Case study for Case 16 Danone: Marketing The Glacier In The United States

Q1 Prepare a brief case overview. What are the main issues being discussed in the case?

The French dairy giant Danone, whose water products contribute 27 percent of the firm's global sales, is suffering from an unhappy decline in recent years. Although Danone's water products, led by Evian, are stable favourite in homeland and rest of Europe, Evian's market share in the U.S. have shrunk from ranking one 7.2 percent to ranking four 3.6 percent between 1996 and 2001. In order to compete against Pepsi's Aquafina and Coca-Cola's Dasani which pulled ahead of Evian, a major strategic plan 'Diversification' (reduce Danone's dependence in Europe, enhance water operations in U.S.) had implemented by CEO Frank Riboud. However, this failed to produce the desired result. Given the little headway had been made in aggressive moves, Ribound reached two dramatic agreements with one of its arch-foes, Coca-Cola in 2002.

In the first agreement announced in April 2002, Coca-Cola would take over the Evian brand in North America.

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According to analysts at J.P. Morgan, under this agreement Coca-Cola will hold master distribution rights to Evian, and will handle all promotional and customer marketing, in-store merchandising, bottler sales, and food service sales. Danone will still manage sourcing and reserve control of Evian's brand image and advertising strategy. Remarkably, the agreement includes incentives for Coke's effect to step up demand. (This is estimated to translate into an increase of less than 1 percent of Danone's total sales on average.)

In the second agreement declared in June 2002, Danone and Coke would establish a joint venture for the production, marketing and distribution of Danone's local and regional branded retail bottled spring and sourced water from within the U.S. (for example, Danone's Dannon brand spring water). Under this agreement Danone contributes the...