More and more shoppers today are seeking healthy alternatives for their shopping baskets, which means the floodgates have opened for bottled water sales. Add to this a growth in popularity of flavoured waters and sports caps, and few retailers can ignore the vital profits the sector now brings.
The volume of the bottled water market increased by about 50% between 1999 and 2004, while the carbonates market grew by just 6% in volume over the same five-year period. Its value growth is also up 37% between 2000 and 2004, with a further rise of 8% expected this year (Mintel, June 2005). According to researcher Zenith, bottled water accounts for 15% of soft drinks sales with the figure forecast to rise to 21% by 2008.
Danone remains the leading supplier of bottled water in the UK with its popular Volvic and Evian brands. Highland Spring is next, with particular strength in the sparkling sector. Own label has an estimated 46% share and Nestlé ranks third with brands including Buxton, Vittel and Perrier (Mintel, June 2005). Nestlé Waters head of sales Deane Ingram says the industry has enjoyed a strong 2005 but he believes there are a number of trends retailers should pay attention to. “The introduction of flavours is the biggest thing in the market since the launch of the sports cap,” he says. “Health is also a big factor. People are more concerned about what they are eating and drinking. One thing they highlight as being important to a healthy lifestyle is
to drink more water, and retailers need to respond.”
Flavoured still water is growing in value at 39.7% in the year to date, making it the fastest growing sub sector in the soft drinks category. Volvic Touch of Fruit accounts for 80% of the flavoured still water market in impulse (ACNielsen, October 2005). March 2005 saw Britvic capitalise on the growth with the launch of a flavoured range under the Pennine Spring brand.
Says Ingram: “It’s clear retailers need to provide a choice of flavoured water but they should also stock for the growing section of in-home consumption with 1.5ltr bottles as well as small packs of bottled water, screw-cap 50cl and sports cap 75cl.” The weather is another factor that c-store retailers cannot fail to ignore. It has a massive effect on water sales. Danone studies of epos data suggest that for every degree of temperature above 17°C, water sales increase by 6.2% - that means sales could double between 17°C and 29°C.
Ingram says: “It’s a good idea to keep an eye on the weather report and to top up when necessary.”
Another area enjoying particular growth is the children’s market, which has more than doubled between 2002 and 2004 (Mintel, June 2005).
Ingram adds: “A lot of schools will actually encourage children to have a bottle of water on their desks. We launched our kids’ pack of eight 25cl bottles three years ago now and last year sold more than 20 million bottles. A lot of the carbonated drinks companies are coming under pressure to offer an alternative.”
Highland Spring marketing director Sally Stanley believes there is room for further growth in the UK water market. “The category is certainly performing well,” says Stanley. “We are keeping our focus on unflavoured water, though, as we believe there is still a massive opportunity for growth with waters that are untouched from their source to the bottle.”
Stanley believes one way this can be achieved is to get people into the habit of drinking bottled water from an early age. “The total of the bottled water sector aimed specifically at kids is tiny at just 0.5% but it is growing hugely and we are very enthusiastic about it,” she says.
Specialist children’s soft drinks company Calypso recently launched a range of drinks made from Welsh natural mineral water featuring popular Disney characters. The still and sparkling 250ml fruit flavoured drinks have no added sugar and are free from artificial colours or flavours. Bosses say they hope
to emphasise the fun element that will encourage children to drink a recommended 1.5 litres a day.
Stanley adds: “Another area retailers should not neglect at this time of year is that sparkling water has a huge seasonal peak at Christmas. There are still plenty of opportunities for retailers to improve their business performance.”
Harrogate Spa managing director Paul Martin is adamant retailers should not forget to stock a range of multipacks. “There has been a significant increase in sales of multipacks over the past year, with a growing number of consumers buying in bulk to satisfy increased consumption,” he explains. “C-store retailers can capitalise on this by allocating space for multipacks alongside single bottles. They should place singles in chillers and multipacks on the drinks fixture to provide choice and ensure all bases are covered.”
* Maximise facings for best sellers.
* Place key brands at eye or grab levels.
* Ensure shelf-edge labels are visible, showing current price or special offers.
* Use ambient fixtures for multipacks but serve single bottles chilled.
* Place children’s bottles alongside the adult range.
* Separate still, sparkling, functional and flavoured products.
Source: Highland Spring
Strathmore is launching Spring Fruits - a combination of Strathmore spring water and 5% cranberry and blackcurrant juice. While the company believes the drink will have mass-market appeal, it says the drink
has been produced with a female bias.
Radnor Hills is introducing a range of low glycaemic index soft drinks made from natural ingredients. GI Fruits are available in four flavours - blueberry, orange, apple and lemon & lime - and contain no artificial colours or sweeteners. The company says the drinks provide a sustained energy source as natural fruit is released more slowly into the bloodstream.
Coca-Cola is making its first addition to the water market since last year’s doomed Dasani. Powerade Aqua+ comes in lime and grapefruit varieties and contains no artificial sweeteners or preservatives. The launch is expected to provide direct competition for GlaxoSmithKline’s Lucozade Sport Hydro Active, which recently added a ‘no spills’ valve cap to the range.
Our Survey Said…
C-Store took up position at Chris and Andrew Poll’s Londis store in Goring-by-Sea, West Sussex. A total of 40 shoppers took part in our blind tasting of four waters.
The clear winner was Buxton with 50% of the vote and Vittel and Londis’ own Montgomery Spring tied in second place. Interestingly, four customers singled out the tap water as their number-one choice.
While the blind tasting concentrated on just three brands stocked at the Goring store, the interest generated from the sampling session highlight the UK’s growing trend in buying bottled water as an alternative to both tap water and sugary carbonates.
Heather and William Law, Goring-by-Sea: “Our tap water is terrible so we buy a lot of water. We steer clear of flavoured waters because lots contain Aspartame, but sports caps are useful for school. Price is important because of the amount we buy.”
Marcus Wickings, Worthing: “I buy water if I’m running, going to the gym or doing other exercise. For ease I usually get a sports cap bottle large enough not to run out. I’m not that keen on flavoured or sparkling waters as I have never had one I liked the taste of.”
Anne Forte, Broadwater: “I don’t usually buy still water but we do have sparkling quite often. It’s obviously a lot healthier than drinking sugary drinks. I’m not worried about buying a particular brand but I will buy San Pellegrino for special occasions.”
Steve Lambert, Hove: “The sports cap bottles are definitely easier when I’m driving. I don’t like a lot of flavoured waters because of the sweeteners in them, although I might buy something if it tasted more natural. I buy sparkling water for special occasions.”
Alec Vincent, Brighton: “I have a water dispenser at my office so I use that. But I often by multipacks of sports cap bottles for the children’s lunches. The size I buy depends on who I am buying for as I have children at primary and secondary school, and at university.”
Audrey Jones, Goring-by-Sea: “I stock up with packs of eight before I go to Spain, which is about six times
a year. This way I have something to start me off when I get there. I don’t buy a massive amount here but if I was out and thirsty I would buy whatever was available.”
Jacqueline Corlett, Worthing: “I just go for the cheapest available. I usually buy it if I’m out and about or going on a long journey. Whether a bottle has a sports cap or flashy design wouldn’t really make much difference. Price is the only thing I bother looking at.”
Stephanie Rae, Worthing: “I like fruit flavoured waters but would like more choice with flavours such as mango or apricot. I buy them instead of coke or lemonade. I filter my water at home so wouldn’t bother buying bottled water unless it was for a special occasion.”