with juice and spirits. It is also expected that 83% of the total sales at the end of the forecasted period will
belong to still and carbonated bottled water (Euromonitor, 2016d).
The bottled water market in France has room for growth in the following years due to the trend of drinking bottled
water at home instead of tap. On-trade sales seem to slow down, as many consumers are expected to ask for tap
water when they go out. In contrast off trade sales grow seem to grow by 2% annually (Euromonitor, 2016b).
In China, as the economy is growing, more and more people will search for higher quality bottled water even if it
could cost more (Euromonitor, 2016a). The growth of bottled water will benefit from the turn to healthier
lifestyles. Between 2015 and 2020 the most spectacular growth is observed in the carbonated bottled water
segment. Similar to the UK, carbonated water’s increasing popularity will lead the sales, with carbonated mineral
water being a healthier alternative. Capitalizing on the attractiveness of lower prices, many retailers also sell
mineral carbonated water via internet (Euromonitor, 2016a).
Market Entry Proposal
Overall, the Chinese market seems to stem the demand for bottled water worldwide. Additionally, the demand for
flavored alternatives in Asia will escalade the total bottled water market worth up to $279.65 billion by 2020
(Wilmore, 2014). Drawing on the above analysis of the five international markets, China is the market that is
expected to grow more in every segment of bottled water. The expected growth in carbonated bottled water can be
a driving force for Gerolsteiner’s further internationalization. As an established brand in Germany, focusing on the

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quality of its products, Gerolsteiner can capitalize on the growing trend of Chinese consumers seeking a healthier
way of life. This factor along with the size of the Chinese market and the growing demand of the Asian region can
facilitate the decision making in regards to the choice of expansion.
However, the Chinese market is distant and entails risks. For this reason, Gerolsteiner could first consider to export
its products and focus mainly carbonated and flavored bottled water. Drawing on the Upsala Internationalization
theory of Johanson and Wiedersheim Paul (1975), the first stage of the internationalization activities is exporting to
China. By exporting the company can gain initial experience in the market. The second stage of
internationalization includes the updating of the exports operations by exporting through independent
representatives (Johanson, Wiedersheim, 1975). In order to do business in China, building relationships (the
Chinese guanxi) is the most important part. Hence, these first stages are valuable in order to know the market
better. The competition in China for the period of 2011 till 2015 is mapped on the following table:
% off-trade volume 2011 2012 2013 2014 2015
Nongfu Spring Co Ltd 12.1 12.9 12.0 11.5 11.4
Ting Hsin International Group 14.3 13.1 13.3 11.6 8.1
Shenzhen C'est Bon Food & Beverage Co Ltd 3.8 4.5 5.5 6.7 7.8
Hangzhou Wahaha Group Co Ltd 12.2 11.5 11.3 9.4 7.5
Coca-Cola China Ltd 5.4 5.9 5.7 5.6 5.5
Guangdong Robust Corp 3.5 3.6 3.7 4.2 4.4
Shenzhen Ganten Industry Co Ltd 1.8 1.9 1.9 2.2 2.7
Shenzhen Danone Health Beverage Co Ltd 1.8 1.7 1.6 1.5 1.4
Blue Sword Drink & Food Holding Co Ltd 1.2 1.2 1.1 1.1 1.2
Yunnan Dashan Beverage Co Ltd 1.2 1.2 1.1 1.2 1.2
Evergrande Spring Group - - 0.1 0.5 0.9
Nestlé (China) Ltd 0.7 0.7 0.7 0.7 0.6
President Enterprises (China) Investment Co Ltd 0.6 0.5 0.4 0.4 0.4
Guangdong Jiaduobao Beverage & Food Co Ltd 0.1 0.1 0.2 0.3 0.4
Beijing President Kirin Beverage Co Ltd - - - - -
Others 41.0 41.1 41.0 42.9 46.0

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Total 100.0 100.0 100.0 100.0 100.0
Table 3 Company Shares of Off-trade Bottled Water: % Volume 2011-2015 - Source: Euromonitor
Moving to the next stage and due to the fragmented Chinese market, a potential joint venture with a Chinese
company can lead to further penetration and growth potential. Gerolsteiner could provide the brand name and
recognition for quality and the Chinese firm the local market knowledge. Thus, this move could potentially make
Gerolsteiner a powerful competitor in China. Finally and after the careful evaluation of the Chinese market
conditions, Gerolsteiner’s possible partner for a joint venture should be one of the leading ten companies of the
market.
Conclusion
Throughout the report, Gerolsteiner’s market position and strengths have been analyzed. The international markets
of the USA, UK, France, Germany and China have been evaluated as potential targets, leading to a structured
market entry plan for Gerolsteiner. The Uppsala theory of Johanson and Wiedersheim Paul (1975) has provided a
guideline for the subsequent Chinese market penetration, drawing attention of the importance of relationship
building in Chinese business activities. Separation of the internationalization procedure in three different stages has
come from the adaptation of the Uppsala theory on the current conditions, considering the Chinese market and

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Gerolsteiner’s ambitions. The Chinese bottled water market shows the fastest growth in comparison with the other
targets. In particular, the carbonated bottled water segment growth can act as a catalyst for Gerolsteiner’s
carbonated water success in the Chinese market. Regardless of the cultural distance between Germany and China, a
further internationalization of Gerolsteiner in China will facilitate Gerolsteiner’s establishment as a global brand.
References
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