Healthy Hydration Is a Large Growing Market

Thursday, August 23, 2018

The U.S. bottled water market is $16 billion (producer revenue) and forecast to grow at a compound annual rate of 8%. More broadly, the U.S. non-alcoholic beverage market is $180 billion and has grown at a low-single-digit rate. Since 2011, however, consumption share for the bottled water segment has increased by 600 basis points, reflecting, among other factors, consumers’ focus on health and wellness.

Consumer analyst Jon Andersen stated, “It is interesting to note that the bottled water segment has gained 1,200 basis points of gallon share over the past decade. And for the first time, the segment’s gallon share eclipsed that of carbonated soft drinks in 2016/2017—a reflection of consumers’ desire to drink fewer beverages with sugar and/or artificial ingredients.”

All segments of the bottled water market—from retail PET (single serve) to bulk/direct delivery to retail 1-2.5 gallon to vending—are expected to grow over the next several years.

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Consumer trends and retail dynamics render the water market, and more specific bulk bottled water, attractive. Consumers recognize purified water as healthy, safe, and convenient, as well as an inexpensive alternative to other beverage types. According to a Harris Poll, 82% of Americans agree they should drink more water, and 90% believe that bottled water is a healthy and convenient beverage. Factors deemed important when choosing a beverage center on quality/safety, convenience, and health and wellness.

More broadly, 86% of consumers have a “very positive” or “somewhat positive” opinion of bottled water. Women are more likely to have a positive opinion, as are younger consumers. Only 14% of Americans have a “somewhat” or “very” negative opinion of bottled water as a beverage choice.

Vended water solutions include water dispensers, water exchange, and water refill. For consumers, exchange and refill systems are environmentally friendly relative to other bottled water alternatives. For example, one 5-gallon water exchange bottle can be sanitized up to 40 times before recycling. This can save 1,500 single-serve bottles, of which more than 1,000 may end up in a landfill, where they take 450 years to decompose.

Another issue supporting bottled water is the quality of tap water. This has become more acute following serious concerns in Flint, Michigan—where high lead levels were found to have caused a spike in Legionnaires’ disease, infertility, miscarriages, and behavioral problems in children. More recently, the Chicago Tribune investigated and found that 70% of homes in Chicago tested positive for lead, and 3 in 10 of those had lead levels that exceeded the maximum FDA limit. Some have estimated it could take $300 billion to fix U.S. water infrastructure.

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