ANALYSIS: Marketing - Bottled water rivals working up HK's thirst. Rivals capitalise on lagging consumption patterns in HK, reports Jo Bowman.

Watsons, a stalwart in the local water market, is running an education campaign on the health benefits of drinking water with a TV and print effort. Bonaqua, the bottled water brand in the Coca-Cola family, is working to inspire customer loyalty by linking the brand with enjoyment of life outdoors.

Both companies say the increasingly sophisticated Hong Kong market makes it ripe for attempts to increase bottled water consumption, which lags behind that of other first-world cities.

Watsons Water general manager, Chris Atkins, says the current campaign, devised by FCB, was inspired by changes in public perception rather than the efforts of its competition. "It's more sophisticated than what we've done before. Consumers are becoming more media aware and don't need to be spoken to in quite such a patronising way anymore, he says.

The adverts, shot in black and white, show shadowy images of naked bodies beneath snippets of statistical information about the importance of water to health and physical performance. Atkins says the campaign was largely the same as the one FCB pitched with when it took over Watsons' advertising from Ogilvy and Mather after Ogilvy won the conflicting Coca-Cola account in January.

"Bonaqua didn't influence our decision at all, Atkins says. "The truth is we spoke to our consumers, and they influenced our decision. We said to them: 'look, we're Watsons Water and you know us and trust us, but what are you looking for from us?'. We wanted to be a water company as opposed to a distilled water company."

Watsons launched its first mineral water products about eight months ago, having focused solely on distilled water in the past.

Bonaqua, meanwhile, is taking a two-pronged approach to its advertising, aimed at both promoting itself and diminishing the appeal of its rivals, especially as distilled water accounts for 73 per cent of bottled water sales in Hong Kong, with only 27 per cent going to mineral water. That's a drop from a year ago when the split was 80:20 per cent, says ACNielsen.

Scott Price, director and region manager for Coca-Cola Hong Kong, says Bonaqua made a renewed push with a campaign last year to "educate the market about differences in bottled waters, in the belief that local consumption would surge in line with global patterns. "In most markets in the world, there's been an increase towards consumption of water for health reasons and convenience, and the majority of that is mineral water, he says.

"Consumers in Hong Kong didn't differentiate between mineral water and distilled water and in fact Hong Kong is one of the last places where distilled water outsells mineral water. Last year's campaign was about educating people to think about what they're drinking. Price says Bonaqua's share of the bottled water market almost doubled after last year's campaign began. "We were very happy with that, but then we wanted to move on and develop a personality for the brand, he says.

Bonaqua's latest offering shows a young woman dancing in the street with an orange that has rolled out of her bag. She then drinks from a bottle of Bonaqua.

The Bonaqua push has generated not just extra sales but broader recognition of the brand; for the first time, it was named a Hong Kong SuperBrand in the annual Reader's Digest survey of consumers' favourite products.

Watsons has been a Hong Kong SuperBrand since the first survey in 1999.

It has now achieved platinum status - that is a "brand that dominates its category.

As the contest for consumers continues, both sides say there does not have to be a loser; bottled water sales in Hong Kong are far from reaching saturation point.

Price says current water sales per capita in Hong Kong equate to only 5.2 litres a month - or about half a glass a day for every resident.

Watsons' Atkins agrees there is room for more than one victor. "This is not about stealing share from other water brands, he says. "We're trying to rise above that and grow the market."