Bottled Water in the United States

Bottled Water in the United States

The bottled water market has a promising future. As consumers become more health aware and continue to turn away from carbonated soft drinks and embrace bottled water in all forms, many of the leading beverage industry analysts and marketers believe that bottled water will be a dominant force out of the non-alcoholic beverages. America’s health and wellness concerns due to the struggle with obesity have led to a fitness fad of water being the zero-calorie/ultra-low calorie beverage of choice for millions of Americans. The continuous innovation in flavoring and packing has made bottled water trendy, appealing to consumers who have sworn off sugary drinks. Bottled water has also gained a new competitive advantage over high calorie beverages due to consumer activists creating public policies stating sugary drinks as menaces to public health. While consumption of premium European sparkling water brands has long served as a status symbol for urban elites, premium still water packaged in designer bottles has become the fashion statement du jour for more and more Millennials and GenXers.

The major marketers in the bottle water industry, however, still face a struggle, even with the upbeat view of the prospects for the bottled water industry. As supermarkets supply their shelves with loss-leading cases of plain bottled water, it no longer seems that competing on the basis of volume and price is possible for marketers of major brands. Industry leaders such as Coca-Cola Company and PepsiCo, Inc. are now revisiting their marketing strategies to keep up with the increasing competition from branded premium products and from low-priced commodity products from private label manufacturers.

Bottled Water in the United States highlights the challenges marketers of bottled water are facing, and analyzes their strategic responses against their competitors. This report also identifies the trends that are shaping the bottled water market; provides an estimate of the retail sales in the United States for both bottled still and sparkling waters for the 2008 to 2013 period, as well as forecasts retail sales through 2018; identifies marketing and new upcoming product trends; and provides an in-depth look at today’s bottled water consumers.

Scope and Methodology

This report analyzes the U.S. market for the following categories of bottled water: still water packaged in polyethylene terephthalate (PET) bottles; still water sold in jugs or bulk; and sparkling/mineral water. Bottled still water is currently being sourced from natural springs or purified water from other water sources. The sparkling/mineral water category includes naturally carbonated bottled water, but excludes seltzers and club sodas. Both bottled still and carbonated waters can be enhanced with vitamins or minerals and various flavorings.

The main source of the consumer data is from the Simmons National Consumer Survey (NCS) for Fall 2013 (and Fall 2004 in the case of 10-year-trend tables and figures) from Experian Marketing Services. On an ongoing basis, Experian Marketing Services conducts booklet-based surveys of a large and random sample of consumers (approximately 25,000 for each 12-month survey compilation) who in aggregate represent a statistically accurate cross-section of the U.S. population. Simmons NCS uses the term “non-carbonated water,” but for this report the term “still water” is used.

Retail sales figures credited to IRI (Chicago, IL) are based on IRI aggregated multi-outlet (MULO) sales tracking, which represents sales through U.S. supermarkets, drugstores (including Walgreens, CVS, and Rite Aid), mass merchandisers (Walmart, Target, Kmart, and Shopko), warehouse clubs (Sam’s Club and BJ’s, but excluding Costco), dollar stores (excluding Dollar Tree), and military commissaries.

The report also includes data collected from field surveys of food retailers in various channels as well as a wide range of industry sources, including company websites, trade publications, business newspapers and magazines, consumer blogs, and annual reports, 10Ks and other releases from public companies.

Market Insights: A Selection From The Report

• Conditions are favorable for growth in U.S. retail sales of bottled water, and the bottled water market is projected to increase $4 billion between 2013 and 2018.
• Bottled water marketers are taking their products to new levels—making water not only a fashion statement but a fashion accessory.
• Major marketers of bottled water are redeploying assets in order to develop high-margin products to improve their bottom lines and beat back the threat emerging from smaller competitors.
• Marketers of bottled water have discovered that enhanced waters are a key weapon in the battle to claim the loyalties of converted drinkers of carbonated soft drinks.
• Many new bottled water products reflect a broader culinary trend toward bold and original flavors that has also become prevalent in foods such as snacks and crackers.
• Over the past ten years the number of adults who drank five or more glasses of bottled still water grew more than 20%, while the number of adults who drank five or more glasses of diet cola, other carbonated diet drinks and regular cola fell by double-digit percentages.
• In an attempt to create more profitable products, Coca-Cola Company has begun to move away from commodity-type bottled water and pivot toward new products with the potential to capture a share of the premium sparkling water market.
• Recent steps taken by PepsiCo, Inc. indicate that instead of competing on the basis of volume, the company is now intent on marketing high-profit, premium brands of bottled water.
• Marketers of bottled water have begun to focus on specific consumer segments. Resource, a new premium bottled water from Nestlé Waters North America, is targeting 35-year-old women. FlavorSplash, a new line of sparkling water from the Aquafina brand of PepsiCo, Inc., is geared toward teens.
• Compared to adults on average, those who drink relatively large quantities of bottled still water are more likely to be young and part of a multicultural population segment.
• Consumers who drink relatively large quantities of bottled still and sparkling waters are more likely to eat several small meals daily and snack primarily on healthy foods.
• Consumers of sparkling water have not completely abandoned carbonated soft drinks. Compared to adults on average, they are 21% more likely to drink regular cola and 22% more likely to drink diet non-cola drinks.
• When grocery shopping, consumers of comparatively large quantities of sparkling water are much more likely to look for organic foods and buy foods that are locally-sourced and without artificial additives.