Consumers still have a thirst for bottled water. "Bottled water is performing moderately well with respectable growth," said John Sicher, publisher of Beverage Digest. Dollar sales of bottled water were up 7% across food, drug and mass outlets for the 52 weeks ended Dec. 2, 2012, according to SymphonyIRI data. Sicher said he expects bottled water to grow modestly over the next few years.
His forecast for the enhanced and flavored bottled water segment of the category is mixed. Dollar sales of enhanced and flavored water were up about 4%, according to Sicher. Their share of total bottled water sales has grown from 16% in 2006 to 24% in 2011 across all three channels, according to Mintel, but a recent report from the market research firm suggests that the introduction of private-label products that mimic the look, flavors and functional claims of branded products have hampered growth.
Some brands have had a strong performance. "Smart Water is the main growth brand in the category because Coke has done such a good job with packaging and marketing," Sicher said. He also said the brand saw dollar sales increase 26% last year. Competitor Vitamin Water Zero sales were up 7%.
One promising segment within the water category is essence waters, which contain natural flavors and no sweeteners. Although they still represent a small percentage of category sales, essence waters could provide some bounce to the category.
Kara Goldin, founder and CEO of Hint, said the company saw high double-digit growth in most of its existing brick-and-mortar accounts during 2012 and almost 200% growth in sales online. This year, Goldin expects growth from existing accounts to surge 30% to 100%, and believes the brand will see major growth in the drug channel in 2013 as retailers allocate more refrigerated space to healthier beverage alternatives.
"Rite Aid launched Hint and some other 'better-for-you' beverages last year, and is expected to allocate cold space later this year," she said. CVS also will launch the brand's sparkling water line, HintFizz.
Sparkling bottled water has been a growth area in the water category, according to Mintel. Sales grew an impressive 22% from 2010 to 2011 and are projected to increase 43% from 2013 to 2016, according to the market research firm. "Sparkling water is on the rise, but it's still a small part of the business," Sicher said.
A recent report from Mintel cited Nestlé's premium sparkling water brands Perrier and San Pellegrino as brands that have shown impressive dollar and volume sales growth in the past two years.
The article above is part of the DSN Category Review Series. For the complete Beverages Buy-In Report, including extensive charts, data and more analysis, click here.