U.S. Bottled Water Sales Soar to $15 Billion

Bottled water brands are benefiting from the overarching consumer trend toward better-for-you alternatives to sugary drinks ringing up $15 billion in 2015, according a new report from Mintel. The sector is expected to witness rapid growth through 2020, with projected sales growth of 34.7 percent for the category, including 75.1 percent growth for the sparkling/mineral water/seltzer segment.

Consumer attitudes highlight that innovation in flavor is driving the category’s success, with 48 percent of bottled water drinkers saying they are drinking more flavored waters to replace high sugar drinks. Consumption of flavored still bottled water is highest among 18- to 34-year-old consumers (66 percent versus 48 percent of consumers overall), who are also the most likely age demographic to consume any still bottled water (93 percent versus 85 percent of consumers overall).

There also is a wide range of interest in functional attributes for bottled water. In fact, 43 percent of consumers are interested in bottled water enhanced with vitamins; another 30 percent agree the ideal bottled water should contain minerals and energy. When it comes to calorie counting, 31 percent of consumers prefer zero-calorie bottled water as opposed to less than 100 calorie offerings (13 percent).

What’s more, 43 percent of consumers say the ideal bottled water would have no artificial sweeteners, artificial flavors or artificial colors (40 percent). Further, 25 percent of consumers say their ideal bottled water would be GMO-free or organic. The trend in increased demand for organic food and drink options continues as Mintel research indicates 37 percent of consumers feel better about themselves when they buy organic foods and beverages.

“In the coming years, consumers will likely put even greater value on no artificial ingredients in bottled water. To capitalize on this trend, brands should emphasize free-from claims on packaging as they release new flavors and functions in order to engage the market’s most active consumers," said Elizabeth Sisel, beverage analyst at Mintel.

While 62 percent of consumers indicate the overall top purchasing factor is price, 53 percent of bottled water drinkers prefer to drink premium bottled water, and 39 percent are willing to pay the added cost. However, there is still some educating to be done as over half (51 percent) of consumers are unfamiliar with premium water.

“While price is a major purchasing factor for many consumers, the majority gravitate toward premium water offerings despite its typically higher cost. To attract the more price conscious consumer, brands should look to incorporate product messaging that justifies a higher price point, as well as communicate the health benefits and sophistication of premium products in order to alleviate any confusion," Sisel said.

Despite major category growth and widespread interest in premium and functional bottled water offerings, environmental concerns are top of mind for consumers. In fact, 39 percent of bottled water drinkers agree that they are drinking less bottled water because of its environmental impact.

The report supports previous market data from the Beverage Marketing Corporation (BMC) that found bottled water will overtake carbonated soft drinks as the No. 1 packaged beverage of choice among U.S. consumers in 2016. According to BMC, bottled water has increased its “share of stomach" of the overall beverage market from 14.4 percent in 2009, to 17.8 percent in 2014. With 20.9 percent, carbonated soft drinks currently holds the No. 1 position; however, bottled water is predicted to the No. 1 packaged beverage sold in the United States by 2016.

Beverage fortification is hardly new; the industry has been adding vitamins A and D to milk for generations, and it’s been years since orange juice began surpassing milk—for some consumers, at least—as a primary source of calcium. But now that traditional vitamins and minerals are a given in good-for-you drinks, consumers want more; they are looking for nutrition that goes above and beyond the status quo—be it extra nutrition or condition-specific benefits. download INSIDER’s free “Beverages with Benefits" Digital Issue to find out more.