The Fijian government has declared a 4,400% taxation increase on water extracted from the country, which has resulted in the probable closure of Fiji Water's only bottling plant. As the company's marketing message relies upon its location in the South Pacific, it is difficult to see any future for the brand unless a compromise can be reached.
Fiji Water, one of the best-selling bottled waters in the US, has revealed that it plans to close its bottling plant on the Fijian island of Viti Levu as a direct result of a tax rise imposed by the military government. The company has been in a long-running dispute with the administration, with this move seemingly the final straw for the company.
The new regulations state that any company extracting more than 3.5 million liters of water per month will have to pay a new duty of 15 Fijian cents per liter, a gargantuan 4,400% increase on the previous rate of a third of a cent per liter. The company's president John Cochran has revealed that this renders its situation "untenable." As a result, it has said that it will close its bottling plant, effectively halting all production.
Leaving Fiji would almost definitely be fatal for the brand, given its reliance on the country for its marketing message. The water is said to be extracted using an artesian aquifier below the rainforests of Viti Levu, meaning that it is uncompromised by pollutants in the air. The brand's slogan, "untouched," describes how the water is not exposed to the outside environment or human contact until the consumer opens the bottle. The product's image is therefore one of true purity, and without this particular set-up, it is difficult to see how it can continue to make such a claim.
Aside from its pure positioning, the brand has also benefitted from the connections of billionaire founder David Gilmour, as well as current owners Lynda and Stewart Resnick. Distribution deals with high-end restaurants and at Hollywood events have given the product a glamorous image.
However, there are indications that a possible compromise can be met. A similar situation occurred two years ago, when the government reneged on a mooted tax increase. Furthermore, Fiji Water has said that it would prefer to continue operations in the country. A meeting in the middle would therefore seemingly benefit both parties: Fiji Water could continue its successful rise, while the government could raise revenue without completely discouraging outside investment.