Business Case Study

Do not forget that every case write-up must start with a short synopsis/overview that very briefly identifies the key issues or dilemmas in the case. 

Case Questions:

1. Does Fiji Water have a clear statement of mission, vision, and core values? If you can find these statements, or similar statements, include them here. Would you consider these statements excellent, adequate, or deficient in some way? Why? Regardless of what you find in your search, do your best to write a mission, vision, and values statement that would be better than the current statements.

2. Conduct a stakeholder analysis using the information from the case and other outside sources. For highest salience stakeholders consider opportunities/threats/cooperative potential, Behavior analysis, Action plans.

3. What factors contributed to the marketing success of Fiji Water?… (Hint: Think back to your marketing class and search for info outside the case.)

4. What does it mean for Fiji Water to go Carbon Negative? Do you think Fiji Water is engaged in Greenwashing? 

5. Are the Fiji government’s concerns about the negative contribution of Fiji Water to the local economy justified? Does the company do enough to improve its relations with the Fiji government and the local community? 

6. Extra Credit: Consider the supplemental data and answer the Bonus questions. (USE the excel and word attachment.)

2

>Well

C

ontract Data

(particulate PPM)

F

67

Resistant

utomation

r

A

1

2

6

A

5 Yes Unknown 1

2

1

B

100 2

Unknown 1

0

2

1

2 No Unknown 1

2

1 BB 100 2 No Unknown 1

2

BB 100 2 No Unknown 1

2

BB 110 2 No Unknown 1

2

1 BB 90 2 No Unknown 1

2

BB 90 2 No Unknown 1

00

2

1.02 BB 100 5 Yes Unknown 1

2

1.01 B 100 2 No Unknown 1

2

1.02 B 100 2 No Unknown 1

2

3

B 110 3 Yes Unknown 1

2

1

C

70 2 No Unknown 1

2

1

80 2 No Unknown 1

2

1 CCC 80 2 Yes Unknown 1

2

CC 100 2 Yes Unknown 1

2

CC 110 2 Yes Unknown 1

2

1 CC 80 2 No Unknown 1

2

1 C 90 2 No Unknown 1

2

A

100 2 No Unknown 2

2

1.16

110 2 Yes Unknown 2

2

1 AAA 100 3 No Unknown 2

2

3

AAA 80 3 Yes Unknown 2

1

AAA 80 4 Yes Unknown 2

1

1 AA 90 2 No Unknown 2

2

1 AA 100 3 No Unknown 2

2

1 AA 100 3 No Unknown 2

2

1.01 AA 100 3 No Unknown 2

2

AA 100 3 No Unknown 2

2

0.81 AA 80 6 Yes Unknown 2

1

1.01 AA 100 5 No Unknown 2 $25,110 2
1 AA 110 5 Yes Unknown 2

2

1.01 AA 110 5 Yes Unknown 2

2

1 AA 90 5 No Unknown 2

2

A 100 2 No Unknown 2 $27,450 2

1 A 100 3 No Unknown 2

2

1 A 100 6 No Unknown 2

2

0.8 A 70 4 Yes Unknown 2

1

A 80 4 Yes Unknown 2

1

1.01 A 100 5 No Unknown 2

2

A 110 5 Yes Unknown 2

2

1 BBB 100 6 Yes Unknown 2

2

1.01 BBB 100 5 Yes Unknown 2

2

1.03 BBB 100 5 Yes Unknown 2

2

BBB 110 5 Yes Unknown 2

2

BBB 110 5 Yes Unknown 2

2

1.2 BBB 110 5 Yes Unknown 2

2

1.01 BBB 90 5 No Unknown 2

2

1 BB 100 3 Yes Unknown 2

2

1 BB 80 3 No Unknown 2

2

BB 70 4 Yes Unknown 2

1

1.03 BB 100 5 No Unknown 2

2

BB 110 5 Yes Unknown 2

2

1 B 100 2 No Unknown 2

2

1 B 100 2 No Unknown 2

2

1.01 B 100 2 No Unknown 2 $21,920 2
1.16 B 100 2 No Unknown 2

2

1.2 B 100 2 No Unknown 2

2

1.05 B 100 2 Yes Unknown 2

2

1 B 90 2 No Unknown 2

2

0.81 B 50 3 Yes Unknown 2

1

2

B 80 4 Yes Unknown 2

1

B 60 4 Yes Unknown 2 $30,410 1

1.02 B 110 5 Yes Unknown 2

2

B 110 5 Yes Unknown 2 $31,080 2

1.02 B 90 5 No Unknown 2

2

1 CCC 100 2 No Unknown 2

2

1.02 CCC 100 2 No Unknown 2

2

CCC 100 2 No Unknown 2

2

CCC 110 2 Yes Unknown 2

2

1 CCC 90 2 No Unknown 2

2

1.01 CCC 90 2 No Unknown 2

2

1.04 CCC 100 3 No Unknown 2

2

1.15 CCC 90 3 No Unknown 2

2

1.16 CCC 100 4 No Unknown 2

2

CCC 100 5 Yes Unknown 2

2

1 CCC 80 5 No Unknown 2 $31,080 2
1.21 CC 90 2 No Unknown 2

2

1.03 CC 90 6 No Unknown 2 $25,110 2
1.02 CC 90 4 No Unknown 2

2

1.04 CC 100 5 Yes Unknown 2 $26,250 2
1.09 CC 100 5 Yes Unknown 2

2

CC 110 5 Yes Unknown 2

2

1 CC 80 5 No Unknown 2 $23,800 2
1.06 C 90 2 No Unknown 2

2

1 C 60 2 Yes Unknown 2

2

1.12 C 80 3 No Unknown 2

2

1.01 C 90 6 No Unknown 2

2

C 100 5 Yes Unknown 2

2

1.21 C 110 5 Yes Unknown 2

2

C 90 5 No Unknown 2

2

1.02 AAA 100 2 No Unknown 3

2

1 AAA 100 5 No Unknown 3 $31,260 2
1.03 AAA 100 5 No Unknown 3 $26,920 2
1.01 AA 100 5 No Unknown 3 $25,110 2
1.01 AA 100 5 No Unknown 3

2

1.07 AA 90 5 No Unknown 3

2

1.06 A 110 3 Yes Unknown 3

2

A 80 6 Yes Unknown 3

1

1.01 A 100 5 No Unknown 3

2

1.03 BBB 100 2 Yes Unknown 3

2

1.01 BBB 110 2 Yes Unknown 3

2

1.01 BBB 80 2 No Unknown 3 $31,380 2
0.9 BBB 80 2 Yes No 3

1

1.1 BBB 100 5 No No 3

2

0.82 BB 50 3 Yes No 3

1

1 BB 80 6 No No 3 $31,350 2
0.81 BB 70 4 Yes No 3

1

1 B 110 2 Yes No 3

2

1.01 CCC 70 3 No No 3

2

1 CCC 80 3 No No 3

2

1.01 CCC 80 5 No No 3

2

1 CC 70 3 No No 3

2

1 CC 90 5 No No 3

2

CC 50 5 No No 3

2

C 90 5 No No 3

2

1.1 B 110 6 Yes Yes 1

2

1.01 AAA 100 2 Yes Yes 2

2

1 AA 100 2 No Yes 2

2

1.01 AA 110 3 No Yes 2

2

0.8 AA 80 4 Yes Yes 2

1

0.81 AA 80 4 Yes Yes 2 $30,510 1
1 A 100 2 No Yes 2

2

0.9 A 80 2 Yes Yes 2

1

1.01 A 90 6 No Yes 2

2

1.04 BBB 100 6 Yes Yes 2

2

1.03 BBB 100 5 Yes Yes 2 $30,820 2
1.19 BB 100 2 No Yes 2

2

0.9 BB 80 2 Yes Yes 2

1

BB 80 3 Yes Yes 2

1

0.9 BB 80 4 Yes Yes 2 $30,430 1
1.2 B 100 2 No Yes 2 $30,930 2
0.9 B 70 3 Yes Yes 2 $30,810 1
1 B 80 3 No Yes 2

2

1.01 B 80 3 No Yes 2

2

1.01 B 100 5 Yes Yes 2

2

1.11 B 80 5 No Yes 2

2

1 CCC 70 2 No Yes 2 $27,800 2
1 CCC 80 2 No Yes 2

2

1.05 CCC 100 3 No Yes 2

2

1.05 CCC 100 5 Yes Yes 2

2

1 CCC 70 5 No Yes 2

2

1 CCC 80 5 No Yes 2 $31,080 2

CC 100 2 No Yes 2

2

1.01 CC 70 2 No Yes 2

2

1 CC 100 5 Yes Yes 2

2

CC 100 5 Yes Yes 2 $31,250 2

1.23 CC 80 5 Yes Yes 2 $31,370 2
1 C 100 5 Yes Yes 2

2

0.8 BB 60 6 Yes Yes 5 $30,800 1

B 70 6 Yes Yes 5

1

0.8 B 50 6 Yes Yes 5 $30,310 1

0.8 B 50 6 Yes Yes 5 $30,310 1

0.81 B 50 6 Yes Yes 5 $30,530 1
0.8 AAA 80 6 Yes Yes 3

1

0.8 AAA 80 4 Yes Yes 3

1

1.01 AA 100 3 Yes Yes 3

2

0.8 AA 80 4 Yes Yes 3

1

0.8 AA 80 4 Yes Yes 3

1

1.02 AA 100 5 No Yes 3 $25,860 2
1.15 AA 100 5 No Yes 3

2

A 70 3 Yes Yes 3

1

1.14 A 100 6 No Yes 3 $26,890 2
0.81 A 70 4 Yes Yes 3

1

0.8 A 70 4 Yes Yes 3

1

1.1 A 110 5 Yes Yes 3

2

1.01 A 90 5 No Yes 3 $26,000 2
0.9 BBB 80 2 Yes Yes 3 $30,430 1
1.01 BBB 100 3 No Yes 3

2

1.01 BBB 100 6 No Yes 3 $23,630 2
0.8 BBB 70 6 Yes Yes 3

1

0.81 BBB 70 6 Yes Yes 3

1

0.81 BBB 80 6 Yes Yes 3

1

0.85 BBB 80 6 Yes Yes 3

1

1.1 BBB 100 5 No Yes 3

2

1 BBB 100 5 Yes Yes 3

2

1 BBB 100 5 Yes Yes 3

2

1.12 BBB 100 5 Yes Yes 3 $31,120 2
1.1 BBB 110 5 Yes Yes 3

2

0.91 BB 80 2 Yes Yes 3 $30,890 1
1.01 BB 80 3 No Yes 3

2

1.03 BB 100 6 No Yes 3

2

0.8 BB 70 4 Yes Yes 3 $30,860 1
0.8 BB 50 4 Yes Yes 3

1

1.1 BB 100 5 Yes Yes 3 $31,240 2
1.05 BB 110 5 Yes Yes 3

2

BB 110 5 Yes Yes 3

2

B 80 3 Yes Yes 3 $30,000 1

1 B 80 3 No Yes 3 $31,270 2
0.9 B 80 3 Yes Yes 3

1

0.91 B 80 6 Yes Yes 3 $30,440 1
0.8 B 50 6 Yes Yes 3

1

0.9 B 70 4 Yes Yes 3

1

0.9 B 80 4 Yes Yes 3 $30,690 1
1.01 CCC 80 6 No Yes 3 $31,390 2
0.91 CCC 70 4 Yes Yes 3

1

0.92 CCC 70 4 Yes Yes 3

1

0.9 CCC 60 4 Yes Yes 3

1

1.04 CCC 70 5 No Yes 3

2

1 CCC 80 5 No Yes 3 $27,720 2
1.01 CCC 80 5 No Yes 3 $31,390 2

1.01 CCC 80 5 No Yes 3 $31,390 2
1.01 CCC 80 5 No Yes 3 $31,390 2

1.01 CCC 90 5 No Yes 3 $26,250 2
1 CC 110 2 Yes Yes 3

2

1 CC 80 6 Yes Yes 3

2

1.04 CC 100 5 No Yes 3

2

1.02 CC 80 5 No Yes 3

2

1 CC 80 5 Yes Yes 3 $27,450 2
1.01 CC 80 5 Yes Yes 3 $31,350 2
1.11 CC 80 5 Yes Yes 3 $31,080 2
1.14 C 110 5 Yes Yes 3

2

1.07 C 80 5 Yes Yes 3

2

1.04 AAA 100 6 No Yes 4 $27,720 2
1.02 AAA 90 6 No Yes 4

2

0.8 AAA 80 4 Yes Yes 4 $30,120 1
1.01 AAA 100 5 No Yes 4 $26,920 2
0.81 AA 80 6 Yes Yes 4

1

0.81 AA 80 6 Yes Yes 4 $30,290 1

0.85 AA 80 6 Yes Yes 4 $30,510 1
0.81 AA 70 4 Yes Yes 4 $30,790 1
0.82 A 80 6 Yes Yes 4 $30,040 1
1.04 A 90 6 No Yes 4 $30,930 2
0.81 A 70 4 Yes Yes 4

1

1.02 BBB 100 6 No Yes 4 $26,250 2
0.82 BBB 70 6 Yes Yes 4 $30,150 1
0.83 BBB 80 6 Yes Yes 4 $30,140 1
1.04 BB 100 6 No Yes 4

2

1.01 BB 100 5 No Yes 4

2

0.82 B 60 6 Yes Yes 4 $30,850 1
0.9 CCC 60 3 Yes Yes 4 $30,640 1
1 CCC 80 6 No Yes 4 $31,080 2
1.01 CCC 80 6 No Yes 4 $31,390 2

1.01 CCC 80 6 No Yes 4 $31,390 2

1.01 CCC 80 6 No Yes 4

2

1.01 CCC 70 5 No Yes 4 $31,110 2
1.04 CCC 70 5 No Yes 4 $30,890 2
1.01 CC 70 6 No Yes 4

2

1.02 CC 60 6 No Yes 4 $30,930 2

				Exhibit																																																																																																																																				1
Fiji Government Water Well Drilling Contracts
	Volume		Flavor		Purity	MT																																				B	ISO																																																																																			5																																													6		Corrosion																									A		Price		Wholesale
				1.05																												110																																																																																																																						3																																																																																																																																																																																																																																																			Yes																																																																																																								Unknown	$23,3																																																																	80
									1.1																																																																															100	$27,7								50
																														BB																																																																																																																																					No	$20,																											70
																												BBB																										90	$26,780
$21,680
												1.02	$26,010
1.18	$20,310
$21,010
																																									1.01	$26,																																																					4
		$30,890
	$21,920
$22,130
			1.2	$19,880
																													CC		$27,800
																																				CCC			$27,450
	$31,250
		1.12	$24,930
1.58	$26,200
	$23,800
$18,5							60
							1.03																															AA			$26,920
									AAA	$27,140
	$31,260
															0.8		$30,410
												0.81		$30,440
	$30,800
$22,430
$27,300
			$25,110
		1.14		$31,120
		$30,310
$23,160
$24,950
$31,050
		1.06
$23,590
$21,280
	$30,530
		0.85			$30,510
$21,490
									1.04	$21,620
$31,360
					$31,080
$31,410
	1.09	$23,300
		1.11	$24,380
$25,650
$31,180
			$26,250
		$31,350
				0.82	$30,720
$24,510
	1.19		$26,000
$21,700
$23,640
$22,920
			$30,930
$24,130
$26,600
$30,570
											0.9		$30,000
	0.83
$20,350
1.43
$31,300
$22,280
$21,000
		1.15	$23,680
1.25	$23,970
$23,100
$26,540
$19,660
$24,670
$25,840
		1.21	$30,830
$24,460
$23,330
$24,270
1.41	$27,040
$18,920
$26,550
$27,650
$21,560
	1.23		$25,860
$22,630
		1.07	$23,860
	$31,370
$27,570
	$31,380
$23,600
0.87	$30,070
$23,820
	$30,820
$19,290
		$30,430
		$27,720
	$30,150
$30,360
$20,450
$31,450
$24,520
						$31,390
	$26,890
$22,880
1.13		$31,240
1.33	$26,070
$21,950
$31,070
$24,860
$22,520
	$30,640
$23,060
	$30,810
	$31,110
$30,840
	$30,850
$30,560
			0.91	$30,380
	$31,270
$31,020
$26,510
$31,220
$25,910
$19,850
$26,930
$31,140
1.22	$25,160
$26,680
$22,260
1.26
$20,490
0.88	$30,420
$30,080
	$30,120
$30,980
$30,620
$30,710
$31,400
0.84	$30,100
$30,270
$30,220
$26,170
	$23,630
$30,350
	$30,040
	$30,790
	$30,140
$25,740
$27,790
$31,010
$23,510
	$30,860
$23,670
$30,590
$20,650
1.17	$23,010
	0.92
	$30,690
$30,670
$30,280
$30,230
$30,910
$30,060
$31,420
$19,180
$26,820
$23,080
$26,290
$24,370
$27,700
$31,190
	$30,290
$30,490
$23,900
$23,210
$24,760
$27,160

Data description

Volume

Flavor

Purity

Corrosion

Price

Wholesale

Data info
This is the volume rating describing how much water the well can produce
AAA to A = Flavorless, Odorless
BBB to B = Near Flavorless, near odorless
CCC to C = Moderate mineral flavors or odors (e.g. Sulfuric, Metalic, other)
Below C = notable undesirable flavors or odors
Particulate matter Parts Per Million that pass through the filtration system
MTBF	Mean Time Between Failure – Manufacturer’s rating for the installed well system
ISO 5667	Is the installed well system ISO 5667-5: 2006 certified as compliant with standards
Does the installed system use the latest materials and coatings for corrosion resistance
Automation	1 = Completely user serviced with periodic maintenance required
5 = Completely automated and self-contained processes with no user intervention needed
Contract price for installation of the contracted well
Wholesaler ID number

Supplemental Data Analysis Problem *(Fictional Scenario and Data by James Van Scotter, Ph.D.)

The Fiji Water company is considering options to develop goodwill with the local Fijian Islanders by funding the installation of a water well on a remote island where the people currently lack consistent access to clean, safe drinking water. The Fiji Government maintains a publicly accessible database* of all public works projects completed within the last

1

0 years. The database provides detailed information about the well installation contracts. In general, the Fiji Water company expects that the best wells (and costliest wells) will tend to be the water wells that have:

1. higher volume capacity

2. better taste

3. more purity

4

. higher reliability for equipment

5. certifications reflecting compliance with international drinking water standards

6. use of corrosion resistant materials

7. higher levels of automation

8. and perhaps… equipment distributed through more reliable wholesalers

With the attached data in hand, the Fiji Water Company wishes to analyze the government data to see if the price offered by the contractor is a good deal, or perhaps overpriced. In order to do this, the analyst at Fiji Water Co. needs to first construct the best model possible for estimating prices. This may require the development of certain classification and decisions rules and conversion of qualitative data into quantitative data. This may require the creation of dummy variables (0,1) or other approaches that make the data analyzable using regression. Running regression in MS Excel, requires the installation of the Data Analysis add-in. If you don’t know how to add this add-in to Excel, you should be able to find simple instructions online.

As an analyst, your first job is to construct the best model you can. This will be a model that explains the greatest amount of variance in the contract prices. Once you have identified this model, you will then need to input the bid criteria the has been offered by the contractor in order to decide whether or not the proposed well installation contract is a good deal.

Here are the relevant details from the contractor’s bid:

Price	$31,000
Volume	.9
MTBF rating	4
Taste rating	CCC
Purity rating	Particulate ≤ 80 PPM
Corrosion Resistance	Unknown
Automation	Level 4
Certification	Yes
Wholesaler Origin	1

Bonus Questions

1. What are the main cost drivers affecting well contracts? What factors are generally irrelevant?

2. Is the well contract price fair?

3. Given the broader context of issues in the case and the current analyst results, what should Fiji Water do?

2.

9

B09A00

8

FIJI WATER AND CORPORATE SOCIAL RESPONSIBILITY — GREEN
MAKEOVER OR “GREENWASHING”?1

James McMaster and Jan Nowak wrote this case solely to provide material for class discussion. The authors do not intend to
illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other
identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N

6

G 0N1; (t)

5

19

.661.3

20

8; (e) cases@ivey.ca; www.iveycases.com.

Copyright © 2009, Richard Ivey School of Business Foundation Version: 201

7

-05-

10

“Bottled water is a disaster, for several reasons. First there’s the issue of the sustainability of underground
aquifers, from where much of the bottled water is drawn. And then there’s the carbon footprint. Water is
heavy, and transporting it around the world uses a lot of energy.”

Jeff Angel, Total Environment Centre, Sydney, Australia2

“We survived before we had water in bottles. It is unnecessary. When you see water imported from Fiji in
plastic bottles, you know it’s bad for the environment all round.”

Lee Rhiannon, Australia’s Greens MP3

“I think the world is slowly going insane. No thanks, but I prefer water in bottles, that way you know it’s
clean and you know, healthy. Not a sacrifice people should make when plastic bags are still rampant.
Those Greens are extremists and I don’t see this ‘tap water alternative’ ever being viable.”

Anthony L, N.S.W.4

“Consumers who choose FIJI Water will actually be helping the environment by taking carbon out of the
atmosphere with every purchase.”

Thomas Mooney, senior vice-president, sustainable growth, FIJI Water, Los Angeles, California5

2008 was a trying year for FIJI Water LLC., a U.S.-based company that marketed its famous brand in more
than a dozen countries out of its bottling plant located in the Fiji Islands. The company was facing some

1 This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives
presented in this case are not necessarily those of FIJI Water LLC. or any of its employees.
2 “Disaster in a bottle,” Sydney Morning Herald, April

24

, 2007.
3 Kelly Fedor, “Greens call for ban on bottled water,” Livenews.com, March

22

, 2008.
4 A reader’s comment posted on Livenews.com on March 22, 2008.
5 “FIJI Water Becomes First Bottled Water Company to Release Carbon Footprint of Its Products,” Press Release from FIJI
Water, April 9, 2008, www.bevnet.com.

5

Page 2 9B09A008

complex challenges to achieve its goal of a carbon negative outcome at its production plant and in the
transportation of its products, and to convince its consumers and other stakeholders that it was leading the
industry in carbon footprint disclosure and offset. The environmental protest against bottled water in
general, and FIJI brand in particular, in the United States, United Kingdom and other developed countries
was gathering steam as the message on the carbon impact of bottled water was more and more widely
publicized to consumers. FIJI Water was singled out as a primary example of “water insanity” due to the
fact that the product was shipped from a remote island in the South Pacific to its main markets thousands
of miles away. In response to this protest, the company launched a new promotion campaign under a
slogan “every drop is green,” only to be immediately accused by environmentalist groups of engaging in
greenwashing activities. The claim was also challenged by government watchdogs in some countries where
FIJI Water was sold.

At the same time, the company’s relationships with the Fiji government were at the lowest point. The
government accused FIJI Water of transfer price manipulations and seized hundreds of containers carrying
FIJI brand water. After assessing the company’s contribution to the Fiji economy, the government tried to
impose a hefty tax on exported water and the company took the drastic action of laying off its employees in
Fiji to pressure the government to repeal the initial 20-cents-a-litre tax that would have greatly reduced FIJI
Water’s profitability by increasing its tax bill by about FJ$50 million per year. The company intensified its
PR activities, focusing on its contributions to the local communities, to show how good a corporate citizen
it was in Fiji.

THE PRODUCT CONCEPT AND COMPANY BACKGROUND

The product concept was developed in the early nineties by David Gilmour, the Canadian-born owner and
founder of Fiji’s renowned Wakaya Island Resort. Simply put, the concept was to bottle Fiji natural
artesian water and market it both locally and internationally as a unique and exotic product. An important
aspect of the product concept was to bottle the water straight from the source — the source being an old
artesian aquifer containing tropical rainwater, filtered for 450 years through layers of volcanic rock. The
aquifer was found in the Yaqara Range of the Nakauvadra Mountains. Being separated by 1,500 kilometres
of ocean, far away from major polluting sources, and being formed before any industrial activity could
contaminate it, the water could only be of the purest quality and of distinct taste. Moreover, this silica-rich
water was attributed anti-aging and immunity-boosting properties. The product was expected to appeal to
health-conscious and image-oriented consumers.6

To extract and bottle Fiji’s artesian water, in 1993 Gilmour founded a company under the name Nature’s
Best. In 1995, the company’s name was changed to Natural Waters of Viti Ltd. The first bottling plant was
built in 1996 at the cost of FJ$48 million at Yaqara in Ra, on land sub-leased from the Yaqara Pastoral
Company. The plant was built where the source of artesian water had been found.7 The site was in a
remote and underdeveloped rural area of the island of Viti Levu that was poorly served with public
infrastructure. The unpolluted, pristine location of the water source and factory guaranteed that the artesian
water was of the highest purity. However, the site’s remoteness from the capital city of Suva, where Fiji’s
main port is located, entailed higher road transport costs compared to other alternative mineral water
sources. In 1996, FIJI Water LLC corporate headquarters was established in Basalt, Colorado, to handle
the product distribution in the United States, which was intended to be the main market for FIJI Water.

6 James McMaster and Jan Nowak, “Natural Waters of Viti Limited — Pioneering a New Industry in the Fiji Islands,” Journal
of the Australian and New Zealand Academy of Management, 9:2, 2003 (Special Edition on Management Cases).
7 Reserve Bank of Fiji, “Natural Waters of Viti Limited,” Briefing Paper, August 2001, p.1; and Ed Dinger, “FIJI Water LLC,”
International Directory of Company Histories, 74, 2003.

6

Page 3 9B09A008

The production process began with the extraction of the water from a bore-hole. The water was then
channelled through a pipe into the factory, treated and bottled in four bottle sizes: 0.33, 0.5, 1.0 and 1.5
litres. Using imported bottle caps, PET resin and labels, the bottles were manufactured by the company on
its premises and were filled with water during the same production cycle. Bottles were packed into cartons
for shipment to domestic and international markets. The cartons were made in Fiji by Golden
Manufacturers.8

Rising demand for FIJI Water led to the construction of a new

11

0,000-square-foot, state-of-the-art
bottling plant, completed in 2000. Demand continued to build in the 2000s, leading to the airlifting of a
new bottling line in 2004 to help increase capacity to more than 50 million cases a year. The design and
construction of the factory was regarded as among the best in the world, with high-quality and high-speed
production capability.

In 2004, the company was sold by its main shareholder, David Gilmour, to Roll International Corporation
for an undisclosed price. Roll International was controlled by one of Hollywood’s richest couples, Stewart
and Lynda Resnik.9 Following this acquisition, FIJI Water’s corporate headquarters was moved to Los
Angeles. While the Fiji Islands-based operation focused on mineral water extraction, bottling and
transportation within Fiji, the corporate headquarters handled marketing and logistics functions worldwide.
The new owner expanded the Fiji plant’s production capacity by adding a new (third) bottling line in 2006.
In 2007, the state-of-the-art factory could churn out more than a million bottles of FIJI Water a day.10

As of 2008, FIJI Water marketed its bottled mineral water in about a dozen countries in North America
(including Mexico and the Caribbean), Asia-Pacific, Europe and the Middle East. It was marketed as FIJI
Natural Mineral Water in Europe and as FIJI Natural Spring Water in Australia. The two main markets for
the product were the United States and Australia.

In the latter part of 2008, the bottling plant at Yaqara had about 400 employees. Of the total number of
employees, only about 10 per cent were employed with the administration, finance and management
sections; the rest were factory-floor workers. The company employed only a handful of expatriates and
placed an emphasis on the hiring, training and advancement of the inhabitants of nearby villages, most of
whom had little or no employment opportunities prior to Natural Waters of Viti Ltd. locating its factory at
Yaqara. The company claimed to be one of the highest paying employers in Fiji.11

THE GLOBAL MARKET FOR BOTTLED WATER — CONSUMPTION TRENDS

Sales of FIJI Water in the domestic market were relatively very small. More than 90 per cent of all
production was exported. Therefore, for FIJI Water, global trends in bottled water consumption and
demand were of paramount importance.

Since the beginning of the last decade, the beverage product category had been shaken by rapidly changing
consumer preferences that had led to a radical shift away from traditional beverages and toward “New
Age” products, like bottled water. In fact, bottled water had been the fastest growing segment of the entire

8 Ibid.
9 Roll International also owned such companies as POM Wonderful, which produced and marketed juices and fresh
pomegranates; Telesfora, the largest online flower shop in the world; Paramount Farms, the largest grower and producer of
pistachios and almonds in the world; and Paramount Citrus, a leader in the California orange and lemon markets
(www.roll.com).
10 Charles Fishman, “Message in a Bottle,” Fast Company, 1

17

, July/August 2007, p. 110.
11 Company website: www.fijiwater.com.

7

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beverage business. As Exhibit 1 shows, between 2002 and 2007, the world’s bottled water consumption
was increasing by 7.6 per cent annually and by 2007, reached close to 50 billion gallons (approximately

18

5 billion litres). As a result, by 2007, bottled water had become the second largest beverage category,
after soft drinks.

As Exhibit 1 also indicates, the United States was the world’s leading consumer of bottled water in 2007.
Americans drank 8.8 billion gallons of bottled water, as compared to 5.8 billion consumed by Mexicans
and 4.8 billion consumed by Chinese. Altogether, the top 10 consuming nations accounted for 73 per cent
of the world’s bottled water consumption in 2007. However, it should be pointed out that China’s
consumption grew the fastest among the top three consumers in the world between 2002 and 2007, at the
compound annual rate of 17.5 per cent, which was twice the world’s average. Therefore, China was
expected to become the largest consumer of bottled water in the world in the next decade. Another
emerging big consumer of bottled water was India. Although not among the leading bottled water
consuming nations in 2007, India had experienced one of the fastest growth rates in the world during the
period shown in Exhibit 1, even faster than China.

12

When per capita consumption was taken into account, the nations’ ranking looked different (see Exhibit 2).
In 2007, the United Arab Emirates, Mexico and Italy showed the highest consumption per person in the
world, and the United States was ranked ninth, with only a slightly higher consumption per capita than
Hungary and Switzerland. It is noteworthy that Australia and the United Kingdom, two markets of interest
to FIJI Water, were not among the biggest consumers of bottled water in the world, neither in terms of total
consumption nor per capita.

In 2007, Europe and North America were the biggest regional markets for bottled water, accounting for
30.9 and 30.7 per cent of the world’s sales volume, respectively. Asia accounted for 24.3 per cent and the
rest of the world accounted for

14

.1 per cent.

13

FIJI WATER’S INTERNATIONAL MARKET EXPANSION

While responding to those world market trends, FIJI Water had made its strategy revolve around capturing
international market opportunities and strongly positioning the brand in large and growing markets for
bottled water, but markets that were not overly price competitive, as FIJI Water, right from the beginning,
was designed to be a premium brand. The first, and critical, international market to conquer was the United
States.

Conquering the U.S. Market

To begin its international market expansion, FIJI Water was first launched in California in 1997, using Los
Angeles and Palm Beach as a beach head for a subsequent and gradual roll-out of the product across the
United States. In 1998, the company entered the sophisticated New York market, firmly positioning itself
on the East Coast. At the same time, FIJI Water was also introduced to the Canadian market, starting with
the country’s West Coast. The North American market provided the company with tremendous growth
opportunities. The U.S. market, in particular, was so embracing that after about five years of the product’s
presence there, FIJI Water had achieved the second selling position in the U.S. market among imported
still water brands, and in 2008, it had climbed to the number one position among imported bottled waters

12 “The Global Bottled Water Market. Report 2007,” Beverage Marketing Corporation, January 2008.
13 Ibid.

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in the United States.14 Such a strong market position had been achieved in the market where competition
was fierce and which was characterized by industry consolidation and the increasing dominance of major
soft drink companies in bottled water marketing, such as Coca Cola and PepsiCo, which had entered the
market with their own proprietary brands, Dasani and Aquafina, respectively. At the same time, FIJI Water
had benefited from the overall beverage market trend that had shown a major shift in beverage
consumption preferences in the United States.

As Exhibit 3 shows, the per capita consumption of bottled water in the United States increased from 13.5
gallons in 1997, when the FIJI Water brand was introduced to the U.S. market, to 29.3 gallons in 2007,
thus more than doubling. This was part of the exponential growth trend in bottled water consumption over
a longer period, although growth clearly accelerated after 1990.

15

The above shifts in the consumption of beverages could be linked to changing lifestyles and growing
concerns of the effects of sweetened carbonated drinks on people’s health. The baby boom generation,
which constituted about a third of the total population in North America, had become obsessively health-
conscious and fitness-oriented. Bottled water had become popular among the younger generation as well.
Over the last decade, bottled water had gained a reputation of not only being healthy but also a fashionable,
elegant and “trendy” drink.

In 2007, total U.S. bottled water sales surpassed 8.8 billion gallons, a 6.9 per cent advance over 2006’s
volume level. That translated into more than 29 gallons per person, which meant U.S. residents drank more
bottled water annually than any other beverage, other than carbonated soft drinks (CSDs). While CSDs still
had volume and average intake levels more than twice as high as those of bottled water, the soft drink
market had been struggling because of competition from bottled water. Per capita consumption of bottled
water had been growing by at least one gallon annually, thereby more than doubling between 1997 and
2007. In 2007, U.S. consumers spent $15 billion on bottled water, more than on iPods or movie tickets.

16

As Exhibit 4 shows, sales of non-sparkling bottled water by far exceeded sales of its sparkling counterpart.
Also, between 2000 and 2007, non-sparkling water’s sales grew faster than those of sparkling water. At the
same time, it is noteworthy that imported bottled water constituted only a little more than two per cent of
the total sales of this product category, and imports tended to fluctuate widely from one year to another.
The biggest sellers in the U.S. market were local brands, such as Arrowhead, Poland Spring, Zephyrhills,
Ozarka, Deer Park, and Ice Mountain. The market was dominated by four large companies: Nestlé, Coca
Cola, PepsiCo and Danone. Nestlé had the largest market share of all — in 2007 the company’s brands of
bottled water accounted for 26 per cent of total sales of the product category.17

During the product’s introduction into the U.S. market, FIJI Water LLC was responsible for the marketing
and logistics of FIJI brand. The company had two senior VPs, in charge of the East Coast and the West
Coast, respectively, reporting to the company’s CEO, Mr. Doug Carlson.18

The successful launch of FIJI Water in the United States was attributed to a skillful marketing strategy and
the high quality of the people who drove the initial marketing campaign.19 FIJI Water LLC’s marketing
personnel were able to differentiate the FIJI brand in a crowded market where about 400 brands of bottled

14 “FIJI Water Becomes First Bottled Water Company to Release Carbon Footprint of Its Products,” Press Release from FIJI
Water, April 9, 2008, www.bevnet.com.
15 “The Global Bottled Water Market. Report 2007,” Beverage Marketing Corporation, January 2008.
16 Fishman, “Message in a Bottle,” July/August 2007, p. 110.
17 Ibid., p. 115.
18 McMaster and Nowak, “Natural Waters of Viti Limited — Pioneering a New Industry in the Fiji Islands,” 2003, p. 42.
19 Paul Yavala, “FIJI Water Travels,” The Fiji Times, November 2000, p. 4.

9

Page 6 9B09A008

water competed with each other. This was mainly achieved through unique product positioning, innovative
packaging, premium-product pricing, effective distribution, and image-creating publicity. The latter had
elevated this otherwise mundane commodity to celebrity status.

Due to its light mineralization, FIJI Water was characterized by a smooth taste and no aftertaste. The light
mineralization also gave the water a clean, pure taste. Many U.S. consumers instantly liked the taste of the
water and, having tried it, repurchased the product in preference to the more mineralized waters. FIJI
Water had been top-rated in taste tests sponsored by such influential magazines and guides as Chicago
Magazine, Cook’s Illustrated Buying Guides, and Men’s Health. Taste, therefore, was one of FIJI Water’s
main advantages over other bottled water brands. The company continued to educate the consumer about
the difference between purified, spring and artesian bottled water.20 In addition to superb taste, the water
had a high level of silica, the ingredient that was believed to promote rejuvenation and anti-aging. Another
distinct aspect of the product was its purity, stemming from the fact that the source of the water was a
virgin, unpolluted ecosystem, located 1,500 kilometres away from any metropolitan and industrial area,
and the fact that the water was 450 years old, thus formed before industrial pollution could affect its purity.
All this added to the mystique that the product seemed to be surrounded by in the minds of consumers. Due
to FIJI Water’s superb taste, purity and mystique, a premium-product positioning had been followed right
from the beginning.

Although of paramount importance, the product content was only part of the successful marketing
equation. Another important element was packaging. For many years, all bottles containing natural water
were the same — round, with paper labels. Packaging, one of the most fundamental ways to differentiate a
product, was not used as such a tool in bottled water markets. Over the last decade, both companies and
consumers had discovered the power of packaging in bottled water brand positioning and imagery. FIJI
Water had utilized the power of packaging to its benefit. Natural Waters of Viti Ltd. was the first company
in the industry to use a square bottle and this had become the product’s signature trait. Furthermore, since
FIJI was the only brand that came from a tropical paradise — not a cold, mountainous region — the
packaging reflected that in an artful and compelling way: consumers could see that immediately when they
looked at the unique square bottle bearing bright, three-dimensional graphics.

21

FIJI Water’s packaging was initially designed by a New York-based advertising agency and had been
refined several times since its original design. When the brand was introduced to the U.S. market, its
square-shaped bottle was unique and had great appeal to consumers. The gold border on the label gave an
image of quality. The blue cap was colour-coordinated with the blue waterfall and the blue-green colours
in the see-through labels. Consumers had reported favourably on the attractive label with the Pacific image
and see-through waterfall. Later on, the company had redesigned the labelling and added new features to
the bottle’s front and back labels. The front label, in addition to the brand name, featured a pink hibiscus
flower, a national flower of the Fiji Islands. In a new version of the bottle design, the inside of the back
label, instead of a waterfall, displayed a large palm frond, which was amplified when the bottle was filled
with water, and the outside of that label explained the water’s distinct characteristics, such as its remote
and pristine source and its unique mineral composition. In fact, in 2008, FIJI Water had four different
outside back labels, each of which illustrated a unique image and communicated a different part of the FIJI
Water story; they included: “bottled in Fiji,” “what ecosystem is your water from,” “what is artesian
water,” and “untouched by man.”

Similarly to packaging, a premium-price policy reinforced the product’s high-quality image. Anyway, high
freight costs between Fiji and the United States would have made a low- or even medium-price policy

20 www.fijiwater.com.
21 Nancy Christy, “Age of enlightenment,” Beverage Aisle, August 2001.

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impossible. FIJI Water’s price was higher than that of most brands offered to U.S. consumers. For
example, in the Californian market, FIJI Water was positioned slightly below Perrier but above Evian.

Another important factor that had contributed to FIJI Water’s success in the U.S. market was its
distribution. Having good distributors was important in that it enabled the brand to be well-placed in and
readily available to the market. While in Fiji, the company used exclusively Coca Cola Amatil to distribute
its product, in the U.S. market the product was sold by numerous distributors, including wholesalers, retail
chains and individual retailers. In addition to stores, the product was sold on the premises of many high-
end restaurants and hotels. The product was also available online in the continental United States. To
support the brand’s continued growth, FIJI Water LLC had expanded distribution beyond exclusive
retailers to include mass merchandisers, convenience stores, drug stores, and even gas stations.22 This
intensification of distribution might sound like a contradiction of the product’s exclusive positioning, but
the company representatives claimed that it was all part of “the affordable luxury” strategy.

Destined for the U.S. market, FIJI Water was shipped from the ports of Suva or Lautoka on Viti Levu to
three major distribution centres in the United States — Los Angeles, New Jersey and Miami. It was then
distributed throughout most of the United States. Initially, the physical distribution to and within the
United States was contracted out to specialized logistics firms, which delivered the product to a variety of
distributors who then carried it through their distribution channels. Occasionally, these logistics firms
delivered the product directly to consumers. In 2000, FIJI Water entered into an exclusive distributorship
agreement with Cadbury Schweppes. This partnership was crucial to FIJI Water’s aggressive expansion
and success in the U.S. market, where the FIJI brand was available at tens of thousands of outlets.
Canadian shipments were sent to Vancouver, the only location where the product was initially available. In
1999, FIJI Water appointed Brio Industries Inc. as Canada-Wide Master Distributor of the FIJI brand.

23

In
2008, the U.S.-market distributorship agreement with Cadbury Schweppes was extended to cover Canada
also. Since February of that year, FIJI Water had been exclusively distributed by Cadbury across Canada
among grocery, convenience, drug and most other retail stores.24

Building an image of the high quality, uniqueness and class of the product was another aspect of this
successful marketing campaign. At the beginning, FIJI Water did very little “formal” or paid advertising,
which included only some printed advertisements placed in in-flight magazines, such as those of Air
Pacific. The brand achieved an explosive growth early on, mostly through word-of-mouth advertising, free
product placement and targeted sampling. According to Thomas Mooney, senior vice-president of
sustainable growth, the company continued its focus on introducing new customers to the brand and
converting them to “brand evangelists.” While doing so, FIJI Water targeted locations and venues that
resonated with the brand’s premium image. Said Mooney: “It’s different to get a bottle of water after
walking off the subway than it is to get a bottle at an after-party following the Oscars.”

25

In fact, the
product had received a lot of publicity through movies, as Hollywood celebrities, such as Tom Cruise,
Pierce Brosnan, Whoopi Goldberg and Vin Diesel, and popular singers, such as Michael Bolton, Tina
Turner and Jessica Simpson, had eagerly endorsed the product. FIJI Water had also become a favourite at
the dining tables of some of New York’s better restaurants and hotels, including Jean Georges, Four
Seasons Restaurant, Pierre Hotel, Trump International Hotels & Towers, and Carlyle and the Paramount.
And there were celebrity chefs using FIJI Water as a cooking ingredient in their kitchens, such as “Sam the
Cooking Guy,” an Emmy Award-winning TV show.

22 Heather Landi, “Paradise in a Bottle,” Beverage World, November 2007, p. 24.
23 “Brio Industries Inc. Appointed Canada-Wide Master Distributor of FIJI Water,” Business Wire, Vancouver, British
Columbia, April 15, 1999, http://findarticles.com/p/articles/mi_m0EIN/is_1999_April_15/ai_54381790.
24 “Canadians Have a Taste for FIJI Water,” FIJI Water Press Release, Toronto, Ontario, March 10, 2008,
www.nkpr.net/pressreleases/FW_Cadbury_Schweppes_Release .
25 Heather Landi, “Paradise in a Bottle,” Beverage World, November 2007, p. 24.

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In 2007, the company launched a new marketing campaign, aiming at communicating the core benefits of
FIJI Water. Revolving around the theme “untouched,” the campaign followed an integrated marketing
communication approach, combining advertising, PR, direct marketing, product placements and event
marketing. The advertising part of the campaign used a striking blue-colour creative copy that brought out
the pristine nature, magical allure and mystery that the Fiji Islands embodied. The advertising campaign
was developed by FIJI Water’s in-house creative agency and used both out-of-home (OOH) and print
media.26

In sum, the secret of FIJI Water’s success in the United States seemed to lie in its marketers’ ability to
elevate the world’s simplest drink to celebrity status. FIJI Water was much more than just pure, good-
tasting liquid. It was a promise of good health, refinement, status, and exclusivity. It evoked images of
unspoiled natural beauty and purity. It was a tropical paradise captured in a bottle!

Expanding into the Australian Market

With the tremendous success achieved by FIJI Water in the United States, the firm entered the Australian
market in 2003 from a position of strength. As shown earlier, Australia was not among the leading bottled
water consuming countries. However, the country’s relatively large market and, more importantly, its
proximity to Fiji made it an attractive market to enter. Moreover, before the product was launched in
Australia, many Australians visiting Fiji had a chance to develop a taste for FIJI Water. It was common to
see Australian vacationers returning from Fiji carrying cartons of FIJI Water with them back home. This
created awareness of, and even pent-up demand for, the product before it was officially launched.

The product was initially introduced to select hotels and restaurants before becoming available in gourmet,
deli and independent convenience stores. In 2005, FIJI Water gained national distribution in more than 400
Coles supermarkets, and in 2007, FIJI Water’s Australian subsidiary signed a national distribution
agreement with Cadbury Schweppes Australia.27 At that time, Cadbury Schweppes had a national market
share of about eight per cent, with its Cool Ridge, Spring Valley Twist and FIJI Water brands.

The Australian bottled water market had sustained a high growth rate in the past decade and was predicted
to continue to grow strongly in the next one. FIJI Water was emerging as a major brand in the premium
market segment and was facing stiff competition. The Australian bottled water market was very
competitive, and it was also less consolidated than the U.S. market. In Australia, about one thousand
brands of bottled water competed for market share. Coca-Cola Amatil’s Mount Franklin was Australia’s
leading water brand and was sourced from select Australian springs.

According to the Australasian Bottled Water Institute (ABWI) website, consumer research suggested that
although bottled water was consumed in Australia by people of varying age groups and occupations, a
large majority of them tended to be young singles and couples, in particular females, aged between 14 and
35 years. In terms of psychographics, bottled water consumers could be described as being more health-
conscious, progressive and socially aware. 28

26 FIJI Water Press Releases, www.fijiwater.com, accessed July 23, 2008.
27 “National Packaging Covenant,” FIJI Water (Australia) Pty Ltd., Annual Report, July 2006-June 2007, South Yara, Victoria,
Australia.
28 www.bottledwater.org.au.

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Another Fiji company, whose brand name was Island Chill, with a very similar bottle design to FIJI Water,
successfully entered the Australian market a few years after FIJI Water’s launch there. Island Chill also
contained silica and had been well-received in the Melbourne market. Although Melbourne was initially
Island Chill’s primary sales focus area, the brand was expanding to other Australian cities. The noticeable
similarities in bottle shape and label design between the FIJI Water and Island Chill brands had led to a
trademark dispute between the two companies in both Australia and the United States. According to the
Island Chill website’s press centre, in February of 2007, the Federal Court of Australia ruled in favour of
Island Chill, dismissing FIJI Water’s complaint against Island Chill.29 In the United States, the dispute was
settled outside of court in June of 2008, when Island Chill agreed to remove the hibiscus flower from its
bottle’s label.30

Experiencing a Backlash in the U.K. Market

One year after FIJI Water entered the Australian market, it made an attempt to crack the U.K. market. The
company launched FIJI brand through the supermarket chains Waitrose and Selfridge’s, department stores
Harvey Nichols and Harrods, and a number of specialty stores carrying whole-food products.

Soon after the brand had arrived in Britain, FIJI Water gained the reputation as the best-travelled bottled
water in the country.31 The fact that the product had to travel 10,000 miles to reach the British consumer
could not escape the attention of environmentalist and conservation groups, in a country where quality of
tap water was among the highest in the world. In a newspaper article published in 2004, an official from
the Food Commission was reported to have said that “it was ludicrous to bring water from the other side of
the world when essentially the same product was available out of the tap.”32 At the same time, it was noted
that the most popular French bottled water brands — Evian and Vittel — travelled “only” between 400 and
460 miles to reach Britain. As a result of this backlash, FIJI Water had so far been largely unsuccessful in
penetrating the U.K. market. Moreover, FIJI Water’s appearance in the United Kingdom had fuelled the
debate around the environmental impact of bottled water.

In 2008, British environmentalists and conservationists took up the war against bottled water. They were
joined by some political leaders and government officials as well. For example, the mayor of London and
the CEO of Thames Water Authority launched a campaign called “London on Tap” to encourage
consumers to order tap water in restaurants.33 Their message to consumers was that using less bottled water
would help tackle climate change by cutting carbon emissions with its production, storage, transport and
disposal. Campaign partners included London Remade, the Crafts Council and WaterAid, and the
supporters included Friends of the Earth and London Sustainability Exchange.

On January 18, 2008, the BBC broadcast a TV special that featured FIJI Water in a Panorama documentary
called “Bottled Water — Who Needs It?” It gave a critical analysis of the negative impact the success of
the U.K. bottled water industry was having on the environment.34 It pointed out that “In the UK last year,
we spent nearly £2 billion buying bottled water, yet a billion people around the world don’t have access to
safe drinking water” and that “Sales of bottled water have boomed in recent decades, growing 200-fold
from the 1970s. But a litre of one of the UK’s most popular French mineral waters generates up to 600

29 www.islandchill.com/press.html.
30 “Island Chill and FIJI Water end trademark dispute,” FOODBEV.COM, June 24, 2008.
31 “Bottle of water that has travelled the world,” The Daily Telegraph, November 3, 2004.
32 Ibid., p. 3.
33 Hannah Marriott, “Bottled water under fire: how industry responded,” PRWeek (UK), February 21, 2008.
34 The documentary can be accessed from http://news.bbc.co.uk/2/hi/programmes/panorama/7247130.stm.

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times more CO2 equivalent than a litre of Thames tap water.”35 The programme travelled to Fiji, where
they visited the FIJI Water bottling plant, Fijian villages and hospitals, noting that one in three Fijians did
not have access to safe tap water. The documentary was wrapped up with the following statement: “Indeed
FIJI Water would make the case that if you really care about the plight of Fijians, you should buy FIJI
Water as it provides jobs and income for the islands. But tell people here on the street that we buy bottled
water from Fiji and most will still roll their eyes and ask: Why?”36 The 2008 BBC Panorama story
focusing on FIJI Water had 3.5 million viewers!

Growing concerns about bottled water’s harmful effects on the environment might have caused a reversal
of a growing trend in bottled water consumption in the United Kingdom. For the first time in years, a nine
per cent drop of retail sales of bottled water was reported in the first quarter of 2008.37 This was largely
attributed to an Evening Standard campaign to get Londoners to turn to tap water instead of buying
expensive and environmentally harmful bottled water. A fifth of diners in London restaurants were
reported to opt for tap water. The government’s Food Standards Agency banned bottled water from its
offices. This move was followed by a growing number of Whitehall departments doing the same, including
Downing Street. Food and health lobby group “Sustain” launched a campaign for government departments
and official bodies to turn to tap water. The campaign’s director, Richard Watts, believed it had worked.
He said: “This looks to be the first ever recorded fall in bottled water sales. It is a significant development.
The message about bottled water being unnecessary, expensive and damaging to the environment is finally
getting through.”38

WORLDWIDE CONTROVERSIES OVER BOTTLED WATER’S IMPACT ON THE ENVIRONMENT

In the last 10 years, the high sustained global growth rate of bottled water sales of about eight per cent per
annum had been a triumph of modern marketing and a dynamic, profitable segment of the beverage market
for the growing number of producers. FIJI Water had been very successful in gaining market share in this
rapidly growing industry. Advertising campaigns had promoted bottled water as a healthy alternative to
high-calorie CSDs and purer alternative to tap water. The advertisements focused on its pristine pureness,
safeness and better taste compared to tap water. However, conservationists pointed out that the price of
bottled water was about 500 to 1000 times higher than that of tap water. Since the launch of FIJI Water in
the United Kingdom, the bottled water industry had been under attack in the media and FIJI brand had
been singled out for criticism by environmental groups and by a BBC documentary that had been widely
broadcast.

The Swiss-based conservation group World Wide Fund for Nature had published a research study it
funded, which found that bottled water was often no healthier or safer to drink than tap water and it had
used the findings to argue strongly that bottled water was not only environmentally unfriendly but also a
waste of money. 39 Another watchdog, Corporate Accountability International, had mounted a campaign
called “Think Outside the Bottle.”40 The group advocated ending state contracts with bottled water
suppliers, promoting water systems and improving the quality of water infrastructure.

35 Ibid.
36 Ibid.
37 Lucy Hanbury, “Bottled water sales dry up as London turns to tap,” Evening Standard, April 14, 2008.
38 Ibid.
39 Catherine Ferrier, “Bottled Water: Understanding a Social Phenomenon,” Discussion Paper commissioned by WWF, April
2001.
40 “Corporate Accountability International: Challenging Abuse, Protecting People,” www.stopcorporateabuse.org.

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According to Janet Larsen’s article “Bottled Water Boycotts,” in 2007 city governments, high-class
restaurants, schools, and religious groups from San Francisco to New York to Paris were ditching bottled
water in favour of tap water. 41 The U.S. Conference of Mayors, which represented some 1,100 American
cities, discussed at its June 2007 meeting the mayors’ role in promoting the consumption of municipal tap
water and many city councils were banning the purchase of bottled water for their employees. In the same
year, New York City launched a campaign to persuade people to cut back on bottled water and return to
tap water. San Francisco’s mayor banned city employees from using public money to buy imported water,
while Chicago’s mayor imposed a five-cents-a-bottle tax on plastic bottles to compensate for the financial
burden bottled water caused for municipal waste disposal systems.42 It was somewhat ironic that in the
United States, more than a quarter of bottled water was just purified tap water, including Pepsi’s top-selling
Aquafina and Coca-Cola’s Dasani.

FIJI WATER’S “CARBON NEGATIVE” CAMPAIGN

In response to the environmentalists’ criticism, in 2008, FIJI Water LLC launched a “carbon negative” PR
campaign, claiming that it was the first bottled water company to release the carbon footprint of its
products.43 It had also joined the Carbon Disclosure Project Supply Chain Leadership Collaboration and
had started working with the Carbon Disclosure Project (CDP), the world’s largest investor coalition on
climate change, to disclose its own and its suppliers’ carbon emissions. As measurement is the first step to
managing and reducing carbon emissions, FIJI Water Company estimated its total annual carbon footprint
at 85,396 metric tons of CO2eq. This was for the base year ending June 30, 2007.44

While measuring its carbon footprint, FIJI Water calculated its carbon emissions across every stage in the
product lifecycle: starting from producing raw materials for packaging, through transporting raw materials
and equipment to the plant, manufacturing and filling bottles, shipping the product from Fiji to markets
worldwide, distributing the product, refrigerating the product in stores, restaurants, and other outlets, to
disposing/recycling the packaging waste. It estimated that about 75 per cent of its carbon emissions
resulted from the operations of supply chain partners. The company also looked at carbon emissions from
its administrative and marketing activities. At the same time, the company launched a product-specific
emissions disclosure via a website (www.fijigreen.com). The website provided consumers with access to
product lifecycle emissions data and analysis for each of the company’s products. The company’s senior
VP for sustainable growth, Mooney, argued that “the only way consumers can turn their good
environmental intentions into good decisions is to give them the information they need regarding the
emissions associated with the products they buy.”45

As part of its “carbon negative” campaign, FIJI Water was planning to offset its total carbon footprint by
120 per cent, by removing from the earth’s atmosphere not only all the emissions its activities produced,
but also an additional 20 per cent. In that sense, the company’s impact on carbon emissions would be
negative. To achieve this goal, FIJI Water had undertaken a number of steps towards sustainable growth.
These steps included:

41 Janet Larsen, “Bottled Water Boycotts,” Earth Policy Institute, 2007.
42 Lucy Siegle, “It’s just water, right? Wrong. Bottled water is set to be the latest battleground in the eco war,” The Observer,
February 10, 2008, p. 30.
43 “FIJI Water Becomes First Bottled Water Company to Release Carbon Footprint of Its Products,” April 9, 2008,
www.bevnet.com.
44 Ibid.
45 Ibid.

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 reducing packaging by 20 per cent
 supplying at least 50 per cent of the energy used at its bottling plant with renewable energy
 optimizing logistics and using more carbon-efficient transportation modes
 restoring degraded grasslands in the Yaqara Valley by planting native tree species
 supporting recycling programs for plastic PET bottles

According to a company press conference held in April 2008, FIJI Water had already implemented several
measures to reduce its carbon emissions. By optimizing its logistics, the company had reduced trucking
miles by 26 per cent on average. FIJI Water’s 1.5-litre bottle had been redesigned to reduce the packaging
by seven per cent. The company had also managed to reduce motor fuel consumption in Fiji by 50 per cent
by using more fuel-efficient trucks in transporting its products from the plant to ports.46

All in all, the above sustainable growth commitment provided FIJI Water with an opportunity to use that
commitment as a PR pitch: the sale of every bottle of FIJI Water would result in a net reduction of carbon
in the atmosphere! In other words — “every drop is green,” as the company’s website emphasized.

CONSERVATIONISTS’ ATTACKS ON FIJI WATER’S GREEN MAKE-OVER

Conservation groups had not been impressed by FIJI Water’s claim that it was going carbon negative. It
was perceived as pure greenwashing at its best. The 10th Edition of the Concise Oxford English Dictionary
recognizes the word “greenwash,” defining it as “Disinformation disseminated by an organisation so as to
present an environmentally responsible public image.” Greenwashing was defined in law in Australia by
the Competition and Consumer Commission that ensured compliance with the Commonwealth Trade
Practices Act 1974. The Act contains a general prohibition on “conduct that is misleading or deceptive or
is likely to mislead or deceive.” Section 53 of the Act prohibits a corporation from representing that
“goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits
they do not have.”

Conservation groups argued that the new website launched by FIJI Water in 2008 to sell its carbon
negative message failed to provide a detailed description of the actual calculation of its carbon footprint
and its reduction by the measures that were promised to be implemented in the future. At the same time,
the groups pointed to the basic carbon footprint advantages of consuming local tap water. They argued that
the new slogan “every drop is green” was straightforward greenwashing pushed to its limits.

The Food and Water Watch website posted a blog, entitled “Greenwashed: FIJI Water Bottles the Myth of
Sustainability,” about FIJI Water’s carbon negative claim that summarized the response of the
environmental watchdogs.47 The website stated: “Corporate attempts to label their products as ‘green’ for
the sake of turning a fast buck are nothing new. Corporations exist, after all, in order to make money, and
capitalizing on whatever is capturing the public’s collective imagination is often the best way of doing so.
But Fiji Artisanal Water’s entree into the green movement strikes us as particularly suspect. The company
has recently launched fijigreen.com, a website outlining the ways in which their water is ‘good for the
environment.’ If you’re anything like us, you are probably wondering how this claim could be true. It
can’t.”48

46 “FIJI Water Becomes First Bottled Water Company to Release Carbon Footprint of Its Products,” FIJI Water Press
Release, Los Angeles, April 9, 2008, www.bevnet.com.
47 www.foodandwaterwatch.org/blog/archive/2008/05/02/greenwashed-fiji-water-bottles-the-myth-of-sustainability.
48 Ibid.

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The Greenwash Brigade (part of the Public Insight Network), a U.S. organization of environmental
professionals that are dedicated to exposing “greenwash” as they examine eco-friendly claims by
companies, was quick to respond to FIJI Water’s claim that it was going carbon negative. In an article by
Heidi Siegelbaum on June 6, 2008, titled “FIJI Water by the numbers,” she summarized FIJI Water’s
environmental impact by the following numbers:

 5,500 miles per trip from Fiji to Los Angeles;
 46 million gallons of fossil fuel;
 1.3 billion gallons of water;
 216,000,000 pounds of greenhouse gases.49

And she commented: “Fiji is using staggering amounts of energy, water, and fossil fuels to take a naturally
occurring product (which is not regulated like drinking water here in the US), put it in an inherently
problematic container and then have that forever-container tossed into landfills or incinerators all over
America (and Asia, where we have a healthy export market for plastics).”50

Tony Azios summarized the reaction in the United States to the response of bottled water companies to the
environmental protests, as follows: “Even as bottled water companies continue to see increased sales, the
recent raft of negative media coverage and activist campaigns against the industry has caused a product
once seen as fundamentally green and healthy to lose some of its luster. Now, brand-name bottlers are
scrambling to reposition their products by upping their green credentials to fend off further consumer
backlash fermenting in churches, college campuses, and city halls across the country.”51

Rob Knox, in his article titled “Green or Greenwashing? FIJI Water,” was also not convinced that “every
drop is green.”52 His evaluation of the green makeover was that it was greenwashing. Knox reported: “[…]
In March they took out a massive booth at the Natural Products Expo, part of a larger ‘hey we’re green
now’ campaign by the company. The booth featured a gigantic banner proclaiming ‘every drop is green’.”

He continued: “Allow me free reign to mock Fiji for a moment. Let’s discuss what every drop of FIJI
Water is — and here’s a hint, it’s not green. Every drop of FIJI Water is imported from Fiji. That’s right,
the Fiji that is an island in the middle of the Pacific Ocean, thousands of miles from the mainland United
States. This company takes water, which can be found in rather large quantities in the US, all the way from
Fiji to your neighborhood. Every drop of FIJI Water represents thousands of miles in completely
unnecessary transportation and hundreds of gallons of fuel, all so you can drink expensive water from a
pretty bottle.”53

In 2007, Pablo Päster, an engineer and MBA, claimed to have undertaken a thorough and exhaustive study
of the cost of bringing a litre of FIJI Water to America that was reported about on the Treehugger website
in an article by Lloyd Alter entitled “Pablo Calculates the True Cost of Bottled Water.” His study found
that “In summary, the manufacture and transport of that one kilogram bottle of FIJI Water consumed 26.88
kilograms of water (7.1 gallons), .849 kilograms of fossil fuel (one litre or .26 gallons) and emitted 562
grams of Greenhouse Gases (1.2 pounds).”54

49 Heidi Siegelbaum, “FIJI Water by the numbers,” June 6, 2008.
50 Ibid.
51 Ibid.
52 Robert Knox, “Green or Greenwashing? FIJI Water,” www.greenopia.com/USA/news/15063/7-16-2008/Green-or-
Greenwashing?-Fiji-Water.
53 Ibid.
54 www.treehugger.com/files/2007/02/pablo_calculate.php.

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RELATIONS WITH THE FIJI GOVERNMENT

Natural Waters, the Fiji Islands-based production subsidiary of FIJI Water LLC, played an important role
in the Fiji economy, particularly as a source of export earnings. While in 1998 FIJI Water brand exports
ranked 14th among product categories exported from Fiji,55 its position among exports had climbed to
number two in 2007, bringing FJ$105 million in export earnings.56 Only sugar, whose exports in 2007
stood at FJ$185 million, brought more export revenues than bottled water, which was virtually all
accounted for by FIJI Water. Since export revenues from sugar had been on the decline since 2000, there
was a possibility that bottled water would soon become the number 1 export earner for Fiji, provided the
Fiji government did not do any harm to the rapidly growing bottled water industry. The stand-off between
Fiji’s bottled water companies and the government over the 20-cents-per-litre export duty and excise in
2008 might put a brake on this industry’s growth and erode a substantial part of Fiji’s export earnings. In
2007, bottled water accounted for almost 10 per cent of Fiji’s total export revenues.57

Taxation Issues

Over the last decade, the Fiji government had observed the rapid growth of a new export industry led by
FIJI Water.58 When Natural Waters of Viti Ltd. was established, it applied to the government for financial
incentives under the Tax Free Factory Scheme and was granted a thirteen-year tax holiday from the
government. Also, it was granted approval to import the plant and equipment for its factory free of import
duty.59

The success of FIJI Water was very evident to all citizens of Fiji as they observed the large number of
trucks transporting containers of bottled water to the ports of Lautoka and Suva using the Queens highway.
FIJI Water received positive media reports and was a sponsor of the Fiji Exporter of the Year Awards. A
film was made about the company’s past growth and plans for the future, and was broadcast several times
on the local TV station, Fiji One.

It was not until 2008 that the government started to review the potential tax contribution that could be
levied on the bottled water industry. FIJI Water appeared to provide little direct benefits to government
revenue because of the tax-free status granted by earlier governments. One could argue that the damage
caused to the national roads and bridges by the huge number of heavily laden trucks carrying FIJI Water
might have exceeded the road and fuel tax, and that the citizens of Fiji were subsidizing FIJI Water. The
bottling plant of FIJI Water was fully automated with state-of-the-art equipment and featured a highly
capital-intensive production process employing a relatively small workforce given the volume of exports.

On July 4, 2008, without any prior consultation with the industry, the Fiji government imposed a twenty-
cents-per-litre export duty on all mineral water exports and the same level of excise duty on mineral water
sold for domestic consumption.60 This new tax was put into effect by amending the Customs Tariff Act
(Amendment) (No 3) Promulgation 2008 And Excise Act (Amendment) (No 1) Promulgation 2008.61

55 McMaster and Nowak, “Natural Waters of Viti Limited — Pioneering a New Industry in the Fiji Islands,” 2003.
56 Fiji Islands Bureau of Statistics, “Key Statistics: Overseas Merchandise Trade,” March 2008, p. 71.
57 Ibid.
58 According to Fiji Times (August 12, 2008, p. 2), FIJI Water accounts for 98 per cent of bottled water exports from Fiji.
59 McMaster and Nowak, “Natural Waters of Viti Limited — Pioneering a New Industry in the Fiji Islands, 2003.”
60 “Cabinet Approves Tariff, Excise Act,” Fiji Times, July 4, 2008.
61 Ibid.

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The local media reported that the interim finance minister, Mahendra Chaudhry, said, “The main purpose
of this new duty was to stimulate conservation of our scarce natural resources.”62

These new taxes came into effect on July 1, 2008. In a press statement released on July 20 by Fiji Islands
Revenue and Customs Authority chief executive officer, Jitoko Tikolevu, it was announced that: “Should
there be a change in the rates in the future as decided by government, the Authority will refund any excess
revenue collected from these taxes.”63

Based on FIJI Water’s export levels, the new export tax would result in the company paying many millions
to the government coffers. In 2006, FIJI Water exported 119,000,000 litres of bottled water to the United
States. Applying a tax of 20-cents-per-litre to this level of export to the United States would result in a tax
bill of FJ$24 million to FIJI Water just for its exports to one market. It was likely that FJIJ Water could end
up paying as much as FJ$50 million for the new tax. 64

FIJI Water and the nine other companies immediately mounted a campaign against the new tax. They first
threatened to cease production and to lay workers off. They issued press releases that argued the new tax
would destroy the whole industry and greatly undermine foreign investor confidence, which was already at
a low level. The 10 bottled water companies formed an industry association and appointed a spokesperson
to lead the media campaign. They argued that this sudden decision by the Cabinet was made without
thorough analysis of the economic costs and benefits. They stated that the government did not have
detailed information on company costs and profitability and that the firms could not absorb the ill-
conceived new tax that would have a major negative impact on the whole economy. It would be the death
knell of this new export industry and would greatly reduce export earnings and foreign exchange earnings,
and lead to job losses and slower economic growth. They pointed out that it would undermine the
government’s economic development strategy, which was based on increasing the level of investment and
export-oriented growth.

The new industry association comprising 10 firms — Warwick Pleass, FIJI Water, VTY, Mr Pure, Island
Chill, Aqua Pacific, Diamond Aqua, Tappoos Beverage, Fresh Spring Limited and Minerals Water of Fiji
— lobbied the members of the Military Council and the media and gained strong support of the local
newspapers. The main local newspaper, The Fiji Times, published an editorial in July 2008 calling for the
sacking of the interim minister of finance, who was seen as the architect of this new tax. The bottled water
industry was required to make its submissions to the Finance Ministry on the new tax.

A critical issue was the likely impact of this new tax on both foreign and local investment. It was seen as
moving the goal posts after the start of the game. Foreign investor confidence was already at a very low
level because of the military takeover of the democratically elected government in December 2006.
Investors are not attracted to a country where the taxation environment can alter dramatically overnight
without consultation.

On July 23, 2008, Natural Waters of Viti Limited laid off about 400 workers and shut down operations
along with five other major exporting companies. The following day, The Fiji Times, the leading local
newspaper, published an editorial comment on the so-called “Water Debacle.”65 The editorial stated that:
“the closure of FIJI Water’s operations yesterday shows what happens when governments take draconian
measures to impose unrealistic taxes on large corporate entities. This major contributor to the national

62 Ibid.
63 “Duty on Bottled Water Remains,” Fiji Times, July 20, 2008.
64 FIRCA Press Release, July 21, 2008, www.frca.org.fj/docs/firca/press_releases/Press Release 21.07
65 “Water Debacle,” Fiji Times, July 24, 2008.

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economy has closed its doors, sent staff home and deprived the nation of $3 million in export revenue per
week.” The editorial continued, stressing the importance of FIJI Water operations for the livelihood of
workers and their families, for tax revenues, as well as for retail revenues in the nearby towns of Rakiraki
and Tavua. It also pointed out the impact of the plant closure on dockworkers and drivers.”66

Also the following day, a spokesperson for the bottlers, Jay Dayal, said they had decided to take legal
action, as their patience had been exhausted. The bottlers had filed for a judicial review over the
government decision to impose the 20-cents-per-litre tax.67 On the same day, FIJI Water released a
statement saying that the lawsuit was caused by the lack of movement by the interim government on the
imposition of tax by Fiji Islands Revenue and Customs Authority (FIRCA), pending a final decision by the
interim Cabinet. “Unfortunately, FIJI Water must take this action because we have now reached a critical
juncture where we can no longer effectively operate our business,” the statement said. “We have neither
sold nor exported any product since July 1, forcing us to cancel multiple port calls from various shipping
lines. As long as the crisis continues, the nation of Fiji will continue to lose approximately FJ$3 million in
export revenue each week (more than FJ$150 million annually).”68

Behind the scenes, the bottlers were very active in seeking the support of the media and key decision
makers, trade unions, village leaders and local chiefs, as well as lobbying interim ministers and members
of the Military Council. One of the bottlers described the tax-induced crisis as “like a war had broken out
or a bomb had exploded.” There were tens of millions of dollars at stake that could be collected from the
bottlers.

On July 25, 2008, the Fiji government made an announcement that it had decided to drop the new tax. This
decision by interim Prime Minister Commodore Voreqe Bainimarama was praised by the proprietors of
water bottling companies.69 Immediately after the announcement of the repeal of the tax, the major bottled
water-exporting companies resumed production and re-employed the hundreds of workers who had been
laid off.70

FIJI Water had for a number of years been a sponsor of the Fiji Exporter of the Year Awards, an annual
event to celebrate successful exporters. On August 3, 2008, FIJI Water’s local CEO, David Roth,
announced the company’s decision to withdraw its sponsorship of the Awards because of the lack of
support of FTIB during the taxation dispute.71 David Roth said: “Fiji Islands Trade and Investment Bureau
(FTIB) did not provide any support or assistance towards the bottled water industry during this struggle,
and in fact FTIB’s chairman publicly supported the imposition of the unreasonable and draconian excise
and export duties, in spite of many of us trying to explain to him that his assumptions about our businesses
were simply incorrect.” Roth added that the company’s decision to withdraw had nothing to do with its
attitude toward others in government.72

In November 2008, the Fiji government re-introduced the disputed water tax as part of the 2009 budget in a
different form. It was called “water resource tax” and was progressive depending on the amount of water
extracted. For extractions up to 4,999,999 litres, it was set at 0.11 cents per litre; for extractions between
5,000,000 and 9,999,999 litres, it was 0.22 cents per litre; and an extraction volume of 10,000,000 litres or

66 Ibid.
67 “FIJI Water bottlers file suit against government, Association says 20-cent tax will kill industry,”
Radio New Zealand International, www.rnzi.com.
68 “FIJI Water Shuts down Operations,” Fiji Daily Post, July 24, 2008.
69 Margaret Wise, “Sigh of Relief as State Drops Tax,” Fiji Times, July 25, 2008.
70 “Bottled Water Back in Action,” Fiji Live website, July 24, 2008.
71 “Fiji Bottlers Reconsider Boycott Decision,” Fiji Live website, August 3, 2008.
72 Ibid.

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more would attract a tax of 0.33 cents per litre.73 The tax was to be imposed only on extracted (artesian)
water; companies engaged in the bottling of rainwater or purified tap water would be exempt from the tax.
The tax was supposed to be collected from January 2009. It was expected that the Fiji government would
collect F$1.5 million through the water extraction tax.74

Transfer Pricing

In January 2008, the government became concerned that FIJI Water was engaging in transfer price
manipulations, selling the water shipments produced in Fiji at a very low price to the company
headquarters in Los Angeles. It was feared that very little of the wealth generated by the company was
coming into Fiji as foreign reserves from export earnings, which Fiji badly needed to fund its imports.
Seemingly, FIJI Water was funnelling most of its cash to the United States.

As a result of these concerns, FIRCA decided to take action against FIJI Water and it halted exports in
January 2008 at the ports by putting 200 containers loaded with FIJI water bottles under armed guard, and
issued a statement accusing FIJI Water of transfer price manipulations. FIRCA’s chief executive, Jitoko
Tikolevu, said, “The wholly US-owned Fijian subsidiary sold its water exclusively to its US parent at the
declared rate, in Fiji, of US$4 (NZ$5) a carton. In the US, though, the same company then sold it for up to
US$50 a carton.”75

Natural Waters of Viti Ltd. immediately filed a lawsuit against FIRCA with the High Court of Fiji. The
High Court issued an interim order, allowing the company to resume shipment of the embargoed
containers upon payment of an F$5 million bond to the Court.76

The U.S. ambassador to Fiji, Larry Dinger, issued a barely veiled threat to Fiji. “The example [the
authority] and the interim government set regarding fair and impartial treatment in this case will surely
have a major impact on global perceptions of Fiji’s investment climate. American companies have to
receive fair and impartial treatment around the world. That applies in Fiji, too. ‘Rule of law’ and a ‘level
playing field’ are critically important factors when there are commercial disputes, and those elements have
a major impact in decisions by foreign investors, including American investors, on where they will direct
their funds,” he stated.77

A press release by FIRCA, issued in January 2008, noted that FIJI Water had received advice from
international law firm Baker & McKenzie, which conducted an economic study on transfer pricing and
declared what the company was doing in Fiji was fair. FIRCA rejected the claim by stating that: “FIRCA
will not passively accept the verdict of Baker & McKenzie without itself having access to the information
on which same is based, and to the instructions on which same is based, and without the opportunity to
conduct its own transfer pricing study based on such matters and upon the profitability of Natural Waters
of Viti Limited.”78

The FIJI Water dispute with the government over transfer pricing attracted the attention of the University
of the South Pacific economist Sukhdev Shah, who published an article on “The true cost of water” in the
Fiji Times on January 24, 2008, to give the general public a lecture on the complexities of transfer pricing.

73 PriceWaterhouseCoopers, 2009 Fiji Islands Budget Summary, November 21, 2008.
74 “$1.5 million expected from water tax,” Fiji Live website, November 21, 2008.
75 Michael Field, “Fiji-US row brews over water exports,” The Dominion Post, January 21, 2008.
76 “High Court set to rule in FIJI Water case,” Fiji Times, February 8, 2008.
77 Field, “Fiji-US row brews over water exports,” January 21, 2008.
78 “Press Release,” Fiji Islands Revenue & Customs Authority, January 11, 2008, p. 3.

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He stated that: “Multinational companies as represented by FIJI Water are capable of spreading their risks
across countries where they do business. They do this by shifting most of their profits and asset holdings to
their affiliates in low-tax countries that are also considered safe. Given a choice between US and Fiji, FIJI
Water would definitely take a bet on the US – partly for the reason of lower tax obligation but mostly
because it can be a safe-haven.”79

RELATIONS WITH THE LOCAL COMMUNITY

The company had recognized the importance of establishing and maintaining good relations with the five
neighbouring Fijian villages that were the traditional landowners of the Yaqara basin, where the bottling
plant was located. These villages were: Draunivi, Togovere, Naseyani, Nananu and Rabulu. FIJI Water’s
bottling plant drew most of its workforce from these villages. It employed a young workforce and most of
the workers had not previously had a wage job but had been engaged in subsistence farming and fishing
activities. The company provided its staff with on-the-job training in operating the sophisticated production
line. In return, its workers showed a lot of enthusiasm, loyalty, and pride in working for the company.
Through strong leadership, FIJI Water had established an excellent work environment with good
interpersonal relationships among the workforce. The company supported children’s education. To assist
the children in getting an early start, it had constructed a kindergarten classroom in each village to provide
early childhood education. The company had also provided the pre-schools with equipment, educational
material, teacher training and other support.

In March 2002, the company voluntarily established an independently administrated community
development trust fund and allocated FJ$275,000 to it. The trust fund was established after a series of
negotiations with the members of the community. It was designed to support village projects to improve
the hygiene and sanitation of the community. Through this fund, the company intended to finance projects
to supply potable water to the villages and reticulate it to the households. It also aimed at supporting
projects to reduce pollution and improve hygiene. Through improving the quality of hygiene and
sanitation, it was hoped to improve the health of the villagers and of the workforce of the company.80

As a result of the above-described trust fund, Draunivi and Togovere were first provided with clean, safe
drinking water. The water supply project was then extended in 2008 to cover three other villages in the
vicinity of the bottling plant — Naseyani, Nananu and Rabulu.81 Moreover, in the same year, FIJI Water
teamed with the Rotary Club in Suva to fund the Pacific Water for Life Trust. The Trust provided funds for
developing the infrastructure, expertise and skills needed to supply clean, safe and sustainable water to
more than 100 communities, schools, health centres and nursing stations throughout Fiji.82

Natural Waters of Viti Ltd. was a strong believer in contracting out. It had contracted out services to a local
company that employed tens of people in the following functions: transport of workers to and from work;
security office to guard the factory; the preparation of food for workers in the canteen; ground
maintenance; and laundry.

In recognition of FIJI Water’s involvement in local community development in Fiji, in 2004, the U.S. State
Department honoured the company with the Award for Corporate Excellence for Outstanding Corporate
Citizenship, Innovation and Exemplary International Business Practice. The award was presented to FIJI

79 Sukhdev Shah, “The true cost of water,” Fiji Times, January, 24, 2008
80 McMaster and Nowak, “Natural Waters of Viti Limited — Pioneering a New Industry in the Fiji Islands.”
81 www.fijiwater.com.
82 Ibid.

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Water founder David Gilmour by Secretary of State Colin Powell in October 2004, who remarked, “Fijians
take special pride in their island’s tranquil beauty and FIJI Water has matched their passion with action . . .
More than a good corporate citizen, FIJI Water is a good neighbour to all the people of Fiji.”83 Ironically,
two months later FIJI Water was sold by Gilmour to Roll International.

WHAT NEXT?

In 2009 and beyond, FIJI Water will continue facing complex corporate social responsibility challenges. It
will have to live up to its promise of becoming a carbon negative company. Any attempt to engage in
greenwashing will be quickly identified and protested by environmental groups. Keeping true to its slogan
“every drop is green” will require substantial new investment in a renewable energy plant and equipment
and in tree-planting offset activities.

FIJI Water’s tax-free concession granted by the Fiji government for 13 years in 1995 came to an end in
October 2008 and the company will be required to pay corporate tax in Fiji. The new water resource tax,
although much lower than the draconian 20-cents-a-litre excise, is nevertheless likely to erode the
company’s profitability by adding about FJ$1 million to its costs every year. This is expected to coincide
with a slow-down of growth or even stagnation of FIJI Water sales in its main markets due to the global
recession.

Maintaining good relations with the Fiji government will be vital. A series of ads sponsored by FIJI Water,
placed in the popular daily Fiji Times in late 2008 and early 2009, was focused on letting the public (and
the government!) know how good a corporate citizen the company is. The ads highlighted FIJI Water’s
contribution to creating new jobs, improving education and raising standards of living in Fiji. In January
2009, FIJI Water donated US$0.5 million to Fiji’s National Disaster, Relief and Rehabilitation Fund,
which was created by the prime minister’s office in the aftermath of devastating floods.84 Clearly, FIJI
Water was making efforts to live up to its good corporate citizenship claim. But is it enough to dispel
government officials’ and ordinary citizens’ doubts about FIJI Water’s positive contribution to the local
economy and community?

Designing and implementing a sustainable growth strategy and a socially and environmentally responsible
marketing plan will require dealing effectively with the promise to go carbon negative as well as meeting
the demanding needs of customers, clients and other stakeholders. Will FIJI Water be able to successfully
navigate through these rough waters of corporate social responsibility? What should it do to breathe new
life into this otherwise clever marketing strategy?

83 “Here’s to you: FIJI Water,” Beverage World, March 8, 2007.
84 “FIJI Water donates to PM’s Relief Fund,” Press Release, Fiji Government On-line, January 27, 2009.

James McMaster is a professor at the Graduate School of Business, The University of the South Pacific, and Jan Nowak
is a professor at the Central European University Business School.

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Exhibit 1

GLOBAL BOTTLED WATER MARKET
LEADING COUNTRIES’ CONSUMPTION AND COMPOUND ANNUAL GROWTH RATES, 2002-2007

Rank, 2007 Countries Consumption in Millions of Gallons CAGR*
2002/07 2002 2007

1 United States 5,795.6 8,823.0 8.8%
2 Mexico 3,898.6 5,885.2 8.6%
3 China 2,138.4 4,787.8 17.5%
4 Brazil 2,541.8 3,621.1 7.3%
5 Italy 2,558.2 3,100.9 3.9%
6 Germany 2,291.5 2,743.2 3.7%
7 Indonesia 1,622.5 2,400.6 8.2%
8 France 2,225.6 2,283.2 0.5%
9 Thailand 1,277.0 1,533.1 3.7%

10 Spain 1,191.4 1,284.0 1.5%
Top 10 Subtotal 25,540.7 36,462.2 7.4%

All Others 9,054.2 13,407.3 8.2%
WORLD TOTAL 34,594.9 49,869.6 7.6%

* Compound annual growth rate.

Source: “The Global Bottled Water Market. Report 2007,” Beverage Marketing Corporation, January 2008.

Exhibit 2

GLOBAL BOTTLED WATER MARKET
PER CAPITA CONSUMPTION BY LEADING COUNTRIES, 2002-2007

Rank, 2007 Countries Consumption in Gallons Per Capita
2002 2007

1 United Arab Emirates 35.2 68.6
2 Mexico 37.7 54.1
3 Italy 44.2 53.3
4 Belgium-Luxembourg 32.7 39.5
5 France 37.1 35.8
6 Germany 27.8 33.3
7 Spain 29.7 31.7
8 Lebanon 24.9 29.3
9 United States 20.1 29.3

10 Hungary 13.5 28.5
11 Switzerland 24.2 28.2
12 Slovenia 18.8 25.2
13 Austria 20.9 25.0
14 Czech Republic 21.1 24.6
15 Croatia 14.9 24.3
16 Saudi Arabia 23.8 24.1
17 Cyprus 21.4 24.0
18 Thailand 20.1 23.6
19 Israel 12.4 23.2
20 Portugal 19.9 22.4

GLOBAL AVERAGE 5.6 7.6

Source: “The Global Bottled Water Market. Report 2007,” Beverage Marketing Corporation, January 2008.
24

Page 21 9B09A008

Exhibit 3

U.S. BOTTLED WATER MARKET
PER CAPITA CONSUMPTION, 1997-2007

Year Gallons Per Capita Annual % Change
1997 13.5 –
1998 14.7 8.3%
1999 16.2 10.2%
2000 16.7 3.5%
2001 18.2 8.6%
2002 20.1 10.6%
2003 21.6 7.2%
2004 23.2 7.5%
2005 25.4 9.7%
2006 27.6 8.4%
2007 29.3 6.4%

Source: “The Global Bottled Water Market. Report 2007,” Beverage Marketing Corporation, January 2008.

Exhibit 4

U.S. BOTTLED WATER MARKET
VOLUME AND GROWTH BY SEGMENT, 2000-2007

Year Non-sparkling Domestic Sparkling Imports Total
Volume* Change Volume* Change Volume* Change Volume* Change

2000 4,443.0 — 144.2 — 137.9 — 4,725.1 —
2001 4,917.3 10.7% 144.0 -0.1% 123.9 -10.1% 5,185.3 9.7%
2002 5,487.5 11.6% 149.5 3.8% 158.7 28.0% 5,795.7 11.8%
2003 5,923.9 8.0% 152.6 2.1% 193.3 21.8% 6,269.8 8.2%
2004 6,411.3 8.2% 166.8 9.3% 228.6 18.2% 6,806.7 8.6%
2005 7,171.4 11.9% 185.0 10.9% 182.5 -20.2% 7,538.9 10.8%
2006 7,899.9 10.2% 189.3 2.3% 164.3 -10.0% 8,253.5 9.5%
2007 8,435.7 6.8% 201.2 6.3% 186.0 13.2% 8,823.0 6.9%

* Millions of gallons.

Source: “The Global Bottled Water Market. Report 2007,” Beverage Marketing Corporation, January 2008.
25

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