Speculation approaches assertion, as Coke system/industry executives report Coca-Cola Co plans to launch bottled water early next year (BD 9/4/98). Say new product probably first appears in some markets in first quarter, with distribution expanding during first six months. Coke, to date, makes no announcement on water product. Name? BD learns name of new water could be "Dasani," though others considered. Coke bottler: "Sounds like they're looking for a name which could mean many things to many people, like 'Haagen-Daz.'" Package. Bottler says Coke's new water will use new proprietary package: "It will be 20-oz PET and run (on existing bottler lines) without changeover problems." 'Concentrate.' Executive predicts product will be reverse-osmosis purified water, like Pepsi's Aquafina. But Coke's water may feature added minerals; company would sell mineral package, giving it both brand ownership and ingredient -- or "concentrate" -- component.

Co-existence/other water brands. Coke bottlers now sell other waters, including Evian, Naya, many regional brands. Naya heavily dependent on Coca-Cola Enterprises. BD estimates CCE handles about 66% of Naya's volume. Under agreement, CCE can drop Naya on six months notice. CCE's termination notice with Vermont Pure recently changed from 90 to 30 days (BD 10/9/98). Asked whether Coke system would continue to sell other water brands, bottlers/executives predict: "yes, but." Views. 1) "Evian is safe, Naya may be less safe. Evian is super-premium (priced), Naya falls more at the heart of the market." 2) "Evian is trying to increase its presence in the Coke system. It would make sense for Coke (system) to have a premium spring water like Evian and their own water at a lower price level, at least for the time being." 3) "If CCE supports Evian, they're putting money in (Groupe Danone's) pocket which will be selling Dannon against Coke's new water. They should keep Naya." Dannon is multi-sourced spring water sold via warehouse delivery. 3) "Coke would probably like (system) to sell (its new water) exclusively, but there'll be reluctance." 4) "My guess is we could sell some other waters that aren't at the same price ... There's a need for spring waters." Naya. Naya executive tells BD: "We are proud of what we've done in CCE to help develop a consumer franchise for bottled water."

Rationale. Water is one of fastest growing beverage categories. But in June Coke chairman/CEO Doug Ivester calls water "tricky subject." Adds: "We have to be careful we don't replace high-margin soft drinks with low-margin water" (BD 7/2/98). But bottlers want water from Coke. Bottler previously tells BD: "We need a system-wide water. That's what Pepsi has with Aquafina." Category. BD/Maxwell estimates still water volume up +13.2% in 1997; category totals $3.5 bil. Bottled water business in US dominated by Nestlé-owned Perrier with multiple brands. Other majors: Suntory; Pepsi with Aquafina; Groupe Danone with Evian, Dannon and Volvic. News. On Nov. 2, Danone announces agreement to buy AquaPenn Spring Water Co for $112 mil; AquaPenn's volume about 21 mil cases.

Views. Coke bottlers: 1) "(New water will appear) in the first quarter." 2) "It won't be a test, but it might not go national all at once." Production. At recent Interbev trade show, Coke bottler explores reverse-osmosis equipment. Executives speculate new Coke water would initially be produced at several large Coke plants, similar to Pepsi's production of Aquafina. But bottler says over time many bottlers may install reverse-osmosis equipment to meet government standards.

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