Al Ain Water: Growth Strategies

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Introduction

Al Ain Water is one of the leading UAE companies specializing in producing and delivering drinking water. It is a division of Al Ain Food & Beverages PJSC, which is, in turn, an Agthia Group company (“Al Ain Water,” 2019). The company’s water processing plant is situated in Al Ain and has been working since 1990 (“Al Ain Water,” 2019). The vision of the company is to provide the “most balanced bottled water with an optimal composition of essential minerals” for its customers (“Al Ain Water,” 2019, para. 3). As of now, Al Ain Water occupies a prominent position on the UAE capped and bottled water market, especially when it comes to 4- and 5-gallon bottles for houses and offices.

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Intensive Growth Strategies

Market Penetration Strategy

Market penetration strategy is the basic and often defining component of intensive growth strategies. It refers to penetrating a market that is already served with the existing range of products (Kreutzer, 2019). Thus, it views both the market and the company’s current product range as givens. Al Ain Water market penetration may benefit from the following recommendations:

  • Marketing Al Ain as a brand that only uses desalinated water as a supplement to well water, as opposed to the companies that rely on desalinated water exclusively
  • Marketing Al Ain as an environment-friendly brand that strives to reduce environmental impact by using less raw materials for packaging
  • Leaning toward larger sales units (330ml, 500ml, 1.5l) and introducing 1l bottles as opposed to smaller units (200ml, 250ml) to boost turnover per purchase

Market development strategy

Market development strategy refers to discovering and developing additional sales opportunities for the company. Essentially, it is an attempt to enter new markets with the company’s existing range of products (Kreutzer, 2019). Market development often involves closing the “white spots” in the core sales area – that is, addressing previously untargeted groups of customers with the company’s potential customer pool (Kreutzer, 2019). Soewartini et al. (2017) point out that effective market segmentation to target different consumer groups may become a significant advantage in the bottled water market. Al Ain Water market development may benefit from the following recommendations:

  • Enhancing marketing efforts for Al Ain Bambini and Al Ain Water+ as products specifically designed for children to increase the company’s appeal to parents
  • Enhancing marketing efforts for Al Ain Zero Bromate as a product designed specifically to satisfy all hydration and mineral needs for pregnant women, to expand the company’s appeal to this demographic
  • Promoting Al Ain Water products as healthy and wholesome hydration for athletes to close a white spot in the company’s core area

Product Development Strategy

Product development is an intensive growth strategy that, as the name suggests, involves the creation of new products. Its main aim is to increase the company’s product range in an already targeted market (Kreutzer, 2019). Increasing interest in healthy lifestyles creates potential market niches for products crafted to address particular issues, such as fluoride drinking water for better dental health (Abouleish, 2019). Al Ain Water product development may benefit from the following recommendations:

  • Introducing and marketing the line of products designed specifically for maintaining salt and water balance in athletes
  • Introducing and marketing a line of products targeted at customer groups with specific interests, such as Al Ain Fluoride for dental health
  • Developing lighter packaging with less material used for caps and labels to reduce costs and environmental impact

Differentiation Strategy

Differentiation strategy is often the most challenging and risky among intensive growth strategies. It involves entering new markets with new products (Kreutzer, 2019). Al Ain Water differentiation may benefit from the following recommendation:

  • Expanding the company’s range to producing baby food and sports nutrition in cooperation with Al Ain Foods

Integrative Growth Strategies

Horizontal Integration

Horizontal integration is a type of integrative strategy that aims to broaden the existing set of products and services. Its defining feature is that the new goods and services remain on the same economic performance level – hence, “horizontal” (Kreutzer, 2019, p. 52). Al Ain Water may have the following opportunities for horizontal integration:

  • Possible merger with Ice Crystal under the overall leadership of Agthia Group to increase the company’s market share in 5-gallon water sales and delivery
  • Possible merger with Alpine under the overall leadership of Agthia Group to increase the company’s market share in bottled water sales

Backward Integration

Unlike horizontal integration above, new goods and services produced through backward integration do not belong to the same economic performance level as the company’s main product. Specifically, backward integration involves a company integrating production capabilities on the levels further away from the customer – hence, “backward” (Kreutzer, 2019, p. 52). Since Al Ain Water already produces its packaging, it may have the following opportunities for backward integration:

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  • Creating or acquiring plastic production facilities for cup and bottle packaging
  • Creating or acquiring aluminum foil production facilities for cup packaging

Forward Integration

Similar to backward integration above, forward integration involves activities that are on a different economic level than the company’s primary product. In this case, integration targets expansion on the economic activity level that will be closer to the customer – hence, “forward” (Kreutzer, 2019, p. 52). Since the economic level closer to the customer than creating the final product is distribution, Al Ain Water may have the following opportunities for forwarding integration:

  • Opening new distribution centers in Fujairah and Ras al-Khaimah apart from those in Al Ain, Dubai, Abu Dhabi, and Sharjah to better serve the northeast of the country
  • Acquiring additional transportation capabilities for home and office delivery of 5-gallon water packages to improve the company’s already strong position in this area

Unrelated Integration

In recent years, Al Ain Water has consistently built its image as an environment-friendly company. For example, it developed a bottle shrinking appliance in cooperation with Horizon Technologies – a UAE company specializing in plastic waste recycling – to make waste handling easier and more efficient. Ghayebzadeh et al. (2020) point out that plastic waste input into the Persian Gulf and the Gulf of Oman is an unmitigated environmental disaster. With these concerns in mind, following unrelated integration strategies look promising for Al Ain Water

  • Developing appliances for more effective handling of plastic waste
  • Creating or acquiring plastic waste recycling facilities

Conclusion

Al Ain Water can employ a combination of intensive and integrative growth strategies, including unrelated integration. It can boost the brand image as part of market penetration, target specific customer groups for market development, devise new products, and enter new markets, such as sports foods. In terms of integration, there are possibilities of mergers within Agthia Group, as well as strengthening its distribution and delivery and acquiring or creating production facilities for raw materials for packaging. Finally, Al Ain Water may also enter an unrelated area of plastic waste recycling, building on the company’s environment-friendly brand.

References

Abouleish, M. Y. Z. (2016). Evaluation of fluoride levels in bottled water and their contribution to health and teeth problems in the United Arab Emirates. The Saudi Dental Journal, 28(4), 194-202. Web.

Al Ain Water | Trusted water brand in UAE since 2004. (2019). Al Ain Water. Web.

Gayebzadeh, M., Taghipour, H., & Aslani, H. (2020). Estimation of plastic waste inputs from land into the Persian Gulf and the Gulf of Oman: An environmental disaster, scientific and social concerns. Science of the Total Environment, 733, 138942. Web.

Kreutzer, R. T. (2019). Toolbox for marketing and management: Creative concepts, forecasting methods, and analytical instruments. Springer.

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Soewartini, S., Sucherly, Effendi, M., & Kaltum, U. (2017). Brand equity and competitive advantage based marketing strategy and marketing mix strategy to improve marketing performance in the bottled water business. South East Asia Journal of Contemporary Business, Economics, and Law, 12(2), 38-47.

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BusinessEssay. 2022. "Al Ain Water: Growth Strategies." February 8, 2022. https://business-essay.com/al-ain-water-growth-strategies/.

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