The source safe flow
Valser Mineralquellen AG will retain its brand identity following its acquisition by the Coca-Cola Group
Valser Mineralquellen AG retains its brand image after the takeover by the Coca-Cola GroupBy Ernst WeberNo sooner had the Coca-Cola Group (CCG) swallowed up Valser Mineralquellen AG (VMAG) than the Vals Valley was given the takeover name Coca-Cola Valley. This is due to the fear that the takeover could lead to a "disfigurement" of the brand landscape. And this fear is not entirely unfounded, as the market for mineral water and freshwater beverages is in a state of flux.
The acquisition of VMAG by CCG can be completed as planned at the end of September. According to Patrik Ducrey, Communications Officer at the Swiss Competition Commission (ComCo), neither the EU Competition Commission nor the ComCo will raise any objections to the takeover.
However, the question of what goals the new owner is pursuing with Switzerland's youngest mineral water brand remains unanswered. Over four decades, it has developed into the market leader in terms of value. And because it is now under the wing of CCG, consumers are concerned that the brand could be on the verge of Americanization.
As understandable as the skepticism may be, it does not seem appropriate, at least for the moment. "We haven't taken over a run-down 'Chlütteribude', but an excellently designed, well-running business. It would be foolish to touch the good sides of Valser," says Fritz Bärlocher, General Manager of Coca-Cola Beverages AG, in response to such fears. He assures that both VMAG, which will be integrated into CCG as a profit center, and the Valser brand will continue to exist in their current form.
A success story that has made a name for itself
The first bottle of Valser water came onto the market in 1961. In 1962, the bottling volume was 578,000 liters. By the last financial year, production had increased to 122.5 million liters per year. Over the past five years, sales have risen by 35 percent in a market that is growing at an annual rate of 4 to 10 percent. The current estimated annual turnover is between 80 and 100 million Swiss francs. Valser water is the market leader in home consumption. In terms of total mineral water consumption, the brand is in second place behind Henniez. The export share is around 7 percent.
VMAG was founded in 1960 by Bernese entrepreneur Donald Hess, shortly after he had acquired the St. Peters spring at the foot of Piz Aul, from which the Valser water springs, which had been unused since 1956. The funds for this came from the proceeds of the sale of his small Steinhölzli brewery. Until the end of 2001, Donald Hess was Chairman of the Board of Directors of the Hess Group, which owned VMAG before the takeover.
Hess was aware of every step and supported the takeover negotiations, which began during his time in office. "We didn't sell the company to him," says his successor Max Lienhard, preventing any possible misconceptions.
The mineral water market is in international hands
Like most of the big players, the CCG has been pursuing an international strategy for around ten years to expand its core competence to the entire non-alcoholic beverage (NAB) sector. The soft drinks giant has already gained a foothold in four out of five sub-categories: iced tea (1992), fruit juices (2001) and mineral water (2002). And the remaining sub-segment, energy drinks, is also soon to be entered.
The expansion of expertise is justified by the fact that the global water business is developing much more dynamically than the freshwater beverage market. This is forcing the big players in the industry to buy up sources all over the world. Nestlé, for example, has swallowed up San Pellegrino, the Danone Group Evian and the Carlsberg Group Feldschlösschen with Passugger. "There is practically only one national mineral water left, namely Henniez, and it is not doing well," says Fritz Bärlocher.
The CCG dealt with the "water question" for eight long years. Various options, such as the purchase of a spring, were examined. The production of table water, in which ordinary drinking water is processed into mineral water, was also discussed. However, these options would have entailed the expense and uncertainty of building a brand.
That's why the takeover of VMAG was not an overnight operation. Before the purchase took place, the two companies had been working together for years. Since 1984, CCG has covered 99% of its mineral water requirements for the catering and system catering market segments - which account for 12% of the total sales volume - with water from the green Vals Valley.
A repositioning would drag the brand into the valley
The positioning of the product and image of Valser water developed over the years was not abandoned when the brand was rejuvenated in 1990. In order to appeal to a trendier audience, the Limelite sub-brand was introduced in a bottle designed by Luigi Colani. The Valser brand was to be rejuvenated in the wake of a brand transfer.
In order to showcase the brand values of elemental strength, health and origin that are associated with Valser today, it was bottled in green bottles. And thus implemented the brand image in an unusual way. At the time, white bottles were the norm. In addition to the corresponding images, two slogans seeped into consumers' consciousness in the advertising.
"S'isch guat, ds'Valser-Wasser" was launched in 1989 by the former Gisler & Gisler together with "Valsermann" Hans Jenny. "Everything is getting better - Valser stays good", a slogan that has been used since 1993, became the new old message in a time of change. It was devised by Contexta, Bern. The agency has been managing the brand since 1989 and the slogans are now household words.
It is not often that a brand identity is rooted in colloquial language. It is evidence of a strong emotional connection that consumers have to their values.
From the Hess Group's perspective, the sale of VMAG is "motivated by responsibility". In order to preserve the almost 100 jobs in the Graubünden village of Vals, it has bowed to the pressure of market developments.
The big players have the upper hand. Carlsberg, Heineken, Coca-Cola and Eichhof cover around 80 percent of distribution. The concentration in the gastronomy sector is particularly striking. Small and medium-sized businesses are finding it increasingly difficult to compete with this superiority.
According to Max Lienhard, if the Hess Group had not accepted the takeover offer, CCG would have simply acquired another water company. As a result, VMAG would probably have been removed from the distribution partnership with CCG in the catering sector. The other water would have taken its place. In other words: CCG would probably have blocked VMAG's catering sales channel. Its presence in 30,000 vending machines, fridges and open bar systems would have been lost. Bärlocher explains that this would have been a loss that could hardly be replaced, as the establishment of an equivalent distribution system would have required years of high investment that would have exceeded the resources of VMAG.
However, after the Carlsberg Group, one of VMAG's largest customers, had already started to push its own products, this would have been one loss too many. The success of Valser water would have slid downhill. "Not from one day to the next, but looking into the near future, we would have had to expect a drop in sales," says Max Lienhard.
On the one hand, the takeover has removed the obstacles that would have blocked the path to a successful future for the Valser-Wasser brand. But it also opens up another interesting growth prospect: "There are good opportunities to export Valser water to countries that are within a reasonable distance," believes Bärlocher. Although the General Manager does not expect the mineral water to become a mass product abroad, he does believe that it will be able to play a certain role in high-end gastronomy.
The acquisition of VMAG by CCG can be completed as planned at the end of September. According to Patrik Ducrey, Communications Officer at the Swiss Competition Commission (ComCo), neither the EU Competition Commission nor the ComCo will raise any objections to the takeover.
However, the question of what goals the new owner is pursuing with Switzerland's youngest mineral water brand remains unanswered. Over four decades, it has developed into the market leader in terms of value. And because it is now under the wing of CCG, consumers are concerned that the brand could be on the verge of Americanization.
As understandable as the skepticism may be, it does not seem appropriate, at least for the moment. "We haven't taken over a run-down 'Chlütteribude', but an excellently designed, well-running business. It would be foolish to touch the good sides of Valser," says Fritz Bärlocher, General Manager of Coca-Cola Beverages AG, in response to such fears. He assures that both VMAG, which will be integrated into CCG as a profit center, and the Valser brand will continue to exist in their current form.
A success story that has made a name for itself
The first bottle of Valser water came onto the market in 1961. In 1962, the bottling volume was 578,000 liters. By the last financial year, production had increased to 122.5 million liters per year. Over the past five years, sales have risen by 35 percent in a market that is growing at an annual rate of 4 to 10 percent. The current estimated annual turnover is between 80 and 100 million Swiss francs. Valser water is the market leader in home consumption. In terms of total mineral water consumption, the brand is in second place behind Henniez. The export share is around 7 percent.
VMAG was founded in 1960 by Bernese entrepreneur Donald Hess, shortly after he had acquired the St. Peters spring at the foot of Piz Aul, from which the Valser water springs, which had been unused since 1956. The funds for this came from the proceeds of the sale of his small Steinhölzli brewery. Until the end of 2001, Donald Hess was Chairman of the Board of Directors of the Hess Group, which owned VMAG before the takeover.
Hess was aware of every step and supported the takeover negotiations, which began during his time in office. "We didn't sell the company to him," says his successor Max Lienhard, preventing any possible misconceptions.
The mineral water market is in international hands
Like most of the big players, the CCG has been pursuing an international strategy for around ten years to expand its core competence to the entire non-alcoholic beverage (NAB) sector. The soft drinks giant has already gained a foothold in four out of five sub-categories: iced tea (1992), fruit juices (2001) and mineral water (2002). And the remaining sub-segment, energy drinks, is also soon to be entered.
The expansion of expertise is justified by the fact that the global water business is developing much more dynamically than the freshwater beverage market. This is forcing the big players in the industry to buy up sources all over the world. Nestlé, for example, has swallowed up San Pellegrino, the Danone Group Evian and the Carlsberg Group Feldschlösschen with Passugger. "There is practically only one national mineral water left, namely Henniez, and it is not doing well," says Fritz Bärlocher.
The CCG dealt with the "water question" for eight long years. Various options, such as the purchase of a spring, were examined. The production of table water, in which ordinary drinking water is processed into mineral water, was also discussed. However, these options would have entailed the expense and uncertainty of building a brand.
That's why the takeover of VMAG was not an overnight operation. Before the purchase took place, the two companies had been working together for years. Since 1984, CCG has covered 99% of its mineral water requirements for the catering and system catering market segments - which account for 12% of the total sales volume - with water from the green Vals Valley.
A repositioning would drag the brand into the valley
The positioning of the product and image of Valser water developed over the years was not abandoned when the brand was rejuvenated in 1990. In order to appeal to a trendier audience, the Limelite sub-brand was introduced in a bottle designed by Luigi Colani. The Valser brand was to be rejuvenated in the wake of a brand transfer.
In order to showcase the brand values of elemental strength, health and origin that are associated with Valser today, it was bottled in green bottles. And thus implemented the brand image in an unusual way. At the time, white bottles were the norm. In addition to the corresponding images, two slogans seeped into consumers' consciousness in the advertising.
"S'isch guat, ds'Valser-Wasser" was launched in 1989 by the former Gisler & Gisler together with "Valsermann" Hans Jenny. "Everything is getting better - Valser stays good", a slogan that has been used since 1993, became the new old message in a time of change. It was devised by Contexta, Bern. The agency has been managing the brand since 1989 and the slogans are now household words.
It is not often that a brand identity is rooted in colloquial language. It is evidence of a strong emotional connection that consumers have to their values.
From the Hess Group's perspective, the sale of VMAG is "motivated by responsibility". In order to preserve the almost 100 jobs in the Graubünden village of Vals, it has bowed to the pressure of market developments.
The big players have the upper hand. Carlsberg, Heineken, Coca-Cola and Eichhof cover around 80 percent of distribution. The concentration in the gastronomy sector is particularly striking. Small and medium-sized businesses are finding it increasingly difficult to compete with this superiority.
According to Max Lienhard, if the Hess Group had not accepted the takeover offer, CCG would have simply acquired another water company. As a result, VMAG would probably have been removed from the distribution partnership with CCG in the catering sector. The other water would have taken its place. In other words: CCG would probably have blocked VMAG's catering sales channel. Its presence in 30,000 vending machines, fridges and open bar systems would have been lost. Bärlocher explains that this would have been a loss that could hardly be replaced, as the establishment of an equivalent distribution system would have required years of high investment that would have exceeded the resources of VMAG.
However, after the Carlsberg Group, one of VMAG's largest customers, had already started to push its own products, this would have been one loss too many. The success of Valser water would have slid downhill. "Not from one day to the next, but looking into the near future, we would have had to expect a drop in sales," says Max Lienhard.
On the one hand, the takeover has removed the obstacles that would have blocked the path to a successful future for the Valser-Wasser brand. But it also opens up another interesting growth prospect: "There are good opportunities to export Valser water to countries that are within a reasonable distance," believes Bärlocher. Although the General Manager does not expect the mineral water to become a mass product abroad, he does believe that it will be able to play a certain role in high-end gastronomy.
