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Fiji Water: A Luxurious Lie?
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The Fiji Water Story.
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Fiji Water started its operations in Fiji in 1993, under the name Nature’s Best. In 1995 the company changed its name to Natural Waters of Viti Ltd. The company built its first bottling plant in 1996 in a remote part of the island Viti Levu, Fiji’s main island. The company was bought by the Wonderful Company, in 2004. Based in Los Angeles, The Wonderful Company is a holding company owned by Stewart and Lynda Resnick (A Hollywood billionaire couple). Brands include FIJI Water, POM Wonderful (fresh pomegranates and juice), and other products. Fiji water is a very successful international brand renowned for its purity, health benefits, and prestige. The premium branding strategy includes premium packaging, celebrity endorsements, and a state of the art bottling plant. The Fiji Water brand story appeals to high-end customers.
“Starting in clouds high above the South Pacific, our water falls as tropical rain on the pristine islands of Fiji. There it is slowly filtered by volcanic rock until it collects in a natural artesian aquifer, where it is protected and preserved from external elements. Untouched by man, it truly is Earth’s Finest Water.” ( Fiji Water Commercial, 2018)
Fiji Water became one of the biggest export products of the Fiji Islands. The company’s revenue has been growing steadily since its inception. In 2022, the company had a revenue of 42 million dollars. 90 percent of its demand comes from the United States. Fiji Water contains silica, a mineral known for anti-aging and rejuvenation. This is one of its main competitive advantages.
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Fiji Islands.
[/vc_column_text][vc_column_text]Fiji’s islands host approximately 900,000 inhabitants, spread out over 100 islands in the Pacific. 220 Islands are not inhabited in the Republic of Fiji. Twelve percent don’t have access to fresh, clean, and safe drinking water. The overall GDP per capita in Fiji was around 5316 dollars in 2022. 1/3 of the inhabitants still live in poverty, especially in rural areas. The Pacific island countries are vulnerable to natural disasters such as cyclones, droughts, landslides, floods, volcanic eruptions, earthquakes, and tsunamis. Frequent natural disasters increase the economic and development challenges Pacific Island countries face. These constraints include geographical remoteness, narrow production bases, and small populations. High transportation costs are a drag on competitiveness and raise the costs of disaster response. Fiji is in any given year, either recovering from a natural disaster or experiencing one. However, despite all the challenges, Fiji built a growing economy. Fiji has forests, minerals, and fish resources, and it is one of the most developed of the Pacific island economies. Sugar exports, remittances from Fijians working abroad, and a growing tourist industry, with 400,000 to 500,000 tourists annually, are significant sources of foreign exchange. Tourists consider Fiji to be an untouched, exclusive tropical paradise.[/vc_column_text][/vc_column][/vc_row][vc_row css=”.vc_custom_1592756345558{margin-top: 80px !important;}”][vc_column width=”1/2″][dfd_single_image image_size=”medium” image=”8333″][/vc_column][vc_column width=”1/2″][dfd_single_image image_size=”medium” image=”8337″][/vc_column][/vc_row][vc_row][vc_column][vc_column_text css=”.vc_custom_1694861561959{margin-top: 30px !important;margin-bottom: 60px !important;}”]
Fiji’s Political Instability
In December 2022, Fiji held an election that resulted in a change of power for the first time since 2006, when Voreqe Bainimarama seized power in a coup. After no party won a clear majority, three parties formed a coalition government called the People’s Coalition, led by Sitiveni Rabuka as Prime Minister. Rabuka has a complex history, having led two coups in 1987 as a military commander. He later served as PM from 1992-1999. The election loss ends Bainimarama’s 16 years in power. He initially ruled as an autocrat after the 2006 coup before transitioning Fiji back to democracy in 2014. Bainimarama and his deputy, Aiyaz Sayed-Khaiyum, rewrote the constitution in 2013 to favor themselves. But Bainimarama’s fatigue led to reduced support over time.
The new Rabuka government quickly began reversing Bainimarama-era policies, including releasing withheld funding for the University of the South Pacific, school funding and signaling rollbacks of media restrictions. The government also removed many Bainimarama loyalists from positions of power. This prompted a concerning statement from the military commander about ensuring security. Significant figures from Bainimarama’s government are under investigation, including Bainimarama himself. A no-confidence motion remains a threat given the coalition’s slim majority. Given the delicate political situation, there are concerns about ongoing power struggles destabilizing the country.
Sitiveni Rabuka granted a 7-year tax holiday for water bottling companies. He states the tax concession aims to attract new investors and spur growth across the industry. Rabuka asserts the government will still generate revenue from these companies through the increased water resource tax of 19.5 cents per liter, 1.5 cents higher than before. He says that despite being corporate tax-exempt, water bottling firms will pay more via this water tax. The opposition questioned forfeiting potential revenue from the whole sector to provide tax credits to a single U.S.-based firm. He noted this company already had a 13-year tax holiday when the previous government took office in 2010.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text css=”.vc_custom_1694861851360{margin-top: 30px !important;margin-bottom: 60px !important;}”]
Fiji Water: The Ethical Choice?
[/vc_column_text][vc_column_text]Fiji’s water is pumped up through the volcanic rock, using diesel engines, 24/7. The bottles are filled with water and packed in carton board boxes from the local rainforests. Afterward, the bottles go on fossil-fueled freighters to reach their end destination at a harbor in the United States or any of the other 50 export destination countries. Trucks distribute them to the buyers. Fiji Water extracts approximately 55 million gallons of water annually, which could be more sustainable. Groundwater is a non-renewable resource; it would take centuries to gather it back after its source is depleted. Fiji Water has been very active in strategic charity projects to boost its image, which was made possible by the local government’s generous tax-free period of 13 years.
Since 2008, it has also boasted that it would become carbon-negative by 2010. However, an American customer, Desire Worthington, accused FIJI Water ―of using a practice known as “forward crediting”: essentially giving yourself credit for carbon reductions that haven’t happened yet. Worthington argues she paid more for the product because she expected the company to be carbon-negative. However, under the forward crediting model, the offsets do not need to be currently occurring; they can be anticipated actions. Fiji Water is a company that uses greenwashing to promote its products. Greenwashing is a term that refers to the portrayal of a brand or product as environmentally sustainable through the use of green imagery and rhetoric that links the brand to environmentalism without alluding to the actual environmental features or benefits of the product.
Recently, Fiji Water has been campaigning heavily to be perceived as more environmentally sustainable. They claim to use 100 percent recycled bottles now. The company boasts about its actions to help the community on Fiji’s About Us and the sustainability page.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][dfd_spacer screen_wide_spacer_size=”30″ screen_normal_resolution=”1024″ screen_tablet_resolution=”800″ screen_mobile_resolution=”480″][vc_column_text css=”.vc_custom_1694835217859{margin-top: 30px !important;margin-bottom: 60px !important;}”]
Climate Change and developmental challenges.
[/vc_column_text][vc_column_text]The Pacific Islands receive the world’s highest amounts of per capita aid. Most aid has been bilateral from Australia, Japan, France, and New Zealand. Despite receiving large amounts of foreign assistance, the Pacific Islands still need to prosper. Development aid led to essential improvements in well-being and economic growth in the Pacific. However, the economic growth needs to be sufficient to be self-sustainable.
That is partly because the weakest economies are the most prominent victims of climate change. The effects of climate change are increasing the volatility and unpredictability of tropical cyclones in the Pacific. The damage to the national economies is devastating. Fiji has experienced 3 Category 5 severe tropical cyclones in the 2020-2021 cyclone season alone. The cyclones caused significant flooding and the destruction of homes, schools, infrastructure, and crops. Moreover, the sea level rises faster in the Pacific region than in the rest of the world.
The government of Fiji has identified approximately 800 communities that may need to relocate due to climate change impacts. Over the past two decades, coastal erosion and flooding have severely damaged the villages on the Fiji Islands. Rising seas have submerged homes, seawater has ruined food crops, and the seawalls intended to protect the villages have been destroyed.[/vc_column_text][dfd_spacer screen_wide_spacer_size=”30″ screen_normal_resolution=”1024″ screen_tablet_resolution=”800″ screen_mobile_resolution=”480″][/vc_column][/vc_row][vc_row][vc_column width=”1/2″][dfd_single_image image_size=”medium” image=”8778″][/vc_column][vc_column width=”1/2″][dfd_single_image image_size=”medium” image=”8781″][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
Case Questions
- What are the key stakeholders involved in Fiji Water’s operations? What are their interests and how does the company manage its relationships with them?
- How does Fiji Water balance the interests of its shareholders with those of local communities in Fiji? Does it manage these stakeholders effectively?
- Should companies like Fiji Water contribute more to local economic development in the communities where they operate? What are the ethical obligations?
- How does the political instability in Fiji impact Fiji Water’s business and stakeholders? How can the company manage this risk?
- What stakeholder groups allege Fiji Water engages in greenwashing? How should the company respond to these criticisms?
- How can Fiji Water improve its stakeholder engagement?
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