By Jennifer Maloney
The latest front in the soda wars: high-tech water
fountains.
Longtime rivals Coca-Cola Co. and PepsiCo Inc. are dotting
college campuses and workplaces across the country with machines
that dispense cold, filtered water -- and can add bubbles and
flavors on demand. But the customers have to supply the
bottles.
The soda giants are among the biggest bottled-water sellers in
the country, with brands such as Dasani, Aquafina, smartwater and
Lifewtr -- all packaged in PET, the plastic used to make soda and
water bottles. Attitudes toward plastic waste are shifting, though,
so the two companies are planning for a future where single-use
plastic bottles may be banned.
The new dispensers are part of broader efforts at both companies
to respond to the mounting public concerns about plastic waste.
PepsiCo last year bought SodaStream -- a maker of countertop
machines that carbonate tap water -- in a $3.2 billion deal. And
PepsiCo's Drinkfinity brand sells reusable plastic bottles with
capsules that add flavors to water. Coca-Cola, meanwhile, is
rolling out 100% recycled plastic bottles in Western Europe and is
exploring adding an aluminum option for its Dasani water brand in
North America. Both companies have pledged to help increase plastic
recycling rates.
A wave of bans on plastic straws last year demonstrated a sharp
turn in public opinion against single-use plastic. The momentum has
continued into this year, with the European Union in March voting
to ban 10 single-use plastic products including cutlery, plates and
cotton-swab sticks. Earlier this month, Canada said it planned to
ban single-use plastics such as bags, straws and stir sticks as
soon as 2021. Now the beverage giants are preparing for the
possibility that U.S. states could begin banning plastic bottles,
as a few municipalities already have done.
Even if lawmakers don't ban plastic bottles, executives at both
Coca-Cola and PepsiCo said, they are seeing consumers choose
reusable bottles over single-use plastic, a trend they expect to
continue.
"These behaviors are manifesting first in... colleges,
universities and workplaces," said Scott Finlow, chief marketing
officer for global food service at PepsiCo. "We believe that will
continue to increase and grow."
Water has been a bright spot for both companies in recent years,
helping to offset slower growth in their core soda businesses.
Coca-Cola's U.S. sales volume of still and sparkling bottled water
rose 2% last year while PepsiCo's increased 4.6%, according to
industry tracker Beverage Marketing Corp. Bottled-water consumption
in the U.S. is now outpacing soda consumption.
Coca-Cola's Dasani PureFill station was conceived in 2016 in an
innovation competition among the company's staff. Coke has piloted
the machine on college campuses for the past two years and this
fall will expand it to more schools as well as zoos and
aquariums.
So far, the most popular option has been the free one: chilled,
filtered water. "People just like really good water," said Lauren
Radow King, Dasani's brand director for North America. "Sometimes
these units will be placed right beside a traditional water
fountain. And you'll actually see people line up to get water from
these machines."
But the company also has found that many students are willing to
pay a fee of 5 cents per ounce to add flavors or bubbles or both.
Consumers can pay directly through the app, use Apple Pay or, in
some cases, swipe a credit card. In some cases, a 20-ounce pour
comes out to roughly the same price as a 20-ounce bottle of Dasani.
The PureFill station is blue, and about the size and shape of a
traditional vending machine. Under the spout, there is a
black-and-white outline of a water bottle, a visual cue that users
must supply their own vessel. The machine's flavors include berry,
lime and blood orange.
The dispensers from both soda companies connect to mobile-phone
apps that can track users' water-consumption goals.
The PureFill station transmits data to the company on what
people are ordering, when and where. For example, Coke expected
students to be willing to pay for flavors and bubbles at the
cafeteria, where they're already paying for lunch, but they've been
surprised to find people willing to pay for a drink at the gym,
too, Ms. King said. The company is still exploring pricing models
for venues where it doesn't sell directly to consumers.
Coca-Cola's PureFill station transmits data to the company on
what people are ordering, when and where. For example, Coke
expected students to be willing to pay for flavors and bubbles at
the cafeteria, where they're already paying for lunch, but it has
been surprised to find people willing to pay for a drink at the
gym, too, Ms. King said. The company is still exploring pricing
models for venues where it doesn't sell directly to consumers.
"We absolutely believe that this is a tool in our tool box for
addressing PET bans," Ms. King said. "I don't think any one of them
is a silver bullet."
PepsiCo's device was launched in a pilot last year and is set to
expand next month across venues similar to the PureFill's, as well
as hotels, workplaces and stadiums. Its name hasn't been finalized
but the company said that, in contrast to Coke, it had decided not
to name the machine after one of its water brands. The dispenser
has a simple and white-and-navy design, around the size of a water
cooler. It also comes in a countertop version. Offering six flavors
including peach and lemon mint, the device allows users to
personalize the temperature, the intensity of the flavor and the
level of carbonation.
Pricing for consumers will vary, depending on the venue. They
can pay by credit card or mobile wallet such as Apple Pay. The
company hopes eventually to allow users to pay through the
accompanying app, and is working on adding an option for college
students to pay with school meal plan points. PepsiCo will charge a
monthly equipment fee for the unit, which will vary depending on
the customer and agreement, and will sell separately the flavors,
filters and carbon dioxide tanks needed to make the bubbles, the
company said.
In workplaces where employers provide free drinks for their
workers, the machine won't charge users. PepsiCo plans to offer
scannable stickers that can be placed on a reusable cup or bottle
so the machine can recognize each user and pour his or her favorite
order. The beverage company also is working with S'well, a maker of
sleek, reusable stainless steel water bottles, to develop a
connected bottle that the PepsiCo machine can scan and
recognize.
"You do see the cultural zeitgeist really changing," S'well
founder Sarah Kauss said. "Single-use plastic is really becoming
uncool....Brands are seeing the need to change as well."
Write to Jennifer Maloney at jennifer.maloney@wsj.com
(END) Dow Jones Newswires
June 21, 2019 07:14 ET (11:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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