WATER WORKS 2000-04-10 (2)

AMITY K. MOORE

Total bottled water sales increased for the year ended Dec. 31, 1999. No big surprise if you consider that the end of 1999 heralded a potential armageddon, or a nearly certain computer meltdown, which would have decisively affected water, electricity and gas power. Instead, another century began.

Luckily for those supermarket chains that stocked up in anticipation of a mad rush, bottled water isn't perishable -- at least not like milk or bananas.

At a Harris Teeter location in Charlotte, N.C., a store manager said he sold bottled water off of two pallets brought in from their distributor. "We usually sell quite a bit of water, so any left over didn't harm us," he said. "We sold quite a bit of it," but not as much as the store was prepared to, he added.

Most stores polled by SN said they gave additional space to the water category last year. The Charlotte-based Harris Teeter location, and others like it within the chain, elected to confer off-shelf space. While others, such as Brookshire Grocery Co., brought end caps into their merchandising mix, along with pallet displays in some of the company's larger stores, according to Sam Anderson, spokesman for the Tyler, Texas-based chain.

Peter Dudis, grocery category manager at Big Y Foods, Springfield, Mass., said his stores also used floor displays to capture additional water sales. Plus, the stores made sure to have plenty of backstock in their warehouse, Dudis added.

Some grocery retailers, apprehensive about taking a stand on Y2K, quietly ensured enough inventory in the event consumers embarked on a water-shopping spree.

At Spartan Stores, "there was a great deal of discussion not to do anything different for Y2K because it put the company, and maybe the whole industry, in a position of 'we had better do this,"' said Karen Aylsworth, public relations consultant.

"We steered clear of merchandising the category differently because we didn't want to be on record as saying there was going to be a problem," Aylsworth added.

Other stores such as Seaway Food Town held to a similar idea.

"We were very conservative, we increased [water stock] about 25%," said Pat Nowak, spokeswoman for Seaway Food Town, Maumee, Ohio. "A lot of water blew out the door; now we're back to normal. We didn't merchandise differently, but we had extra in the back so [employees] could easily replenish," she added.

When it was all over, party hats put away and naysayers looking at 2001 as the real millennium, Seaway Food Town did not have an overabundance of bottled water left, "but other retailers did," Nowak said.

Because retailers saw so much movement of water up until the time the date changed, they naturally attributed it to concerned people preparing for Y2K.

"Certainly water sales were substantially increased as a result of Y2K, especially in the few weeks and days leading up to New Year's," Brookshire's Anderson said.

Big Y's Dudis said his stores experienced a last minute rush the week before New Year's. "Sales were about double a 'regular' big winter storm. Water sales were up slightly during October, November and December, which indicated some 'quiet' stock-up by customers," he added.

The Harris Teeter store manager said he noticed shoppers stocking up during summer and also as it got closer to November and December. "Then they saw it wasn't going to be spectacular, but we didn't have a lot of returns. I think somebody returned six bottles, and that was it," he added.

A bottled water manufacturer who hit the shelves in 1999 may have benefited from the effects of Y2K.

Dasani water, a product from Coca-Cola, came to market last year and performed very well, according to company executives.

"We were very pleased with the performance of Dasani across all channels, including supermarkets," said Scott Williamson, Coca-Cola spokesman. "We had high expectations for the brand, and Dasani exceeded them. While I cannot speak specifically about volume, I can say that we were certainly encouraged by the rapid and positive response we received from bottlers, distributors, and most importantly, consumers," he added.

So, how much did water sales increase in 1999? Data from Information Resources Inc., Chicago, reveals that sales of noncarbonated water across all channels totaled more than $1.6 billion for the 52-week period ended Dec. 26, 1999, a 23% increase from the prior year.

Supermarkets surpassed bottled water sales in mass merchandisers and drug stores, although mass merchandisers showed an impressive 53.4% gain over 1998's sales, IRI date showed.

Private label noncarbonated brands sold more than double that of the next competitor at $286 million. Great Brands of Europe, the runner-up, generated nearly $140 million in sales, while Poland Spring Corp. trailed in third place, selling almost $91 million.

Distilled water, also an important segment in the overall water category, particularly during crisis times, sold more units for the year ended Dec. 26, 1999, according to IRI. Data indicated an 8.7% increase in the number of units sold as compared with the same period in 1998.

As with the noncarbonated subsegment, distilled water sold in supermarkets exceeded the number of units carried out of mass merchandisers and drug stores.

Supermarkets increased 4.5% moving 101.5 million units. In comparison, mass merchandisers moved about 35 million units.

Now that the panic is over, retailers have modified their store space to accommodate things like Easter candy and general merchandise, and bottled water is back in its usual spot. The hype might be over, but lessons from the event press into the future.

"It was such a peculiar event that it's hard to deal with. I don't know if there will be anything comparable in the future," said Spartan's Aylsworth.

"Maybe something weather-related, but the key for Y2K was that you had some warning. Having warning is important because then you can start getting prepared for it. Weather often doesn't give any warning," she added.

Other retailers likened Y2K to weather disasters as well. "I don't know what knowledge was gained; we always see increased activity during storms," explained Big Y's Dudis.

The store manager at the Charlotte Harris Teeter location said hurricanes really increase water consumption, "particularly in the wake of Hugo," a storm that left thousands of people homeless and without power.

Brookshire's Anderson put simply what his stores learned from the Y2K experience: "Our experience with Y2K and water reaffirmed the importance of maintaining in-stock conditions. If you don't have it in stock, you sure can't sell it."