A rebound in consumption is prompting new sponsorship activity on behalf of the U.S.’s major and upstart bottled water brands.

After posting declines in 2008 and 2009, bottled water volume grew by 3.5 percent in 2010, according to Beverage Marketing Corp. That increase outpaces the growth of the entire U.S. non-alcoholic refreshment beverage market, which grew 1.2 percent last year.

“As we predicted last year, the worst is now behind us and beverages’ performance will continue to benefit from the improved economy,” said Michael Bellas, BMC chairman and CEO, in a statement.

Already one of the sponsorship industry’s most active categories, the rebound in sales has spurred a new round of deal-making over the past year.

That includes National Beverage Corp.’s LaCroix, which in February announced a new partnership with US Road Sports & Entertainment Group’ s 13.1 Marathon Series. In addition, Fiji Water Co. this year signed a new partnership with February’s Food Network South Beach Wine & Food Festival presented by Food & Wine. The deal follows a new tie inked last year with Mercedes-Benz Fashion Week in New York City.

Refreshing Ideas LLC plans to build on its h2O natural spring water’s year-old sponsorship of the Lollapalooza and Austin City Limits music festivals. Ties under consideration: Sunrise, Fla.’s Langerado Music Festival and a concert series at The Surf Lodge in Montauk, N.Y.

Below, IEG SR examines two sponsorship trends in the bottled water category.

More Category Slicing
While The Coca-Cola Co., PepsiCo, Inc., and other major players typically look for exclusivity across the bottled water, carbonated beverage, juice and other non-alcoholic beverage segments, a growing number of properties are selling bottled water as a discrete category.

For example: MLS Real Salt Lake sold Fiji Water exclusivity in the bottled water category as part of the 2008 opening of Rio Tinto Stadium, leaving Pepsi with the soft drink, tea and juice categories.

The property believed the category had become more salable on its own due to its relative strength versus soft drinks. “We wanted to carve out the water category because people are drinking more water and less soda,” said Brook Bingham, Real Salt Lake’s director of corporate partnerships.

While carbonated soft drinks remained the largest non-alcoholic beverage category in 2010, the category continued to lose both volume and market share, according to BMC. Volume slipped 0.8 percent in 2010, while market share totaled 47 percent, down from 48 percent in 2009.

Other rightsholders have carved a distinction within the water category between bottled and home delivered water, even though the companies behind those products may be direct competitors.

The L.A. County Fair last year included bottled water as part of its seven-year renewal with The Coca-Cola Co., which markets Dasani. The sponsorship previously had belonged to DS Waters of America, Inc.’s Sparkletts brand.

To retain a relationship with Sparkletts, the fair signed a new deal with DS Waters that affords exclusivity in the home delivery service, something Dasani does not offer.

“We told Coke, ‘You don’t offer a home delivery product, so you shouldn’t have a problem with us looking elsewhere.’ They said ‘You’re right,’” said Dale Coleman, vice president of sales, marketing and creative programming with Fairplex, the L.A. County Fair, Hotel and Exhibition Complex.

Not every property believes there is higher value in splitting the category. Many pro sports properties typically include bottled water as part of broad category exclusivity deals with big beverage companies.

Case in point: Coca-Cola’s NASCAR partnership affords exclusivity in the soft drink, sport drink and non-alcoholic beverage categories.

“Our philosophy is not to slice and dice,” said Jim O’Connell, NASCAR’s chief sales officer and vice president of corporate marketing. “We try to aggregate categories, which adds more value to the partnership.”

Broad exclusivity helps Coke obtain share of stomach, he added. “It’s important for Coke to make sure that anything that people drink to refresh and hydrate is included in the category.”

Extend Reach Beyond Events
Although on-site sales remain a key sponsorship driver for bottled water and other beverage companies, a growing number of players are looking for activation opportunities that engage consumers before and after a sponsored event.

Not surprisingly, that increasingly includes social media platforms.

For example, New York Road Runners—producer of the ING New York City Marathon—has incorporated long-time water sponsor Poland Spring into its new Challenge U social media promotion.

NYRR launched the program through its Facebook page at the beginning of the year to encourage consumers to get in shape and fulfill their New Year’s resolutions. The program offers a new health and wellness challenge every four weeks.

In March, NYRR aligned Poland Spring, a brand of Nestlé Waters North America Inc., with the Hydration Challenge, which reminds runners about the importance of staying properly hydrated.

As part of the challenge, Poland Spring encouraged consumers to post photos of themselves drinking water during their training regime. Runners who posted the best images received branded clothing and other merchandise.

“The more relevant and helpful a brand is, the more it will resonate with consumers,” said Ann Crandall, NYRR’s executive vice president of business development and strategic partnerships.

Tips on Forging Successful Water Partnerships
Below, IEG SR offers tips for properties on structuring beneficial relationships with bottled water marketers.

Offer on-site sales rights. On-site sales and sampling rights serve as the crux of nearly every bottled water sponsorship.

On-site sales at events such as Lollapalooza and others sponsored by Refreshing Idea’s H2O allow the company to break even on sponsorship rights fees, said Julie Atherton, Refreshing Ideas president, noting the upstart company could not afford the ties without the benefit.

“We donate water for artists, and in exchange the festivals buy water from us. That gives us exposure we could not otherwise afford,” she said.

Promote brand attributes. Bottled water marketers frequently look for opportunities to play up their brand positioning. For example, Groupe Danone uses Evian’s 26-year-old sponsorship of the USTA US Open to bolster the brand’s upscale, international positioning, while Fiji Water sponsors culinary and fashion events to support its super-premium status.

Gain promotional platforms. As with other consumer packaged goods marketers, bottled water companies almost always look for tickets, hospitality and other perks that can be used to develop retail promotions.

That includes promotions with grocery store and c-store accounts, as well as quick-service and other types of restaurants.

For example, the Aquafina brand last year partnered with Dunkin’ Brands, Inc.’s Baskin-Robbins ice cream chain to activate its segment of PepsiCo’s MLB partnership. Consumers who purchased a 20-ounce bottle of Aquafina and a two-scoop sundae received a free MLB mini helmet.

Tie-in strategic partners. Fiji Water frequently activates sponsorships with restaurateurs and chefs with whom it has strategic partnerships.

For example, the company activates the Food & Wine Classic in Aspen and other culinary events by hosting dinners prepared by celebrity chefs who serve Fiji Water in their restaurants.

“It’s a great way to leverage our on-premise relationships,” said Amber Eyerly, Fiji’s senior manager of corporate communications.

Tout green positioning. With growing concerns over sustainable packaging, bottled water companies increasingly are rolling out recycling programs at sponsored events.

That includes Poland Spring, which in 2009 created a recycling program around its ING New York City Marathon sponsorship.

Promote community involvement. Bottled water companies frequently donate product to fundraisers and other events as part of their community outreach efforts.

For example, CG Roxane, LLC leverages its Crystal Geyser brand’s sponsorship of San Francisco’s Pier 39 by providing water to nonprofit fundraisers that take place at or near the waterfront attraction.

CG Roxane also provides product to other events that take place at the venue, said Beth Schnitzer, Pier 39’s vice president of strategic alliances, noting that the company will provide 10,000 bottles of water for the U.S. Travel Assn.’s May 21-25 International Pow Wow.