CONSUMER BEHAVIOR: A FRAMEWORK

REBUILDING THE PERRIER BRAND

Perrier Group of America, Inc., the U.S. unit of Frances Source Perrier S.A., announced a highly embarrassing product recall on February 9, 1990. The recall came in response to a report released by North Carolina regulators. The report stated that Perriers high-priced bottled water was contaminated with benzene, a poisonous liquid shown to cause cancer in laboratory animals. Even though the U.S. Food and Drug Administration (FDA) said that the benzene levels did not pose a significant short-term health risk, Perriers management requested the removal of the brand from supermarkets and restaurants in the United States and Canada.1

A Source Perrier official stated at the time that the company believed the contamination could be traced to an employees mistaken use of a fluid containing benzene to clean the machinery on the bottling line that fills Perrier bottles from North American. Initially, the recall affected only the United States and Canada an inventory of some 70 million bottles. Soon it was made worldwide, however, because Dutch and Danish officials also found benzene in some Perrier bottles.

The incident turned into a public relations disaster, in large part because the companys explanation for the recall kept changing. After traces of benzene were found in Perrier bottles in other parts of the world, company officials altered their original explanation. Benzene, they now said, is naturally present in carbon dioxide (the gas that makes Perrier bubbly) and is normally filtered out before the water is bottled. For unknown reasons workers had inexplicably failed to change the filters. Meanwhile, Perrier still insisted that its famous spring in Vergeze, France was unpolluted.2 These inconsistent statements further raised consumers suspicions.

The big question was what long-term effects the contamination incident would have on Perrier, which had positioned itself as naturally pure water. The strong underpinning for the success of bottled waters was their perceived safety compared to ordinary tap water. Tom Pirko, a beverage consultant, described the revelations of contamination as the worst possible thing that could happen to a bottled water company. Purity is the franchise. The last possible thing that Perrier can afford to have happen is for the American public to think there is benzene in their spring, whether it gets filtered or not.3

The recall came at a rough time for Perrier. In 1989 Perrier was the leading imported water, holding about 6 percent of the U.S. Bottled water segment. But the success brought intense competition from other bottled water brands in the 1990s. While the total category was growing at about 10 percent annually, Perriers growth slowed to about 5 percent per year. In an effort to regain market share lost during the months-long recall, Perrier Group spent $25 million in a U.S. advertising campaign. The message was: Perrier. Worth Waiting For. However, it seemed that consumers began to believe that any bottled water would do. Exacerbating the problem was the FDAs decision to make Perrier drop the words Naturally Sparkling from its label since its investigators had discovered that Perrier artificially carbonates its water after taking it out of the ground. Again, company officials were concerned about what beliefs consumers were forming about the brand.

By 1995, Perrier sales had fallen to one-half their 1989 peak. The company had to mount a comeback strategy. While attempting to regain share for the Perrier brand through new distribution channels, the company began to invest in other brands that did not have the Perrier name attached to them. By 1996 the company owned seven of the top ten brands of bottled water, and the future of bottled water looked good. Whereas coffee consumption in the United States dipped by 5.2 in 1997, bottled water consumption grew by over 7 percent. Bottled water sales grew by 10.1 in 1998. There had not been an explosion like that since 19894.

As we enter the year 2000 and beyond, it appears that the demand for bottled water will remain strong. Despite the Perrier Groups efforts to regain sales for Perrier, however, the brand is still not among the best-selling bottled waters in the United States5. The question remains, however, will the memory of the benzene incident forever tarnish Perrier brand name?

Questions:

1. Define the problem faced by Source Perrier in attempting to revive the brand?

2. What consumer behavior concepts apply to the case?