What is the value of bottled water? Empirical evidence from the Italian retail market

Bottled water has become a global business, and Italy is one of the largest producers and consumer countries in the world. However, the Italian bottled water market seems to have reached the maturity stage of its life cycle, and because competitive pressure has strongly increased in this market, producers need to revise their marketing strategies. A variety of products with different features and prices are now available on the market of bottled water, however it is unknown how the retail price of bottled water is affected by its attributes. We thus measured whether, and to what extent, the price of bottled water depends upon its extrinsic (brand, packaging, origin), and intrinsic characteristics (mineral composition). We estimated a hedonic price model using data collected via direct observation of the shelves in various Italian modern retail stores. Our results show that bottled water is highly differentiated and its retail price is mainly affected by extrinsic characteristics. On the basis of these results, several insights are provided for both practitioners and policy makers.