Arrowhead’s Thirsty for More Water Sales : Advertising: It is putting its name on the Anaheim Arena to try to improve business.

Unlike junk bonds, those “Baby on Board” signs and ponytails on men, “designer water” is one trend that actually survived the 1980s.

The industry, in fact, peddles nearly $3 billion worth of bottled water a year--a river deep enough to provide every man, woman and child in America with nine gallons.

But the business isn’t growing nearly as fast as it once did, which brings us to Monterey Park’s Arrowhead Mountain Spring Water Co.

Arrowhead sold wholesalers $225 million worth of bottled water last year--peanuts by the standards of a huge business such as the auto industry, but enough to make it the nation’s largest bottled-water company.

It owns a new water-bottling plant in Ontario, 45 miles east of Los Angeles, that is the largest in the United States: It can pump out a torrent of half a million gallons a day.

Arrowhead, though, does not have the cachet of, say, Perrier. In fact, it makes half its money in the far less glamorous business of selling water in plastic jugs for home and office water coolers.

And unlike the snazzier and more expensive brands sold nationwide, such as Perrier, Arrowhead sells only to customers in California and Arizona.

That’s why Arrowhead sales have been even slower lately than the rest of the industry: Southern California, its biggest market, is still in the grips of a recession.

Once-prosperous aerospace and real estate companies are trimming their budgets, and frills such as those big, pale-blue plastic bottles of spring water are often among the first to go.

“Look at it this way: Take away just 10 water coolers,” says marketing consultant Hellen Berry, “and over a year you cancel a whole lot of bottles.”

So Arrowhead will try something only half a dozen or so much larger companies with huge ad budgets have done before: Put its name on an arena. From now on, Anaheim Arena--where Disney’s Mighty Ducks hockey team plays--will be known as the Arrowhead Pond of Anaheim.

It usually costs close to a $1 million a year to sponsor an arena. And the reasons, sports marketing experts say, are not always as businesslike as the companies would have you believe: There is usually at least a little corporate egotism involved in seeing the company’s name up in lights, not to mention the perks that come with it, such as box seats and season tickets for executives.

On the other hand, it probably pays off for the four airlines that have their names on arenas in Chicago, Washington, Salt Lake City and Phoenix. “They get an automatic association with that city or region, like United in Chicago,” says Jim Andrews, who edits a trade publication on sports marketing called IEG Sponsorship Report.

“What Arrowhead seems to be trying to do is say: ‘We’re Southern California’s water company,’ ” Andrews says. Whether this novel strategy proves cost-effective for a small company--as opposed to a big savings and loan such as Great Western Bank, which has its name on the Forum in Inglewood--remains to be seen.

Arrowhead will not say how much it is spending on the arena out of its advertising budget, which usually runs between $6 million and $8 million a year.

“But it’s not just a lot of visibility we’re buying,” says Jeffrey Caso, vice president of marketing. “There’s an image rub-off from the Ducks, from Disney, and from the excitement of hockey in L.A.

“And there are a lot more events, like concerts, at that arena than just hockey games.”

With its name on a sports arena, Arrowhead has come a long way from its beginnings nearly a century ago--hauling water by wagon from the San Bernardino Mountains near Lake Arrowhead to Los Angeles. (Angelenos who visited the spas there had decided they wanted to drink the water at home too.)

Over the years, the company has had a long, strange corporate odyssey: It has been owned by Standard Oil of California; a company called Rheem Manufacturing; and was a public company until 1969.

At the start of the 1980s, Arrowhead was gobbled up by the giant conglomerate Beatrice Foods, which owned Swiss Miss hot chocolate, ZagNut candy and Dannon yogurt, as well as Avis Rent a Car and Max Factor cosmetics.

For a company that touts its devotion to the environment and its recyclable bottles, Arrowhead has not always been so green. In 1985, it was hit with a $500,000 criminal fine--the largest in state history to that point--for dumping solvents and sludge into the Los Angeles sewer system.

In 1986, a $6-billion deal took Beatrice private; the new owners needed to sell off some businesses to repay their huge debt. In 1987, Arrowhead and several smaller brands were sold to Perrier Group of America for a price estimated at about $400 million.

In the mid-1980s, everybody--even the beer companies--were trying to buy bottled-water concerns: Upscale water looked like the next big thing.

It was Perrier that made it so.

Through lucky timing and savvy marketing, the French company--with its pear-shaped green bottles--promoted carbonated mineral water into the beverage of the 1980s. (The company’s advertising slogan was “Earth’s first soft drink.”)

Back then, your basic ‘80s kind of person would amble into a chic bistro and casually order a Perrier to show he or she was (a) health-conscious and (b) able to afford a bottle of French water.

Unlike in Europe, where people have been drinking mineral water for decades, the U.S. bottled-water business sprung out of nowhere to grow by as much as 15% a year through most of the ‘80s. (It was, of course, easier to rack up big sales back then because bottled water was a fairly small, new business, so any gains looked big. Still, the sales were impressive.)

“Before the 1980s,” says Hellen Berry, the marketing consultant at Beverage Marketing Corp., “Americans just didn’t buy water.

“They turned on the tap and drank whatever came out.”

It was a gigantic marketing coup--selling people something they were used to getting free, or nearly so.

In the less glamorous half of the market, the home-delivery companies such as Arrowhead and San Francisco’s McKesson Corp.--which sells Sparkletts--were pushing themselves as purer alternatives to Southern California’s sometimes-grungy tap water.

Bottled water even got its own coterie of connoisseurs--among them Arthur von Weisenberger, author of “The Pocket Guide to Bottled Water”--not to mention 700 different brands across the nation and the ultimate credential for any with-it industry: its own Washington lobby, the International Bottled Water Assn.

“The home-delivery stuff sells so well,” says von Weisenberger, “because in Southern California the tap water ranges from awful to chunky. Here in Santa Barbara, for instance, we’ve got water you can chew.”

But the 1980s ended with a thump in the recession of 1990, and bottled-water sales slowed to a trickle. Perrier did even worse: Sales plummeted when it had to recall its water for benzene contamination.

So growth for the bottled-water business seems to have topped out in the range of 4% to 5%. (In comparison, Arrowhead sales grew only 2% last year.)

And unless the companies can dig up some new customers, they are doomed to stay piddling-sized compared to, say, carbonated soft drinks, a $50-billion-a-year business.

That seems a likely fate for most water companies, which are small and regional. The reason: Most are tied to their springs, and water is expensive to ship great distances.

Last year, though, Perrier was swallowed up--in a $2.6-billion deal--by the world’s largest food company, the truly gigantic Swiss concern Nestle SA. Nestle is even older than Arrowhead; it has parlayed Nescafe coffee, chocolate, condensed milk and dozens of other foods--including its controversial baby formulas sold in the Third World--into a $37-billion-a-year food and drink empire.

Nestle has said it would not mind hitting $70 billion in sales by the end of the decade.

“It was already the world’s No. 1 coffee company,” says Les Pugh, a stock analyst at investment bankers Salomon Bros.

“Now it’s No. 1 in water too. And it’s taken a lot of interest in Perrier.”

It is probably Nestle, in fact, that is behind a push at Connecticut-based Perrier Group of America to plug the brands more, like the Arrowhead deal at the Anaheim Arena.

Even Perrier is revamping its image: Snob appeal is out; the company says the old image of the middle-aged, moneyed Perrier drinker turns off health-conscious twentysomethings.

As for Arrowhead, it celebrates its 100th birthday next year.

And it will have its own arena in which to do it.

Liquid Assets

Arrowhead was easily the most popular brand of bottled water in 1992. It sold about 60% more than its nearest competitor, Sparkletts. Wholesale dollar sales in millions: Brand: ‘91-92 sales growth

Arrowhead: $225.1 (1.9%)

Sparkletts: $142.0 (1.6%)

Poland Spring: $134.2 (2.4%)

Evian: $101.0 (9.8%)

Hinckley & Schmitt: $93.5 (9.5%)

Ozarka/Oasis: $64.0 (4.6%)

Deer Park/Deep Rock: $57.0 (1.2%)

Perrier: $56.2 (12.4%)

Great Bear: $51.8 (-7.5%)

Calistoga: $47.0 (4.0%)

Source: Beverage World Magazine; Researched by JANICE L. JONES / Los Angeles Times

Arrowhead Mountain Spring Water

* Founded: 1894

* Headquarters: Monterey Park

* General Manager: Rusty Krahn

* Parent company: Perrier Group of America, Greenwich, Conn., a unit of Swiss food conglomerate Nestle SA.

* History: Takes its name from an arrowhead-shaped natural landmark pointing toward its original springs in the San Bernardino Mountains. The stone arrowhead aided travelers in locating the health spa and baths established at the springs in 1857. The spa’s proprietors began bottling the water for visitors to take home in 1894.

Source: Perrier Group of America

Researched by JANICE L. JONES / Los Angeles Times