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Business case study (Fiji Water and Corporate Social Responsibility- Green Makeover or Greenwashing?)...

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Introduction FIJI Water is a natural artesian water producer and distributor that promotes unique product for health concerned and brand-oriented customer. In less than 10 years the company successfully entered several international markets, achieving number one position among all imported mineral water brands. Even though the company tried to give the image of sustainable and environmentally-friendly organization, many international societies and environmentalists questioned FIJI Water’s fairness considering its production, distribution and promotion actions as greenwashing rather than green makeover. In order to answer questions stated in the business case study and make a proper review of company’s actions and today’s market position we are going to have look on the company’s concept, background and current situation, relationship with its stakeholders as well as to do PESTEL and SWOT analyses to have a better understanding of the factors influencing company’s performance and finally give some recommendations which can potentially increase stakeholders’ trust and number of customers.

Summary of the case Company Background & International Expansion David Gilmour, a Canadian businessman and investor, is a founder of Fiji natural artesian water being an international unique product for health concerned and image-oriented consumers. The concept of Fiji water was in bottling water straight from the old artesian aquifer and purified it through layers of volcanic rock that would be not only of purest quality and taste but also due to the silica-richness provide immunity-boosting and anti-age positive effects. The company that extracted and bottled Fiji water was founded in 1993 and already in 1997 it started to conquer international markets, choosing United States as the first and most critical international market. Within first five years in the market, FIJI Water “the second selling position in the U.S market among imported still water brands” (James McMaster, Jan Nowak, 2009) and in 2008 it already got the leading position. The key reason why the company achieved success in this market was mostly because of clever marketing campaign which consisted of several staples: 

Product content – the water had a smooth taste and no aftertaste;

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Product packaging – square shaped bottles presented in four sizes: 0.33, 0.5, 1.0 and 1.5 l were unique for the American consumers;

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Premium price policy – which gave an image of product’s high quality;

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Distribution channels – the product was available for American consumers through multiple distributers on the premises of high-end restaurants and hotels, online as well as convenience and drug stores, gas stations and mass merchandisers;

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Promotion campaign – through product placement and building relationship, which led to the brand being supported and recommended by American celebrities and wellknown companies, creating an image of water’s high quality.

The second chosen market for FIJI Water distribution was Australia because of its proximity to Fiji Islands, which made this market attractive in terms of distribution easiness and potential consumers’ awareness of the product itself. Despite potential attractiveness, FIJI Water’s entering strategy had some inflows as Australian bottled water market was growing rapidly and the company had around one thousand competitors that were competing for the market share in 2007. Nevertheless, because of Australians’ health-conscious and social aware the company gained national distribution in local hotels and restaurants as well as other 400 Coles supermarkets around the country. Soon after successful entering US and Australian markets the company decided to try selling their product in the United Kingdom, through supermarket chains. Even though British consumers were aware of FIJI Water concept, almost immediately after launching bottled water sales, number of British environmentalists and conservationists started campaigns against bottled water which afterwards were extended towards international war against bottled water, including FIJI Water, which production and distribution was believed to have harmful effects on the environment. Issues with Company’s Stakeholders Due to the fact that Fiji water concept was controversial for many people all over the world, it was just a matter of time when its stakeholders would start to question the company’s politics and actions. There are three main groups of stakeholders that were important for FIJI Water in terms of developing its company image. The first group and the most numerous one is International society that arose an issue about environmental impact and ethical issues of FIJI Water production and distribution especially after the company’s entrance to the UK market. Environmentalists and conservationists were questioning not only company’s sustainable production and product distribution but the

quality of water itself. For instance, conservative group WWF and Corporate Accountability International conducted the study where they were speaking about FIJI bottled water antihealthiness and the waste of money in comparison with tape water sustainability, which led to various campaigns launched to promote tap water consumption as more sustainable alternative. International community was mostly concerned about environmental unsustainability. For instance, BBC filmed an analysis of the company’s bottled water negative impact on the environment and the society, especially people living in less developed countries, having no access towards clean water. All these stakeholders’ actions forced the company to start “Carbon Negative” Campaign, where FIJI Water “was planning to offset its total footprint by 120 percent, by removing from the earth’s atmosphere not only all the emission its activities produced, but also additional 20 percent” (James McMaster, Jan Nowak, 2009), introducing several steps which would be undertaken to achieve this: taking recycling programs, optimizing logistics, reducing packages, etc. The introduced campaign was not impressive for the sustainable society and this “green make-over” was questioned by many conservationists and considered as a part of marketing that would attract more consumers. Fiji government and FIJI Water has been having strong mutual economic influence since the company was launched, due to the fact that FIJI Water LLC was one of the major source of export earnings for the country. Initially, when the company was established, in order to promote the rapid growth of this industry, the government let Fiji company to produce and sell its water (both domestically and internationally) under the Tax-Free Factory Regime. This agreement had a positive effect on the company’s development and overall performance, bringing in 2007 earnings of more than FJ$105 only through exports. But no later than January 2008 Fiji government started to suspect FIJI Water in transfer price manipulations, namely “selling the water shipments produced in Fiji at a very low price to the company headquarters in Los Angeles” (James McMaster, Jan Nowak, 2009), which led to active actions against the company: the same month country’s government arrested 200 containers with FIJI water that were ready for the export to other markets. With the support of distinguished organizations and individuals such as U.S. ambassador Larry Dinger, University of South Pacific and international law firm Baker and McKenzie, FIJI Water was capable to continue exporting of the embargoed containers but at the cost of F$5 million bond payed to the Fiji Court. The same year Fiji government after considering current little benefits provided by local bottled water industries and the potential economic contribution, based on the taxes from

these companies, decided to impose a 20-cents-per-litre tax on all mineral water exports as well as mineral water sale in a domestic market. It brought to a huge discord and the association of ten bottled water producing firms, including FIJI Water, started a big campaign against new tax regime, which, according to the companies, was implemented without careful analysis and would have the negative effect not only on the firms itself but also the whole Fiji economy. The campaign was supported by media and local newspapers, which stated that it would also influence foreign and local investment. All this action led to Fiji government announcement about dropping the new tax. Nevertheless, in just several months the local government again decided to impose new tax that was progressive and depended on the amount of exported bottled extracted water, while bringing the Fiji government F$1.5 million. One more important stakeholder that played a role in the establishment of company’s image was Fiji’s local community. The management of FIJI Water has realized the importance of stable relationship between the company and the local society, especially with those living in five villages located in the nearby area where the bottling plant was placed. The company tried not only to employ local young force that had not previously had any payed job but also to arrange comfortable work environment where these employees would be able to develop new skills with the help of on-the-job training. Besides that, FIJI Water organized campaigns for supporting children’s education by building kindergartens in these five villages and providing schools with educational equipment in order to maintain early education. Nevertheless, the largest and most essential company’s involvement in local community’s welfare was “projects to reduce pollution and improve hygiene” (James McMaster, Jan Nowak, 2009) through developing infrastructure and abilities to supply clean drink water to educational and medical institutions. For this purposes company established a trust fund and donated FJ$275000 immediately to it. The campaign resulted successfully in giving the access towards clean water to citizens of all five villages and afterwards receiving the U.S. State Department Award for Corporate Excellence for Outstanding Corporate Citizenship.

Current situation Nowadays the company is presented in multiple markets where consumers can by its products in shops, restaurants and hotels as well as from local distributers. Overall, FIJI Water is represented in more than 12 countries that are located in different continents: 

Northern America: USA and Canada;

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Southern America: Mexico;

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Asia and a small part of Africa: Middle East countries, China, Japan, Singapore, Hong Kong, South Korea, Taiwan;

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Europe: United Kingdom;

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Australia.

For the consumers living in the countries which do not have the access towards these products from retail stores, where the company is represented, Fiji Water proposes to buy bottled water online directly from its online shop. Potential consumers have the possibility to choose the preferred bottle size as well as different reusable sleeves for bottles that are supposed to add style and luxury to bottles. The company also offers the incentive of 20 percent discount for those consumers who make a subscription instead of one time purchase. Thereby the company expands, covering not only above-mentioned markets but also all other countries where the bottles can be delivered. In 2018 the company decided to expand its product line adding the possibility to buy bottled water with a sport cap in the size of 700 ml, which according to FIJI Water website “designed for your active lifestyle” and “slim and sleek shape made to fit everywhere from cup holders and treadmills” (James McMaster, Jan Nowak, 2009). As the company uses premium price policy, the average current price without any discount that is offered on the company’s official website is following: a pack of 36 bottles 330ml is 47.5$, a pack of 24 bottles 500ml costs 37$, for 12 bottles 700ml consumers have to pay 30$, 12 bottles 1000ml are 37$ and a pack of 12 bottles 1500ml – 50$.

Analysis of the company’s marketing strategy In order to have the key insights in the company’s internal and external factors, influencing its performance in the global market, and find the answers stated in the FIJI Water case study, examining the company’s actions through PESTEL (to distinguish factors that have an influence on the company) and SWOT (to identify strengths, weaknesses, opportunities and threats that derive from these factors) analyses is essential. PESTEL Analysis 

Political factors – include governance system, especially the possibility of changing policies and regulations such as taxes, and also non-government organizations that are willing to contribute to society and environmental welfare;

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Economic factors – includes both inflation and exchange rates, that are important for company’s consideration as its production takes place only in Fiji and strategic sale markets are located in other countries;

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Social factors – changing demographics and people’s preferences, for instance tendency towards healthier lifestyle and more sustainable behavior;

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Technological – technology innovations give the company both opportunities (the ability to decrease production and distribution cost with the help of renewable energy and transportation sources) and threats (high cost of switching to new technologies, which is essential for the company to remain competitive);

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Environmental – weather conditions and climate change have direct influence on the company’s production as the product is extracted from the old artesian aquifer, and as well distribution to international markets which is largely done by water carriage;

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Legal factors – include environmental and employment laws, especially important for company’s production which takes place in Fiji, and therefore FIJI Water should carefully monitor and follow all Fiji government guidelines updates.

SWOT Analysis The success of FIJI Water can be explained not only by the advantage of being the first mover in the industry but mostly because of excellent management and great marketing campaign that includes product concept of unique and sustainable water, innovative product packaging, premium price policy, various distribution channels, promotion campaigns with celebrities and well-known companies. The company has several weaknesses that interfere its good performance, which includes lack of logistics network and high cost of building new supply chain, which does not let the company to fully enter International market by entering new countries and increases the cost of water distribution. The consequence that derive from the above-mentioned weakness is declining market share as Global bottled water industry is growing faster than the company. The last but not least is that the company does not verify its financial situation and the purity of its water on the constant bases through the reports that would be available on their website for all potential consumers, which lead to questioning company’s financial accuracy and water quality. One of the biggest opportunities for FIJI Water is consumers’ health awareness, and therefore increased bottled water consumption as a healthier alternative towards tape water. The company’s strong brand recognition and premium price policy gives the opportunity to

increase its profitability through attracting customers that are migrating to higher end product. Due to company’s expanding: adding the ability to purchase the products online and as well collaborating with local players and distributers, FIJI Water is able to enter international market and sell their products worldwide. As for threats, first of all the company has to take into consideration the distrust of its stakeholders, which can lead not only to international society questioning bottled water sustainability and proposing tape water as a better alternative, but also to the threat of legal actions from Fiji government. The second threat that can decrease FIJI Water sales and consumer’ attraction is the pressure from existing competitors that want to increase its market share by changing citizens’ preference towards their products.

Possible Recommendations for FIJI Water Company In my opinion, the best opportunity for the company to increase its performance, attract more consumers and gain stakeholders’ trust is to focus more on the Triple Bottom Line Framework as the optimal and sustainable way to do its business. Triple Bottom Line refers “to a method of measuring the economic, environmental, and community service impacts of an organization rather than the traditional practice of measuring just the financial bottom line” (Amos Arowoshegbe, Emmanuel Uniamikogbo and Gina Atu, 2018). Profit According to this Framework the company raises its profit not only to make the organization’s performance and make it more competitive to increase the market share but also to increase company’s ability to help empower and sustain the community and the environment. People First of all, the company has to continue supporting local Fiji community by providing citizens with well-paid jobs at FIJI Water plants and as well provide safe and comfortable working conditions based on international labour standards formulated by International Labour Organization. The company also have to continue on-the-job trainings which will be beneficial not only for employees that are going to master and gain new skills, but also for the company itself as it will obtain qualified and loyal workers. It is also important for the company’s image to sustain Fiji common citizens through numerous campaigns oriented on improvement of people’s welfare such as education encouragement, clean drinking water

supply and infrastructure reformation, health and sustainable awareness promotions among locals. In 2004 Fiji Water was purchased by Roll International Corporation, controlled by one of Hollywood’s richest couples, and as now the company is bringing benefits only to the America’s economy while using Fiji’s natural and labour sources it has to pay taxes to Fiji government to contribute to the production country’s economy. FIJI Water company presents itself as a producer of premium quality water that is sold for a premium price that is why the upper management has to issue water quality reports on constant bases being available on the company’s website in order to make current and potential consumers aware of the product’s content and quality. Planet The most important aspect for the company in this TBL framework is environmental as that is the main reason why the majority of environmentalists and conservationists are criticizing bottled water and trying to alter current and potential customers towards tape water consumption as more sustainable alternative. To make the image of environmentally friendly company FIJI Water has to continue” Carbon Negative” campaign, by participating in carbon recycling programs, optimizing its logistics systems, using more carbon-efficient shipment models as well as reducing carbon in packages or finding more sustainable alternative towards plastic bottles and trying to find new renewable energy sources for its plants and office buildings. In order to provide the evidence of undertaken actions the company must publish annual reports on what has been achieved and it has also to be available for everybody on the website. As long-distance transportation of the finished product is the main concern for the international society that considers it the main source of company’s negative impact on the environment. That is why FIJI Water can look for new entry markets that are located near Fiji Islands to decrease pollution from product shipment as well as to decrease transportation costs.

References 1. Arowoshegbe A., Uniamikogbo E., Atu G. (2018). Sustainability and triple bottom line: an overview of two interrelated concepts. 2. Bloxham, A. (2011, June 20). Fiji Water accused of environme...