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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.

Chapter 1: Executive Summary
Scope of the Report
Methodology
Market Overview
Insights and Opportunities
Premium Waters Seen as Salvation for Meager Profits
Perceived Purity of the Product Still Matters
“Natural” Enhancements Important
Bold Colors and Flavors Start to Trend Upward
Water Enhancers Create Promise and Loom as a Threat
At-Home Carbonation Enters the Fray
C-Stores Offer Hope for Bottom Lines of Bottled Water Marketers
Sparkling Water Users Are Elite Consumers
Competitive Strategies
Major Marketers Forced to Hit Reset Button
Talking Rain Beverage Company Disrupts Sparkling Water Market
Marketing and New Product Trends
PepsiCo Markets New Water Brand to Teens
Essentia Water Promotes Health and Happiness
Bottled Water Companies Support Drink Up Initiative
Premium Still Water Offers “Ectrolytenment”
Evian Takes Steps to Rebuild Brand
LaCroix Revives Spree and Launches Cύrate
Demographic Highlights
Users of Bottled Still Water Tend to Be Young and Multicultural
Sparkling Water Works for GenXers
Perrier and S. Pellegrino Succeed with Upscale Urbanites
Bottled Water Appeals to Weight-Conscious Americans
Fitness Buffs Key Segment in Bottled Water Market
Bottled Water Users Less Likely to Eat Three Square Meals a Day
Healthy Snacking Appeals
Bottled Water Fans Like to Try New Food and Beverage Products
Sparkling Water Devotees Shop Natural Channel
Ads Can Reach Bottled Water Drinkers on Social Media and Cellphones
Chapter 2: Insights and Opportunities
Bottled Water Market Rich with Opportunities and Rife with Challenges .. 16
Major Brands Threatened from All Sides
Table 2-1: IRI-Tracked Dollar and Volume Sales of Selected Beverages for the 52 Weeks Ending March 23, 2014, Private Labels vs. Branded .. 18
Upstart Firms Become a Major Force
Premium Waters Seen as Salvation for Meager Profits
Perceived Purity of the Product Still Matters
Table 2-2: Excerpts of Marketing Claims Made about Sources of
Selected Water Brands
“Natural” Enhancements Important
Table 2-3: Excerpts of Health and Wellness Marketing Claims Made by Selected Enhanced and Flavored Waters
Bold Colors and Flavors Start to Trend Upward
Table 2-4: Flavors and Colors of Selected New Bottled Water Products
Water Enhancers Create Promise and Loom as a Threat
At-Home Carbonation Enters the Fray
Dispensing Caps Open New Vistas
C-Stores Offer Hope for Bottom Lines of Bottled Water Marketers
Bottled Water Becomes a Fashion Statement
Bottled Water Users a Desirable Demographic
Sparkling Water Users Are Elite Consumers
Chapter 3: Market Overview
Historical Trends
Consumers Shift from Carbonated Soft Drinks to Bottled Water
Table 3-1: Number of Adults Drinking Five or More Glasses of Non-Alcoholic Beverages in Last Seven Days by Type of Beverage, 2004 vs. 2013
More Consumers Drink Large Quantities of Bottled Water
Table 3-2: Number of Adults Drinking Bottled Non-Carbonated Water by Number of Glasses Consumed in Last 7 Days, 2004 vs. 2013
Table 3-3: Number of Glasses of Bottled Non-Carbonated Water Consumed in Last 7 Days, 2004 vs. 2013
Bottled Water Use Mirrors Demographic Trends in U.S. Society
Table 3-4: Selected Demographic Characteristics of Adults Drinking 7 or More Glasses of Bottled Non-Carbonated Water or 5 or More Glassesof Sparkling Water in Last 7 Days, 2004 vs. 2013
Table 3-5: Number of Adults Consuming 7 or More Glasses of Bottled Non-Carbonated Water in Last 7 Days by Age Group, 2004 vs. 2013
Size and Composition of the Market
Market for Sparkling Water Bubbles, Still Water Flat
Table 3-6: U.S. Retail Sales of Bottled Still Water, 2008-2013
Still Water Volumes Up, Dollar Sales Down
Convenience Stores Bolster Bottled Water Sales
Figure 3-1: Projected U.S. Dollar Retail Sales of Bottled Water by Retail Channel, 2014 (% of total U.S. retail sales)
Figure 3-2: Projected U.S. Dollar Retail Sales of Bottled Water by Retail Channel, 2014 (in million $)
Factors Affecting Market Growth
Shift from Carbonated Soft Drinks Expected to Last
Industry Sources Bullish about the Future
Still More Room for Growth in American Market
Health and Fitness Movement Will Boost Bottled Water Market
Public Policy Favors Bottled Water as Better-for-You Beverage
Higher Prices for Premium Waters Will Help Dollar Sales
Sparkling/Mineral Water to Stay on High Growth Curve
Liquid Enhancers Will Boost Interest in Water
Continued Commoditization of Plain Bottled Water Will Squeeze Profits
PET Bottle Bans Create Obstacles to Growth
Projected Market Growth
Growth Will Accelerate
Sparkling/Mineral Water Will Continue to Lead the Way
Chapter 4: Competitive Strategies
Overview
Top Marketers Lose Ground to Private Labels
Figure 4-1: Top 5 Marketers’ Shares of IRI-Tracked Dollar Sales of Bottled Still and Sparkling/Mineral Waters, 52 Weeks Ending February 23, 2014
Table 4-1: Leading Marketers’ Shares of IRI-Tracked Dollar Sales of Bottled Still and Sparkling/Mineral Waters, 52 Weeks Ending February 23, 2014
Private Labels Get Boost from PET/Convenience Segment
Table 4-2: Private Labels’ Shares of IRI-Tracked Dollar Sales of Bottled Still and Sparkling Waters, 52 Weeks Ending February 23, 2014
Nestlé Waters North America Stays on Top of Still Water Market
Figure 4-2: Top 5 Marketers’ Shares of IRI-Tracked Dollar Sales of Bottled Still Water, 52 Weeks Ending February 23, 2014
Table 4-3: Leading Marketers’ Shares of IRI-Tracked Dollar Sales of Convenience/PET Still Water, 52 Weeks Ending February 23, 2014
Table 4-4: Leading Marketers’ Shares of IRI-Tracked Dollar Sales of Jug/Bulk Still Water, 52 Weeks Ending February 23, 2014
Talking Rain Beverage Company Disrupts Sparkling Water Market
Figure 4-3: Top 5 Marketers’ Shares of IRI-Tracked Dollar Sales of Sparkling/Mineral Water, 52 Weeks Ending February 23, 2014
Table 4-5: Leading Marketers’ Shares of IRI-Tracked Dollar Sales of Sparkling/Mineral Water, 52 Weeks Ending February 23, 2014
Competitive Strategies
Nestlé Waters North America Remains in the Lead
Table 4-6: IRI-Tracked Dollar Sales of Bottled Still and Sparkling/Mineral Waters by Nestlé Waters North America, 52 Weeks Ending February 23, 2014
Table 4-7: IRI-Tracked Dollar Sales of Perrier and S. Pellegrino Brandsvs. Other Brands of Nestlé Waters North America, 52 Weeks Ending February 23, 2014
Coca-Cola Company “Hits a Speed Bump”
Table 4-8: IRI-Tracked Dollar Sales of Bottled Still and Sparkling/Mineral Waters by Coca-Cola Company, 52 Weeks Ending February 23, 2014
Table 4-9: IRI-Tracked Dollar Sales of Major Brands of Bottled Still andSparkling/Mineral Waters by Coca-Cola Company, 52 Weeks Ending February 23, 2014
PepsiCo Hopes Premium Products Will Keep Its Water Business Afloat .. 60
Table 4-10: IRI-Tracked Dollar Sales of Bottled Still and Sparkling/Mineral Waters by PepsiCo, Inc., 52 Weeks Ending February 23, 2014
Sparkling ICE a One-Hit Wonder for Talking Rain Beverage Company
Figure 4-4: IRI-Tracked Dollar Sales of Sparkling ICE Brand of Talking Rain Beverage Company, 52 Weeks Ending February 23, 2014
Chapter 5: Marketing and New Product Trends
Marketing Trends
PepsiCo Launches Water Brand for Teens
Essentia Water Promotes Health and Happiness
Bottled Water Companies Support Drink Up Initiative
Premium Still Water Offers “Ectrolytenment”
Evian Takes Steps to Rebuild Brand
New Product Trends: Sparkling Water
Talking Rain Expands Fast-Growing Brand
LaCroix Revives Spree and Launches Cύrate
Coca Cola Launches DASANI Sparkling
New Product Trends: Still Water
New Brand of Premium Fashion Water Launched
Blossom Water Introduces Essence Water
Oceans Omega Offers Healthy Hydration with Omega Infusion
Balance Water Adds Flower Extracts
Ultra-Premium Canadian Water Introduced
Chapter 6: Demographic Highlights
Who Drinks Bottled Water
Users of Bottled Still Water Tend to Be Young and Multicultural
Table 6-1: Selected Demographic Characteristics of Adults Drinking Bottled Still Water by Number of Glasses Consumed in Last 7 Days, 2013
Sparkling Water Works for GenXers
Table 6-2: Selected Demographic Characteristics of Adults Drinking Sparkling Water by Number of Glasses Consumed in Last 7 Days, 2013
Perrier and S. Pellegrino Succeed with Upscale Urbanites
Table 6-3: Selected Demographic Characteristics of Adults Naming Perrier or S. Pellegrino the Brand of Sparkling Water Used Most Often, 2013
Figure 6-1: Percent of Consumers Naming Perrier or S. Pellegrino the Brand of Sparkling Water Used Most Often with a Household Income of $100,000 or More, 2013
Focus on Health and Fitness
Bottled Water Appeals to Weight-Conscious Americans
Table 6-4: Attitudes toward Weight Management of Adults Drinking High Volumes of Bottled Still and Sparkling Waters in Last 7 Days, 2013
Fitness Buffs Key Segment in Bottled Water Market
Figure 6-2: Percent of Adults Drinking High Volumes of Bottled Still and Sparkling Waters in Last 7 Days Who Exercise Five or More Times a Week, 2013
Table 6-5: Physical Fitness Activities of Adults Drinking High Volumes of Bottled Still and Sparkling Waters, 2013
Eating Habits and Food Preferences
Bottled Water Users Less Likely to Eat Three Square Meals a Day
Figure 6-3: Percent of Adults Drinking High Volumes of Bottled Still and Sparkling Waters Who Eat Several Small Meals throughout the Day, 2013
Healthy Snacking Appeals
Table 6-6: Healthy Snacking by Adults Drinking High Volumes of Bottled Still and Sparkling Waters, 2013
Households of Bottled Water Drinkers Eat Lots of Other Snacks
Table 6-7: Household Use of Snacks by Adults Drinking High Volumes of Bottled Still and Sparkling Waters by Type and Volume of Snack Consumed in Last 30 Days, 2013
Energy and Sports Drinks Favored
Table 6-8: Use of Other Beverages by Adults Drinking High Volumes of Bottled Still and Sparkling Waters, 2013
Sparkling Water Drinkers Have Gourmet Tendencies
Table 6-9: Food Preferences of Adults Drinking High Volumes of Bottled Still and Sparkling Waters in Last 7 Days, 2013
Bottled Water Consumers Big Spenders in Grocery Stores
Table 6-10 : Supermarket Shopping Profile of Adults Drinking High Volumes of Bottled Still and Sparkling Waters, 2013
Bottled Water Fans Like to Try New Food and Beverage Products
Table 6-11: Attitudes toward Trying New Food and Beverage Products of Adults Drinking High Volumes of Bottled Still and Sparkling Waters in Last 7 Days, 2013
Sparkling Water Devotees Shop Natural Channel
Table 6-12: Attitudes toward Natural Foods of Adults Drinking High Volumes of Bottled Still and Sparkling Waters, 2013
Figure 6-4: Percent of Adults Drinking High Volumes of Bottled Still and Sparkling Waters Who Are Vegetarians, 2013
Figure 6-5: Percent of Adults Drinking High Volumes of Bottled Still and Sparkling Waters Who Shopped at Trader Joe’s or Whole Foods in Last Four Weeks, 2013
Receptivity to Marketing and Advertising
Ads Can Reach Bottled Water Drinkers on Social Media and Cellphones
Table 6-13: Receptivity to Marketing and Advertising on Cellphones and Social Media of Adults Drinking High Volumes of Bottled Still and Sparkling Waters in Last 7 Days, 2013 Magazines Work Too
Table 6-14: Importance of Magazines of Adults Drinking High Volumes of Bottled Still and Sparkling Waters in Last 7 Days, 2013

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