For the past decade, Nestlé have dominated the premium water category with brands like Perrier and San Pellegrino. But the sparkling water aisle is rapidly evolving, with dozens of challengers entering the market at many different price levels. The dynamics of the category were changing as a result, with consumers expecting more from their purchases and mental availability being stolen by incumbents.

Another consideration was Nestlé’s desire to move away from glass bottles; this packaging had all but become synonymous with some of Nestlé’s sparkling water brands. This raised concerns for their team – how would customers react to this kind of shift?

The Nestlé team needed to better understand how their reimagined products might play within the new competitive environment and optimize the pack, price, format, and claims strategy for their entire portfolio of premium water. That’s where we came in.

Nestlé Canada’s Premium Waters team were tasked with finding answers to many difficult questions:

• How do we maintain our premium positioning?
• How can we make the most valuable changes to pack and price architecture?
• Do we have the right formats?
• How can we streamline our overall portfolio and make our products work harder on shelf?

Using Dig Insights’ proprietary solution, Virtual Market, Dig worked with Nestlé to experiment across numerous variables, from pack size and pack configuration, to pricing strategy and discount depth and frequency.

Virtual Market is different from traditional methodologies as it forecasts market share based on consumer behavior in a shopping environment, not reported attitudinal behavior in a questionnaire. Insights from Virtual Market are delivered in the language of the business, not the language of researchers. Virtual Market translates any at-shelf change into business metrics like unit volume and revenue, and results are calibrated using current pricing and unit volume for in-market SKUs, which are highly predictive of in-market performance.

With Virtual Market, respondents shop an intuitive interface that presents ideas in context, alongside a relevant competitive set. This task-based approach feels intuitive for respondents, who quickly make decisions based on the available assortment and the promotions in play, just as they would in a real shopping situation.

Virtual Market also allows you to plan for several possible futures with a custom simulator that allows you to explore the impact of market changes (both yours and your competitors) now and in the future, improving the shelf life of research.

We delivered custom Virtual Market simulator that allowed the Nestlé team to instantly project the effect of any retail change by re-forecasting the unit and dollar volumes for every SKU in the model.

Nestlé were able to leverage the data from Virtual Market and implement several of the scenarios tested, with the actual in-market results ending up extremely close to the model predications.

A few of the most impactful outcomes for Nestlé from this piece of research:

• Discontinued two entire sub-brands

• Removed Perrier glass bottles from shelves

• Changed the format of their cans

• Launched 2 new flavors of Perrier in 2023

• Filled their innovation pipeline for 3-years for their 2 most profitable premium water brands

Virtual Market has become a powerful and long lasting tool for Nestlé, enabling them to understand what drives behavior in their categories, in turn leading to stronger recommendations and greater agility when it came to making important business decisions.

Because the Nestlé team had the foresight to build in many test variables from a large innovation pipeline, to a wide range of prices and promotion strategies across both their brands and their competition, they have been able to leverage the simulators and re-run scenarios as the category continues to shift and evolve.