Case study: San Pellegrino: delighting mineral water consumers

Acqua Panna

The town of San Pellegrino in the mountains north of Milan was first made famous by quenching the thirst of Leonardo da Vinci. Today, the Fonte Termale in San Pellegrino is an opulent marbled drinking hall and a monument to the tradition of 'taking the waters'. The quintessentially Italian mineral water brand has held true to its stylish consumer principles for more than a century. Known for its remarkable freshness, with subtle but very pleasant flavors, Acqua Panna natural mineral water flows from the Apennine Mountains in the heart of the picturesque Tuscan landscape. Here, sheltered by uncontaminated nature since Renaissance times, it continues to surface in all its purity, as it has done for centuries. Bottled at the source, it reaches tables around the world as pure as it came from its springs. The water has been flowing through fissures in the mountains for centuries, absorbing magnesium and calcium carbonate en route, before arriving at a vertical clay fault that forces it quickly upwards to the spring. The only problem was that, like many substances considered to have health-giving properties, it was not to everyone's taste. The extra fizz changed that. The key technical development was the addition of carbon dioxide, which, as well as providing the fizz, helped disguise the aftertaste of Acqua Panna.

Founded in 1899, when the rights to the spring were bought by Societa Anonima delle Terme di San Pellegrino, the company was immediately listed on the Milan Stock Exchange, and by 1901 the town of San Pellegrino had opened spa facilities to enable visitors to sample its waters. The Grand Hotel and Casino - monuments to art deco grandeur - followed five years later. The town and brand have scarcely looked back since.

The parent brand, its familiar green bottle bearing a blue label and red star, has become synonymous with the white linen of the fine dining experience. As well as emphasizing its connections to Italy, San Pellegrino has long sought to stress such upmarket associations. 'Lingering at table for over 100 years' was the typically idiosyncratic strapline it chose to celebrate its centenary. It has been similarly discerning in its choice of business collaborations. In 2010 it brought out a special edition to mark an association with fashion house Missoni and followed this in 2012 with a tasteful golden label in tribute to the 125th anniversary of Italian jeweler Bulgari. To emphasize its connections to upmarket dining,

San Pellegrino sponsors The World's 50 Best Restaurants list, which is currently topped by Italian Osteria Francescana (Modena, Italy), followed by Spain's El Celler de Can Roca.

Sanpellegrino flavoured waters

The first product extension, launched in 1932, was branded Sanpellegrino Aranciata, which was rooted in the all-Italian tradition of preparing a blend of the juice of freshly squeezed citrus fruits (oranges and lemons) with sparkling mineral water and sugar. This was followed by Chinotto, named after an orangey citrus fruit, that grows on the slopes of Mount Etna in Sicily. In more recent years, cans of Sanpellegrino grapefruit (Pompelmo to aficionados) and lemonade, and further extensions of the Aranciata sodas (Aranciata Rossa and Aranciata Amara) with their distinctive foil topping, have become more widespread at the premium end of the fizzy-drinks market.

The appeal of Sanpellegrino sparkling fruit beverages has always been ensured by its exclusive use of high-quality citrus and by sophisticated technological innovations that translate the high quality of raw materials into equally first-rate finished market offerings, ensuring nutritional properties remain unaltered and thus avoiding the addition of preservatives. This is achieved by pasteurisation and a unique flavouring process. In 1932, Sanpellegrino was one of the first companies to turn to pasteurisation, considered a revolutionary technological innovation at the time. Pasteurisation, combined with the Italian tradition of 'spremuta' (literally, squeezed juice), created an exclusive product with a unique taste.

The production process is exclusive to the San Pellegrino company and respects the old Italian traditional recipe. Once concentrated, the juice is kept at low temperature and then the orange paste is kneaded with concentrated orange oil. The only additional ingredients are essential oils, which are strictly natural and extracted from fruit: these add a unique fragrance that recreates for the consumer the

sensory

experience of holding a ripe, freshly picked piece of fruit. The full product line includes:

1)Aranciata - the Italian orangeade par excellence created in 1932.

2)Limonata - made with the finest lemons, sun-ripened in the south of Italy, a real thirst-

quenching beverage rich in juice.

3)Chinotto - created in the early 1950s, made from Sicilian high-quality Chinotto oranges, grown

at the foot of the Etna volcano; a real 'cult drink'.

4)Aranciata Rossa -intense fragrance of Sicilian blonde and sanguinello oranges (blood oranges).

5)Aranciata Amara - a sparkling orange beverage with a slightly bitter tang.

6)Pompelmo - an amazingly zesty and tasty sparkling grapefruit beverage.

7)Mandarino Sanpellegrino - made from blending selected mandarin juice, a kind of citrus fruit

sweeter than oranges.

From the beginning, Aranciata was sold in a highly distinctive club-shaped glass bottle, known as 'clavetta'- with a surface resembling the peel of citrus fruit. Over time, this small bottle, synonymous with preciousness, has become an authentic icon for the brand. The 'Sparkling Fruit Beverages' paper label reflects the naturalness of the product. It's a fresh and trendy package, featuring the image of a citrus fruit while bearing a strong resemblance to the San Pellegrino brand label, with its famous belle epoque charm and flair, cyan color and - most of all - its central red star. The sparkling fruit beverages cans bear marks of the same visual identity, and with their eco-cap - the separate foil-cover lid that acts as a dust cover - are 100 per cent recyclable.

Brand personality

Since 1899, the San Pellegrino Group has been a well-established name throughout the world, synonymous with the highest quality. Distributed in over 120 countries in all five continents, all its products - from non-alcoholic aperitifs to soft drinks - represent quality excellence, especially its extraordinary mineral waters. By virtue of their origins, a strong relationship with Italy, its culture and its traditions, Acqua Panna and S.Pellegrino perfectly interpret Italian style as a synthesis of conviviality,

well-being and fine dining. Sommeliers, chefs, and connoisseurs worldwide concur that these two premium waters are the quintessence of Italian lifestyle and good taste, thus gracing the world's finest dining tables.

San Pellegrino

San Pellegrino's stylish mineral water and sparkling fruit beverages convey a sense of joy, spontaneity and colour that whisks you outdoors to sunny southern Italy and the shade of orange groves. The sparkling fruit beverages, with their strong feel of genuineness, belong to a lively atmosphere, imbued with a passionate Italian mood. Here, the sense of community and the lovely ritual of meeting friends or enjoying a special authentic moment all create the perfect setting to sip a S.Pellegrino mineral water or a Sanpellegrino sparkling fruit beverage.

The premium price, stylish logo and brand associations with upmarket dining have not prevented S.Pellegrino, known as 'the Champagne of mineral water', from selling in high volumes, which it has achieved without diluting its brand values. Today, San Pellegrino has sales of more than $1000 million worldwide. In April 2021, they announced to be carbon neutral in 2022 in addition they renewed their commitment to the Shared Value concept from Michael Porter.

Questions

1. Explain how San Pellegrino has managed to develop and sustain a competitive business in an industry that some might regard as a commodity market.
2. Analyze the company's segmentation, targeting and positioning strategy and recommend how San Pellegrino could further develop its business.
3. What relevant meaning do the brand semiotics of the blue watermarked label provide?
4. Explain how San Pellegrino cultivates strong customer relationships and keeps aspiring competitors at bay.
5. Research the other mineral water brands that Nestle owns and explain why S.Pellegrino has become a global brand in its mineral water brand portfolio.
6. Will the carbon neutral promise assist the existing brand promise?
7. Can Nestle with brands like San Pellegrino implement the shared value concept?