Plain and simple: water’s dominance of a growing non-alcoholic market
As the health and wellness macro-trend drives consumers to look for non-alcoholic beverages, the market is experiencing a surge of growth. Standing atop this growth, according to Zenith Global, is the humble bottled water. Callum Tyndall finds out more.
Image courtesy of Belu
According to Zenith Global’s globaldrinks database, 2018 is the year in which bottled water claimed the crown of the soft drinks market. Launched at the end of October, the database (which provides information on 24 non-alcoholic beverage categories across 86 countries, with data from 2006 up to 2022 forecasts) suggested that 2018 would see the health and wellness trend propel bottled water past competitors in the category. As consumers look for drink products that are lower in sugar and can fit into a healthier lifestyle, bottled water’s growth has steadily increased in the face of large and diversifying competition.
Richard Hall, chairman of Zenith Global, said at the 15th Global Bottled Water Congress: “This is all the more remarkable because other soft drinks include carbonates, juices, energy, sports, concentrates, ready to drink teas and coffees, some of which are also growing strongly.
“Bottled water consumption reached 418bn litres in 2017, up 92% since 2007, an average approaching 7% a year and a 10-year increase of 200bn litres. All other soft drinks totalled 438bn litres in 2017, up 24% since 2007, an average of 2% a year and a 10-year increase of 84bn litres. We are therefore forecasting 2018 will be the year when bottled water exceeds the total for all other non-alcoholic beverages.”
Bottled water’s big success: rapid sector growth as industry players diversify
A report from Zion Market Research estimates that the 2017 non-alcoholic beverage market was worth $1,157bn and that, by 2024, the market’s revenue will have reached $1,650bn (it should be noted however that other estimates placed the value far lower, at $470bn). According to ResearchandMarkets, the bottled water market is expected to achieve a CAGR of 7.4% and reach $215bn by 2025. Zion’s report highlights a demand for functional products that is likely to continue in years to come. ResearchandMarkets also noted that the anticipated rise in bottled water’s fortunes was likely to come about as a result of the health benefits and additional nutrition provided by products in this sector.
The author of the Zion study said: “Cumulative demand for functional soft drinks with few calories and low sugar is expected to lucratively impact the growth of non-alcoholic beverage market in the years ahead.”
The vast majority of bottled water is not only healthy, convenient and local, it is also very affordably priced
Big industry players like Coca-Cola, which saw quarterly sales boosted by low-sugar offerings and bottled water in October 2018, are looking to reap the profits of diversification into areas such as bottled water in the face of the burgeoning market and the ‘war on sugar’. Ongoing regulatory moves against the non-alcoholic market such as sugar taxes are likely to inhibit the market as a whole, but may serve to push more companies towards exploring the possibilities of bottled water. This could however serve to impact the product’s price, which Zenith’s data (comparing prices for five market segments over the last 10 years) has shown to be consistently appealingly low.
“This shows that the vast majority of bottled water is not only healthy, convenient and local, it is also very affordably priced with virtually no increase in average prices during the past ten years,” Hall said. “The price of bulk water in packs over 10 litres has consistently averaged out at $0.15 or less per litre and the average for smaller packs of still water has not risen above $0.65 per litre. Nevertheless, there is a strong premium for other waters, with sparkling water averaging up to $0.97 per litre, flavoured water up to $1.49 per litre and functional water up to $1.95 per litre.”
Sustainability and status symbols: the price of plastic leads to premium ‘green’ bottles
There is, however, somewhat of a change coming to bottled water thanks to sustainability and the premiumisation trend. Artisanal water offerings such as Flow are on the rise, but perhaps more so than the product contained within, the packaging for bottled water is undergoing rapid change. As plastic becomes increasingly unfavourable due to environmental concerns, a market (reportedly worth £5.5bn) has sprung up to provide premium reusable bottles. Part sustainability effort, part status symbol, products such as S’well, VitaJuwel’s ViA, and Bellabeat’s Spring offer consumers the chance to not only avoid single-use plastic but lend themselves to a modern image consciousness and desire for premium products.
Kirpal Bharaj, founder of London start-up Stay Sixty, told the Guardian: “If you want someone to carry a bottle around every day, you have to make something that is desirable, that people want to be seen with. Single-use plastic is an unnecessary evil, and it’s not just that it takes years to degrade – 50 million barrels of oil are used to pump, to process and to refrigerate single-use plastic bottles everywhere.”
There is still some way to go for the movement towards reusable bottles (a survey by Keep Britain Tidy and Brita found that only 36% of Britons regularly carry a reusable water bottle with them), but the trend is emblematic of the sector’s wider push towards increasing sustainability. Innovation in this area is operating at multiple levels from large industry players’ campaigns (Evian aims to launch plastic alternatives in all major water markets by 2025) to smaller entries with great potential (Clear Water Manufacturing’s Boomerang Water machine can reputedly filter, fill and cap more than 300 reusable bottles per hour). And yet, there are regional challenges ahead for bottled water and its struggles with sustainability.
Safe and sustainable: regional troubles to ensure responsible water stewardship
In regions such as Pakistan and Flint, Michigan, bottled water is vital to aiding with struggles to ensure consistent water safety. That importance can be seen in cases such as the Pakistan Supreme Court’s ordering in November 2018 of an inspection of bottled water companies over quality control failures and overcharging. In part, this relates to the management of groundwater sources and whether that management is done so responsibly in regards to both safety for consumption and sustainability.
This concept of water stewardship has seen recent testing in Australia. While the International Bottled Water Association claims that bottled water has the smallest water and energy footprint of all packaged beverages, the rising global population has put increasing pressure on water sources. In November 2018, Minister for Regional Water and New South Wales’ (NSW) Chief Scientist Niall Blair called for a review of the bottled water industry’s impact on groundwater sources in the Northern Rivers region of Australia on behalf of concerned constituents.
It is crucial that the review considers the minimal environmental impact of water extraction by the bottled water industry
Australian Beverages Council CEO Geoff Parker said: “We are confident that the Chief Scientist will find that the bottled water industry responsibly manages groundwater sources across NSW, as all ABWI- [Australasian Bottled Water Institute]-certified source owners are required to ensure the ongoing sustainability of their water sources.
“It is crucial that the review considers the minimal environmental impact of water extraction by our industry while considering the positive economic contribution the industry makes to communities across Australia.”
Bottled water’s rise to the top of the non-alcoholic beverage market is contingent on its place within the health and wellness trend, but it must now contend with its place within the sustainability movement. Both in regards to plastic packaging and water stewardship, the sector has important challenges to face. With a growing consumer base, particularly as more young consumers adopt teetotal lifestyles, the sector is well placed for success but will have high standards to live up to.