Market ec ec water has image of pure natural product

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Unformatted text preview: C: consumer and retailer surveys showed EC: that mineral waters and softdrinks are not close substitutes. close 49 49 Definition of relevant product market EC: EC: Regulatory constraints (especially in France): France): production of mineral water needs authorization bottling must be done at the source water must be marketed with a brand name that is water associated with the source associated Spring Spring waters have inferior characteristics, but must also be bottled at source. Can be sold under different brand name, though. name, None None of these constraints apply to softdrinks (they can use tap water, and have no particular production and marketing restrictions) production 50 50 Definition of relevant product market EC: EC: Price level difference mill price of soft drinks is 2-3 times higher than mineral water drinks separation of markets separation Correlation Correlation of prices of different mineral waters between 0.85 and 1. But correlation among soft drink prices low or even negative among prices of mineral waters tended to increase in prices past, while soft drink prices decreased past, 51 51 Definition of relevant product market Supply Supply substitution: limited, as soft drink producers cannot produce mineral water producers Interesting: EC argued that soft drink EC producers could, in principle, enter water market with purified tap water, but unlikely that it would happen, as most likely not accepted by consumers. accepted However, Coca-Cola Company entered However, markets with „Dasani“ water some years later. markets 52 52 Definition of relevant product market Should Should a distinction be made among still and sparkling or flavoured water? and EC: EC: no differences between sparkling, still and flavoured waters, as technically it is very easy to switch production. to product market is bottled mineral water. product 53 53 Geographic market Geographic Geographic market was determined to be France. Transport cost of mineral water are extremely high (low Transport value-to-weight ratio) val...
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