Future Opportunities in Bottled Water: Leveraging purity, ethical and health credentials

Future Opportunities in Bottled Water
Leveraging purity, ethical and health credentials                         

Report Overview...

The bottled water market in Europe, the US and Japan is forecast to grow by a CAGR of 5.3% to reach $76.4bn by 2012. Growth will be driven by manufacturers promoting the provenance of water by placing greater emphasis on the source. Companies are also demonstrating their ethical and green credentials by seeking to adopt more socially responsible business practices and reducing carbon footprints.

Functional bottled water continues to see growth with NPD featured around weight management, improvement in mental function, skin hydration and anti-ageing benefits. ‘Future Opportunities in Bottled Water: Leveraging purity, ethical and health credentials’ is a new management report published by Business Insights that analyzes innovation and NPD strategies by category, region and type of innovation. This report provides global bottled water market values across key regions/countries and profiles the leading players. It identifies key growth opportunities and emerging trends and also assesses the impact of regulations and social trends on NPD.            

Key Findings...

The value of the bottled water market in Europe, the US and Japan is forecast to grow at an annual average rate of 5.3% between 2006 and 2012 and will be worth almost $76.4bn by the end of that period.

Bottled water growth in the US market is expected to be double that in Europe, such that the US market will account for 32% of market revenue by value. However, Europe will remain the leading region, and will account for 61% of total market share by 2012.

Flavored still water is the most innovative bottled water segment, with 8.8% of all launches in this area classed as being innovative between 2005 and 2008. Flavored sparkling was the least innovative category with 2.6% of innovative product launches.            

Use this report to...

• Quantify the value, size, geography and growth potential of the bottled water market using this report’s data for key categories including still and sparkling, flavored and unflavored waters across Europe, the US and Japan.
• Understand which key trends in bottled water NPD offer the greatest growth potential with this report’s analysis of trends within health, premiumization, ethical and convenience.
• Benchmark your competitive position aganist other players in the bottled water market based on this report’s analysis of Groupe Danone, Nestlé, PepsiCo, Coca Cola, TalkingRain Beverage Co, Y Water Inc and Plup Oy Ab Ltd.
• Improve the targeting and effectiveness of your NPD strategy using this report’s analysis of product launch data for over 1,600 products launched between 2005-2008.        

Key issues...

Functional health benefits. Functional waters continue to be a key area of growth in the bottled water market with a focus on how to offer functional health benefits and greater flavor without being seen to impair product purity and naturalness.

Sugar content. Consumer perceptions of flavored and functional waters are changing as some of the bestselling enhanced water brands contain almost as much, in some cases more, sugar than competing soft drinks.

Ethical Consumerism. Concerns over plastic bottle waste, the emission of greenhouse gases and wasted natural resources are continuing to impact NPD in the bottled water market.

Tap Water. Bottled water sales may be threatened by Government initiatives to increase the consumption of tap water. Tap water is reported to be 500 times cheaper and produces 300 times less CO² than bottled water.          

Your questions answered...

• What are the key innovations in bottled water market which will be significant in the next five years?
• How are manufacturers addressing safety and environmental issues?
• Which companies are driving innovation in the bottled water market?
• Why do manufacturers need to review the development of healthy bottled water products to keep them in line with consumer behaviour?
• How are urban lifestyles influencing new product development in the bottled water market?
• What new functional ingredients are delivering health and well-being within the bottled water market?

Table of Contents

• Future Opportunities in Bottled Water

Executive summary 10

• Key innovation trends 10
• Market drivers, inhibitors and issues 11
• Market dynamics and growth opportunities 12
• NPD launch patterns and key innovations 13
• Conclusions 14

Chapter 1 Introduction 16

• Introduction 16
• What is this report about? 16
• Report structure 16

Chapter 2 Key innovation trends 20

• Summary 20
• Introduction 20
• Purity and provenance 22
• Purity and provenance are inextricably linked in consumers’ minds 22
• Sourcing and natural ingredients 23
• Sourcing 23
• Natural ingredients 25
• Ethical products 28
• Reducing carbon footprint 28
• Supporting good causes 30
• Functional waters 32
• Weight management 32
• Improvement in mental function 33
• Skin hydration and anti-ageing 35
• Lifestyle products 37
• Fashion accessory packaging 37
• Urban lifestyle products 38
• The cocktail bar scene provides opportunities 38
• Antidotes to problems associated with urban lifestyles also offer opportunities 39

Chapter 3 Market drivers, inhibitors and issues 42

• Summary 42
• Introduction 43
• Bottled waters will need to redefine themselves in future to maintain growth 43
• Market drivers 44
• Several trends have played a key role in growing bottled water sales 44
• Adult obesity and diet 44
• Over half of the European and American populations are overweight 44
• State intervention is encouraging awareness about diets 45
• Consumers are increasingly switching away from less health drinks 46
• Children’s health and school meals 47
• Ageing populations 48
• Convenience – “on-the-go” consumption 49
• Demand for “natural” products 50
• Market inhibitors 52
• Pressure on consumers’ budgets 52
• Doubts over product safety 52
• The BPA issue 53
• E. coli testing of source water in the US 55
• Ethical consumerism 56
• Plastic bottles increasingly represent a barrier to purchase for many consumers 56
• Many consumers feel too many resources are wasted in the supply chain 58
• A lack of appeal to children and teens 60
• Market issues 62
• Competition from tap water 62
• Initiatives promoting tap water consumption are on the increase 63
• There is evidence showing tap water is becoming more popular… 63
• Balancing flavor, function, and sugar 65
• Some waters have unexpectedly high sugar content 66
• Natural sweeteners are being developed to help solve the problem 67

Chapter 4 Market dynamics and growth opportunities 70

• Summary 70
• Introduction and market trends 71
• The US dominates the bottled water market 71
• Still unflavored water is gaining share 72
• Volume-driven growth will put prices under pressure 73
• Bottled water market value analysis 74
• Country analysis 74
• Overall growth is strong, but inhibitors will retard growth to a certain extent 74
• Within Europe, Germany is the most valuable market to target 75
• Segment analysis 76
• Unflavored varieties dominate sales by segment 76
• Sparkling unflavored is a key target in Europe 77
• Still unflavored waters are the main US target 78

Chapter 5 NPD launch patterns and key innovations 80

• Summary 80
• Introduction: opportunities in NPD 81
• Unflavored waters will drive growth, but innovation will focus on flavored waters 81
• Functional properties and acting as alcohol mixers are hot innovation areas in flavored waters 82
• Launch pattern analysis 83
• Regional analysis 83
• Within Europe still water dominates new product launches 84
• In North America unflavored still water accounts for most launches 85
• In Asia-Pacific unflavored still water is clearly dominant in new product launches 86
• Segment analysis 87
• Still waters dominate the share of new product launches 87
• Product claims 88
• Flavor trends 91
• A shift away from citrus to more exotic fruit flavors is being seen 91
• Unusual flavor combinations also help to stir consumers’ interest 92
• Other unusual ingredients, like tea, are also being used more 92
• “New to market” innovation in bottled water 93
• Innovation overview 93
• New formulations are at the heart of truly innovative bottled waters 93
• Innovation in formulation 94
• Provenance is a key way in order to add value to a product’s formulation 95
• Functional properties 96
• Temperature ranges add a new dimension to the properties of water 99
• Innovation in Packaging 101
• Portability 102
• Flavor Release 103
• Design aesthetics 104
• Eco packaging 105
• Bioplastics (plant-based plastics) may provide a solution 107
• Innovation in positioning 109

Chapter 6 Conclusions 112

• Summary 112
• Introduction 113
• Balancing purity and functionality 113
• Drivers and resistors in the bottled water market 113
• The pursuit of purity 115
• The demand for functionality 117
• Natural sweeteners 118
• Botanicals 118
• Key opportunities in functional waters 120
• Opportunities to be exploited 121
• By consumer group 121
• Niche opportunities by category 122
• Index 123

List of Figures

• Figure 2.1: Key trends shaping innovation in bottled water 22
• Figure 2.2: Park City Ice Water Artesian Water from Glacier Ice, Glacier Diamond Artesian Water and Dydo Drink’s Sparta 7 24
• Figure 2.3: Carpe Diem, Eclectic Waters and Talking Rain Twist 27
• Figure 2.4: Carbon negative Fiji Water 30
• Figure 2.5: Give Natural Spring Water and Brazilian Springs Rainforest Water 31
• Figure 2.6: Archers Farm Water. Kellogg’s K2O and Skinny Water 33
• Figure 2.7: Y Brain Water 34
• Figure 2.8: JT Foods Fiber Water and Anti-Ageing Water 36
• Figure 2.9: Plup Spring Water 38
• Figure 2.10: Pure Cool Waters and V Water 39
• Figure 2.11: Delo Syrup Caps and Bodegas Torres Brandy Spray 40
• Figure 3.12: Boxed Water is Better 58
• Figure 3.13: Oasis Rubberduckzilla advertisement appealing to teenagers’ resistance to drinking water 61
• Figure 3.14: Bottled waters targeting lunchboxes 62
• Figure 3.15: Natural Hydration Council (UK) Advertisement 65
• Figure 3.16: PepsiCo’s SoBe Lifewater featuring stevia sweetener 68
• Figure 4.17: Spend per capita (US$/head), value growth (CAGR 2006-2012) and future market size (US$ in 2012) analysis 72
• Figure 4.18: Segment share analysis (% market value), 2006-2012 73
• Figure 4.19: Value and volume growth (CAGR 2006-2012) and future market size (US$m in 2012) analysis 74
• Figure 5.20: Market opportunity of bottled water categories: spend per capita (US$/head) and future market growth (CAGR 2006-2012) and future segment size (US$m) 82
• Figure 5.21: Pure Coconut Water and Mattoni Mojito Water 83
• Figure 4.22: Share of bottled water product launches by region (% new launches), 2005-2008 84
• Figure 5.23: Share of bottled water product launches (% new launches) in Europe, 2005-2008 85
• Figure 5.24: Share of bottled water product launches (% new launches) in North America, 2005- 2008 86
• Figure 5.25: Share of bottled water launches in Asia-Pacific (% of new launches), 2005-2008 87
• Figure 5.26: Share of bottled water product launches (% of new launches) by segment, 2005-2008 88
• Figure 5.27: Snapple Antioxidant water, Bonaqua Fresh and Spice, Sip and Nestlé Aquarel 92
• Figure 5.28: Mt Fuji’s Natural Spring Water, Organic Spring Water and Siwa Natural Water 96
• Figure 5.29: Glaceau Vitamin Water and 120/80 Works Water 98
• Figure 5.30: Beauty Spring Water and HARD Nutritional Functional Water 99
• Figure 5.31 : Atataki Tenneusui and Cool Rhino Water 100
• Figure 5.32: Aqua Ice, Hyosho Lemon Water and Nut Green Water 101
• Figure 5.33: Ozarka – Eco Shape, Next Generation Bottled Water and Aava Bottled Mineral Water 103
• Figure 5.34: Seriously Twisted Bottled Water and H2O Pia Flavor Infusion 104
• Figure 5.35: Aquadeco Premium Spring Water, Evian Palace Bottle and Gota Water 105
• Figure 5.36: SoBe Life Water, Acqua Mineral Water and Primo plant based bottle 107
• Figure 5.37: Biota Colorado Pure Spring Water and Belu Natural Mineral Water – pioneering bioplastics in bottled water 108
• Figure 5.38: Volvic Quinze, Fragra Water and Agualicious Healthy Kids Water 110
• Figure 6.39: Drivers and resistors in the bottled water industry 114

List of Tables

• Table 3.1: Percentage of overweight and obese adult consumers by country, 2004-2009 (% of adult population) 45
• Table 3.2: Number of overweight and obese people by country (m), 2002 and 2007 48
• Table 3.3: Over 60 mid year population by Continent 2008-2012 49
• Table 3.4: Natural (excluding organic) food and drink market, by category, Europe and the US ($m), 2000-2010 51
• Table 3.5: Comparison of sugar content in selected soft drinks and enhanced water products 66
• Table 4.6: Bottled water market value (US$bn), Europe, the US and Japan, 2006-2012 76
• Table 4.7: Bottled water market value, by segment, US$bn, in Europe, the US and Japan, 2006- 2012 77
• Table 5.8: Top 20 claims (as % of all claims made) on all bottled waters launched, 2005-2008 90
• Table 5.9: Top 15 flavors in new bottled waters (as a % of all flavors used in new launches), 2005-2008 91
• Table 5.10: Share of “new to market” innovations within Bottled Water by type of innovation, 2005-2008 94