The thirst to build a strong brand
By Jonathan Birchal in New York
Published: November 27 2007 19:17 | Last updated: November 27 2007 19:17
In his native Iceland, Jon Olafsson is a controversial figure. Born into poverty, he left school at 16 and went into the music business before shaking up the island’s sleepy broadcasting world with the launch of its first commercial television channel, gaining the reputation of a maverick outsider.
But in 2003 he sold his business, Northern Lights Communications, and moved to the UK, complaining that he had become the target of a politically inspired vendetta in his home country.
Mr Olafsson, 53, is now back in business in Iceland.
In 2004, he worked with his son Kristjan Olafsson to set up Icelandic
Water Holdings after buying up a bankrupt Icelandic mineral water
producer, and launched Icelandic Glacial, a premium mineral water.
This summer, less than three years later, the company signed a US distribution deal for Icelandic Glacial with Anheuser-Busch, the largest US brewer. The deal marks an almost unparalleled achievement for such a fledgling brand and shows how carefully targeted marketing can be as powerful for entrepreneurs as for big business.
Mr Olafsson says he knows of at least 10 doomed efforts to make profits out of Iceland’s water. But the most successful, produced by the island’s main brewer, Egils, has only managed limited sales in the US, trading under the Icelandic Spring name.
“Numerous companies in Iceland have tried this. But they all went to the mass market, seeking cheap profit, and I think that was the reason for their failure,” he says. “We realised we had one of the best quality waters in the world, and we should go for the quality market.”
In the US, the premium mineral water market is dominated by Evian, produced by Group Danone and distributed by Coca-Cola, and by Fiji, established in 1996 by a Canadian entrepreneur, and now owned by Roll International, a privately owned drinks and citrus company based in California.
Icelandic Glacial’s early moves reflected some of Fiji’s initial strategies, including a focus on packaging and an effort to build the brand through careful product placement with key opinion-formers.
After deciding on the name, chosen because it drew on Iceland’s unspoiled and wild image, Mr Olafsson and his son opted for a square bottle – like Fiji – but with innovative artwork. Design Bridge, a London-based brand design company, set out to create a bottle “to resemble an ice formation with each face unique to represent the ever-changing nature of a glacier”. Slightly convex sides on the bottles carry four different photographs of glaciers in the artwork, so that on the shelf they combine to create a constantly varied image.
Mr Olafsson believes the design has helped him win what Procter & Gamble likes to call “the first moment of truth” when consumers survey a shelf of products in a store. “When you put them together you create a kind of a landscape. With the other labels everything is the same.”
He also drew heavily on his previous experience, using his contacts in the media and film business to launch the water at the 2005 Cannes Film Festival. Bottles appeared at all the parties and were placed in the limousines ferrying actors and directors from Nice Airport. He also sponsored bicycle rickshaws on the car-free zone of the Boulevard de la Croisette at Cannes. “We were the only brand going up and down the street for those 10 days,” he says.
In the same month, the water was placed at the high-profile launch of the Microsoft X Box 360 in Los Angeles. But while Mr Olafsson was confident about marketing his product in the US, the logistics of selling it there turned out to be harder than he’d imagined.
“It was a really tough game, much tougher than I thought it would be,” he says. The challenges included discovering that not all US retailers had adopted a bar coding system that is supposed to have been standardised with the European Union – leading to at least one major retailer cancelling orders when the bar codes could not be read by check-out machines. “That cost us a lot,” says Mr Olafsson.
Realising the need for distribution, the company looked at the largest beverage distributors and saw that Anheuser-Busch had the biggest coverage nationally.
“There was Pepsi, and Coca-Cola, but number one was Anheuser-Busch. And we realised they didn’t have any water. So we found a way to get to them ... and almost immediately they said we’ll do some tests and see if your water has some legs.”
Mr Olafsson also happened upon Anheuser-Busch at a time when the brewer was increasingly interested in expanding beyond alcohol and beer. It launched its first energy drink in 2000, and last year started distributing Hansen Natural’s Monster energy drinks.
The American company has now taken a 20 per cent stake in Icelandic Glacial, and its funding is providing the financing for a new water bottling plant in Olfus, Iceland, capable of producing 30,000 bottles an hour. Separate distribution deals now cover Canada and the Netherlands, with a UK deal imminent. Mr Olafsson declines to give revenue projections.
Meanwhile, Fiji has shown signs of responding to the new challenge. The Olafssons have made their company’s environmental claims a central part of their marketing effort, with Icelandic Glacial winning certification as “carbon neutral” by offsetting carbon dioxide generated by its production and transportation from Iceland to international markets.
While most mainstream environmentalist groups argue that all bottled mineral waters are unsustainable, Fiji has responded by announcing a plan this month to make its water “carbon negative”, through a mix of energy reducing initiatives and carbon credits.
In the looming battle of the island waters, Mr Olafsson places his faith in Iceland. “I don’t like to criticise the competition, but when I think of Fiji, I think of heat and palm trees. But Iceland is cool and refreshing.”
Natural imagery or Nordic sexiness? The right way to sell Iceland
“We’re selling Iceland,” says Jon Olafsson of the branding of Icelandic Glacial, the designer water brand (pictured right). “The purity and coolness of the island – because Iceland is very cool and hip these days.”
But focus on natural imagery, reinforced by its carbon neutral certification, contrasts with previous efforts to market Iceland. In 2001, Icelandic Spring – produced by the Egils brewery – launched an advertising campaign in the US that tried to play up Nordic sexiness, including a bare-chested male model in a dog collar and a partially naked female with pointed ears.
“There is nothing sexy about water. It is all about health,” says Mr Olafsson, who recalls earlier campaigns by Icelandic travel companies featuring three attractive young women in a single sweater. “Iceland has been sold on sex appeal, with the image of a kind of Bangkok of the north. That was completely the wrong approach.”
Aside from Bjork, the Iceland-born singer, the country’s best-known international brand remains Icelandair. “We want to be bigger than Icelandair,” says Mr Olafsson.
Copyright The Financial Times Limited 2007
http://www.britishdesign.co.uk/index.php?page=newsservice/view&news_id=4356
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