How to Build a Brand: Smartwater and Vitamin Water

In the first decade of the 21st century, there were fewer hotter companies than beverage maker Glacéau (also known as Energy Brands), who created the “enhanced water” category of products en route to racking up billions of dollars in sales. The company is a fascinating case study in how to market an upstart brand in a highly competitive industry.

A few critical factors allowed the company to stand out in an area that most people had not suspected was ripe for disruption, especially by someone not named Coke or Pepsi. Of these factors, apart from Glacéau’s savvy distribution strategy, the remainder are marketing lessons:

1. Creating a category and defining the competitive set

“We are a water and want to be with the waters. The visual makes it stand out. We pushed that. If you put it in with the Gatorade and Snapple, it doesn’t sell as well.” – Vitamin Water distributor

Company founder Darius Bikoff insisted his products be shelved with regular water as opposed to sodas or sports beverages. This was important for competitive reasons, and it helped maintain the pure/healthful perception of the products. Even the name “Vitamin Water” was chosen for health connotations, belying its high sugar content (then 30g+ per bottle).

Also, as “enhanced waters” exploded in popularity, retailers in particularly were big fans of the company, as it allowed them to sell an entirely new, non-cannibalizing product to their customers. Strong relationships with retailers enabled Glacéau to better fight competition, especially early in the company’s history.

2. Non-traditional branding

The sleek Smartwater and bold Vitamin Water bottles stood out on shelves compared to traditional “mountains and streams” water bottles. Officially, the names of the brands were spelled in all-lowercase, which at the time was more novel than it is today. Further, the cheeky copy printed on labels of Vitamin Water — they contained jokes that were self-mocking or poking fun at celebrity figures — reinforced the product’s fun, irreverent nature. The label on their Energy drink winkingly said “Although this is a great alternative to sports drinks we do not believe in succumbing to commercialism. Unless, of course, there’s a lot of cash. Then we’ll talk.”

3. Aligning product with an aspirational lifestyle image

Early on, Bikoff — already a wealthy businessman from prior ventures — used his personal connections to maximize the utility of celebrity exposure. Glacéau, which began in the New York area, intentionally targeted Los Angeles as its next area of expansion, securing critical distribution rights and getting on area radar by advertising on billboards and in stylish publications like Vanity Fair and In Touch. Bikoff had personal deliveries sent to stars homes, with the effect being that well-known trend-setters like Sarah Jessica Parker and Britney Spears were often photographed in public clutching Glacéau bottles.

This did not go unnoticed in trendy circles. In 2001, the luxury house Louis Vuitton Moet Hennessy bought a minority stake in Glacéau, an act which not only gave the company a significant cash infusion, it reinforced their brand’s glamorous image — an image that was promoted to younger consumers in many ways, including via the hundreds of Glacéau “ambassadors” the company employed to promote their products at colleges, gyms, and other youth-dominated scenes.

Once an established brand, the company turned to overt usage of celebrity endorsers. In 2004, rapper 50 Cent was signed to an endorsement deal, made a minority owner of the company, and brought in to co-develop a custom Vitamin Water flavor called “Formula 50”.  In 2007, Glacéau began a high-profile advertising campaign featuring Jennifer Aniston and Tom Brady. By then the company’s products were firmly established as key accessories of the yoga-and-pilates set.

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Sources:

• Fortune: “Darius Bikoff vs. Coke and Pepsi” (2003)
• Ad Age: “Vitamin Water, A Case Study in Launching a Beverage, Brand” (2004)
• Wall Street Journal: “Move Over, Coke: How a small beverage maker managed to win shelf space in one of the most brutally competitive industries” (2006)