Breaking the Seal 

on Bottled Water 

As consumers continue to turn away from traditional soft drinks in favour of low-sugar alternatives, could bottled water fill the gap with ‘healthier’ offerings? Drawing from a recent report by GlobalData, Eloise McLennan breaks the seal on innovation in the bottled water category

Where Next for Bottled Water?

Exploring consumer trends and innovation opportunities in bottled water

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The competitive landscape of the soft drinks industry has shifted dramatically amidst the ongoing backlash against sugar. Health and wellness are now considered to be the most influential factors for consumers when purchasing soft drinks. When selecting their beverage of choice, consumers are actively avoiding high-sugar categories, such as carbonates and juice, turning instead towards low-sugar alternatives that are perceived to be healthier, such as packaged, flavoured or enhanced bottled waters.

Packaged water is the largest soft drink category globally by volume and, along with flavoured and enhanced waters, is forecast to grow strongly over the next five years. The category has a high inherent health appeal, given that water is crucial to staying hydrated and supporting the function of every body system, including the brain, heart and muscles. In a recent report from GlobalData, titled ‘Where Next for Bottled Water?’, associate analyst Matthew Perry examines ways in which bottled water brands can utilise this inherent health appeal to capitalise on the growing demand for ‘healthy’ soft drinks. Drawing from key findings in the report, we take a look at the key consumer trends and innovation opportunities in bottled water.

Where Next for Bottled Water? 

Exploring consumer trends and innovation opportunities in bottled water

View Report

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Many consumers are taking a more proactive approach to managing their health

Most plastic waste is either discarded as litter, or ends up in landfill sites

Hybrid, cross-category beverages are likely to appeal to a wider audience

Functional waters target 


Many consumers are taking a more proactive approach to managing their health. Consequently, they are opting to purchase products that target specific health concerns and provide functional benefits. Bottled water is no longer simply about hydration. Nowadays, beverages that support general health and wellbeing, particularly immunity and digestion, are in demand, which opens up new opportunities for brands to convert this growing consumer interest into purchases through targeted innovation and strategic marketing.

Enhanced water products are an ideal choice for such consumers, as they align with the growing demand for low-sugar beverages and the desire for ‘cleaner’ lifestyles. They are widely perceived to be ‘better-for-you’ than other soft drinks on the market, containing fewer (if any) artificial ingredients, which can appeal to consumers looking for a flavoursome alternative to standard water without the negative health implications of traditional soft drinks. 

Indeed, 42% of consumers are proactively seeking products that improve their health, according to GlobalData’s 2016 Q3 global consumer survey, so low or no-sugar functional waters are well-positioned to tap into this developing movement. Moreover, because the backlash against sugar is predominantly affecting the carbonates and juice categories, the inherent health attributes associated with water gives functional water beverages a clear edge over competitors, as well as opportunities to enhance water formulations to further expand the health appeal of bottled water.

Outside the bottle:


However, it’s not just what’s inside the bottle that concerns modern shoppers. Environmental concerns have become mainstream movements, with consumers growing more knowledgeable about how their purchasing choices can impact the environment. While plastic bottles may be the packaging format of choice for the majority of bottled water consumers, they are a key contributor to plastic waste. To combat this growing issue, manufacturers can explore more sustainable alternatives to plastic packaging. 

Plastic bottles are often made from PET, which is highly recyclable. Unfortunately, the majority of this plastic is not recycled; instead most plastic waste is either discarded as litter, or ends up in landfill sites, where it can take hundreds of years to decompose and has a severe impact on the environment. 

Consumers are aware that plastic bottles are more damaging to the environment than materials such as glass, carton or aluminium. Yet in spite of this, a substantial preference for plastic packaging remains when consuming bottled water. In fact, a significant 62% of global consumers claim to prefer consuming water in plastic bottles when on the go, according to GlobalData’s 2015 Q2 global consumer survey. 

Alternative formats, such as beverage cartons and aluminium cans, have failed to make waves with either consumers or brands despite their sustainability credentials. That said, there is room for growth if manufacturers address the key reasons why PET bottles are popular solutions. The abundance of plastic bottles in the water market leaves consumers with limited opportunity to purchase products in eco-friendly packaging. To compete with the economic, easy-to-produce and convenience benefits of PET bottles, producers looking to explore more sustainable packaging options should focus on making products easy to transport, open and reseal. 

Many consumers are taking a more proactive approach to managing their health

Cross-category, hybrid waters target


Shoppers are open to experimentation when it comes to their bottled water purchases. Unlike soft drinks categories such as carbonates, energy drinks and juices, where flavour appeal and functionality are key purchase motivators, in the bottled water category, hydration and general health have traditionally driven purchase choices. But that appears to be changing, as hybrid products, such as energy waters, sport waters and juice-infused waters are beginning to garner attention in the soft drinks market.

These hybrid cross-category beverages are likely to appeal to a wider audience, largely because they are perceived to be healthier options than conventional soft drinks. To successfully tap into this trend, brands must strike a delicate balance between flavour, functionality and health appeal to deliver a sensory drinking experience that aligns with the needs of health-conscious consumers. Finding ways to offer interesting flavours without sugar or sweeteners is not an easy task for manufacturers, however using natural ingredients and energisers to add a hint of flavour and sweeten water products is a notable route for innovation.

Most plastic waste is either discarded as litter, or ends up in landfill sites

Tapping into the popularity


The plant water trend has gained significant traction in recent years. Consumers were first introduced to the concept through the meteoric rise of coconut water, and the trend has expanded to include maple, cactus, birch, aloe vera and, more recently, honey water. The benefits of such waters have become well recognised and manufacturers are keen to capitalise on the growing popularity of beverages that are sourced directly from plants or trees.

Demand for plant waters stems from health-conscious consumers who seek beverages that offer ‘natural hydration’ and functional benefits without using any artificial ingredients. Tree waters, such as birch and maple waters, are made from pure sap, which is tapped directly from trees. They are claimed to be a naturally hydrating source of vitamins and minerals, which are said to provide a myriad of health benefits ranging from bone health to workout recovery.

Plant waters, such as cactus and aloe vera water, align with the consumer desire to lead healthier lifestyles. Aloe vera water has long been used as a medicinal ingredient, where is has been claimed to improve the immune and digestive systems, as well as aiding general health and wellbeing. Similarly, cactus water, sourced from the fruit of the prickly pear cactus, is said to offer health and skin benefits with half the calories and sugar of coconut water.

For brands looking to capitalise on the alternative water trend, using natural, real plant and botanical ingredients should be a key focus, particularly given that 54% and 51% of consumers globally associate real ingredients and plant-based ingredients with ‘natural’ respectively, according to GlobalData’s 2016 Q3 global consumer survey. Additionally, manufacturers should work to avoid using artificial ingredients, including colours and sweeteners, which can undermine the natural and healthy perception of alternative waters.

Using purity and quality cues

to differentiate premium waters

Leveraging premium cues such as ‘high quality’ claims and sustainability credentials can help brands to differentiate products and establish a premium market position in a highly saturated and competitive market.

Water brands often focus on high-quality ingredients, emphasising the purity and quality of their water products. This is largely due to the fact that high quality ingredients are widely recognised as one of the top factors that motivate consumers to trade up and pay a premium for more high-end offerings.

A number of premium water brands source their ingredients from ‘clean’ regions, which report low levels of pollution and boast significant environmental commitments that ensure that the water is of a high quality. Sourcing water from these ‘clean’ regions has the added advantage of being very marketable, as consumers may naturally associate these areas with pure, high-quality water. By focusing on purity and quality, brands can leverage sustainability to enhance the brand’s natural image, which can help to justify higher price tags.

But, standing out from the competition requires more than just high-quality ingredients. Packaging is an important tool that brands can utilise to reinforce the premium appeal of water products. To catch the eye of browsing shoppers, brands can use unique label designs, packaging shapes and materials that are more commonly associated with high quality, for example glass, to differentiate offerings and enhance the luxury appeal of premium water products.