Sometimes innovation is less about invention and more about just noticing what’s around you. That’s what organic water company Nature on Tap learned in the creation of their company’s flag-ship product. Product developers there discovered something that consumers considered new and different even though it had been around for more than a thousand years—tapped birch water. If you’re a frequent purchaser of brands like Dasani or Aquafina, it’s probably no surprise to you that bottled water is big business. U.S. per capita consumption of bottled water recently approached 40 gallons per person, per year, edging out carbonated soft drinks for the first time. Selling over $21.3 billion of a ubiquitous product (water) that is readily available almost for free is an impressive marketing feat. Of course, bottled water consumers are buying not just the commodity of water but also the perceived health benefit based on the filtering and/or sourcing of the water. And that’s where Nature on Tap comes in with their in-novative take: tapped birch water. For centuries people have tapped the waterlike sap of the birch tree for refreshment and health. According to the University of Maryland Medi-al Center, the slightly sweet beverage contains a high level of manganese—a quite efficacious mineral that, according to experts, can help blood sugar regulation, fight “free radicals,” and support bone structure through calcium absorption. To add to the value proposition, birch water also contains trace amounts of xylitol, a natural sugar alcohol that the California Dental Association says can help prevent tooth decay. Birch water fits into a product category known as “alter-native water,” with the category’s most famous formula being the very popular coconut water. Sales of that beverage have reached over $3 billion worldwide and Nature on Tap realized that consumers were looking for that next “superdrink.” They concluded that birch water was “it,” especially given the lower sugar content (and calories) versus coconut water. In addition to the benefit claims noted earlier, it has also been pointed out that birch water contains saponin, which may have anti-inflammatory benefits and can lower cholesterol. Nature on Tap has taken full advantage of the storytell-ing opportunities that the nature of their product affords. They readily offer up imagery of the beautiful birch forests of Fin-land, where birch tree farmers tap the trees for a truly unique beverage that is “pure, hydrating, cleansing, and straight from the tree.” The package is also unique—a cylinder made of 75 percent wood-based paperboard that looks like a portion of a birch tree. But while Nature on Tap is riding a birch high, the truth is that birch is not the only plant in the forest and other companies are busily pursuing their own versions of wonder water. Maple, bamboo, olive, artichoke, and even cactus are all vying for a place on water connoisseurs’ palates. And closer to home, they have competitors right in the birch water segment, such as Sapp, BelSeva, TreeVitalise, and Treo. Beyond the growing competitive challenges, Nature on Tap has a unique production and supply chain quirk due to the short two-week window their product can be harvested! This circum-stance accentuates the criticality of very accurate sales forecast-ing and precise distribution targets. And like all the products in the category, birch water marketers must deal with often con-fusing and contradicting claims and counterclaims regarding product benefits. For example, one dietician notes that a cup of oats has about the same amount of manganese as a bottle of birch water and costs about 21 cents—far less than the over $3 you’re likely to pay for a bottle of tapped birch water. Nevertheless, as a small player in a niche market, Natureon Tap has a great product story, gets generally positive press, and has built a distribution network that includes leading retail-ers such as Sainsbury’s, whole Foods, and Amazon. Their abillty to excel over competitors and continue to grow will heavily depend on how well they keep up the product innovation and creative marketing that is the hallmark of their story so far.
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1. what is the decision facing Nature on Tap?
2. What factors are important in understanding this decision situation?3. what kind of innovation is tapped birch water—continuous, dynamically continuous, or discontinuous?
4. what other innovations should the company pursue to continue growing?