Bottled Water Refresh

Water, water everywhere ? and in bottled form, the tide is rising nicely once again. By the end of the decade (if not sooner), beverage industry insiders expect sales of bottled water to surpass carbonated soft drinks (CSDs), the long-time cold vault category leader.

Some in the industry anticipate that day will come sooner when taking into account water as an overall beverage. ?By 2017, we think there will be more water consumption overall than CSDs,? said Joe Wiggetman, director of channel and customer development for Nestlé Waters North America, the supplier of such brands as Nestlé Pure Life, Poland Spring and Perrier.

?We?re seeing that with retailers, too, including [convenience] stores,? Wiggetman told Convenience Store News. ?They?re turning over more space to water and less to sugary beverages. The consumer is driving that.?

Indeed, consumers are turning more to water as their concern about sugary, high-calorie beverages increases. According to the latest insights on bottled water from market research provider Mintel, 45 percent of consumers indicated they are drinking bottled water to replace other drinks, especially calorie-dense beverages.

Specifically in the convenience channel, bottled water is partly responsible for the 2.8-percent increase seen in non-alcoholic beverage sales during the first quarter of 2014, according to the latest Wells Fargo Securities LLC?s Beverage Buzz survey, released in April. At c-stores, bottled water sales are reportedly offsetting declines in juices and CSDs.

TURNING THE TIDE

In the U.S. market, sales of bottled water fell almost 7 percent in 2009, but began to recover slightly in 2010 with growth continuing through 2013, Mintel reported, noting that the category?s comeback is supported by an overall consumer desire to drink healthful, low- and no-calorie beverages. Mintel found that 29 percent of consumers are drinking more unflavored bottled water compared to six months ago, 14 percent are drinking more flavored and enhanced bottled water, and 13 percent are drinking more sparkling and carbonated water products.

It also hasn?t hurt that bottled water recently received White House attention. First Lady Michelle Obama has heavily endorsed water, teaming up with The Coca-Cola Co., PepsiCo Inc. and Nestlé Waters among others to persuade Americans to drink more of it.

In the convenience channel, bottled water sales have shown steady improvement since 2012, according to data provided by Nielsen. For the 52 weeks ended in mid-March, bottled water tallied $2.3 billion in sales at c-stores, a 4.2-percent increase vs. mid-March 2013 when sales reached $2.2 billion, and a 10.4-percent increase compared to mid-March 2012 sales of $2 billion.

ENHANCE & CONQUER

In her analysis of the non-alcoholic beverage market, Bonnie Herzog, managing director of tobacco, beverage and consumer research at Wells Fargo Securities, highlighted the ?faster-growing? enhanced water category (water fortified with vitamin enhancements).

In the U.S. convenience channel, sales of enhanced water ? which consists of fortified and aquaceutical bottled water ? were $690 million for the 52 weeks ended March 15. This is actually flat compared to the year prior, according to Nielsen. But that is expected to change as new products and promotions come on the scene.

Avitae USA LLC rolled out new packaging for its all-natural Avitae Caffeine Water, along with a new 125-milligram caffeine level. The new packaging, meant to be more easily noticed by consumers, features a more traditional cylindrical shape, but still holds 16.9 ounces of water.

Meanwhile, Nestlé Waters said it is gearing up for in-store Memorial Day promotions around its Resource brand (natural spring water with electrolytes). The company will partner with convenience stores like 7-Eleven to offer a buy two, get one free deal.

?We?re going to be seeing lots of BOGOS [buy one, get one frees] and tie-ins to customer-specific activities, so this is really the year we are full-scale with national distribution,? stated Wiggetman.

Mintel reported that sparkling water is the bottled water category?s fastest-growing subsegment and is expected to remain so through 2018, perhaps because consumers are looking to replace CSDs, as previously mentioned. The Sparkling ICE brand of sparkling mountain spring water recently introduced new flavors including cherry limeade and strawberry watermelon.

GREEN PASTURES

Still, the bottled water category is not without its challenges and one of the biggest has to do with its bad carbon footprint rap, often highlighted by the younger generation in particular.

For example, Western Washington University ended bottled water sales on campus in April, led by a group called Students for Sustainable Water. A member of this group said sales of bottled water are harmful to the environment, in part because just 13 percent of the plastic bottles are recycled.

Bottled water suppliers are fighting back with investments in green efforts such as reduced plastic in bottles and other environmentally friendly packaging improvements. Dasani, Coca-Cola?s primary water brand, comes in the company?s green-capped PlantBottle, at least 30 percent of which is made from plant materials. In the ?premium distilled? space, Nestlé Waters? Resource bottle is made from 50 percent recycled plastic.

?We have the lightest carbon footprint out there,? maintained Wiggetman.