The phrase “water is the essence of life” is used to describe how important water is for all living organisms. The October 2024 issue of Beverage Industry delved into the performance of the bottled water market. Experts shared that, despite slowed volume growth, the category remains robust, showing that water is still important to consumers.

Michael Bellas, chairman and CEO at Beverage Marketing Corporation (BMC), Wintersville, Ohio, stated that bottled water is still a top beverage choice for consumers, even with its sluggish growth.

“The total bottled water market has experienced slower volume growth from middle-single digits to low-single digits since 2022,” he said in Beverage Industry’s October 2024 issue. “Growth is likely to improve as the economy improves. Overall, it remains the largest beverage category in the U.S. on a volume basis.”

According to Chicago-based Circana, the bottled water category recorded $29.9 billion in sales, a 3.6% increase, while volume sales were up 1% in total U.S. multi-outlets for the 52 weeks ending April 20.

Health and wellness trends have been the primary growth driver for the category, Bellas said in Beverage Industry’s October 2024 issue. He anticipated such trends would continue to be a driver in the future.

“It is the ultimate health and wellness beverage,” he added.

Bellas also noted that bottled water is the best value proposition of any beverage.

“The category has an appeal to value-seeking consumers. But health and wellness is the primary driver,” he explained.

Jill Culora, vice president of communications at the International Bottled Water Association, noted data from BMC in Beverage Industry’s October 2024 issue.

“Bottled water retained its title as America’s favorite packaged drink in 2023, outselling carbonated soft drinks (CSDs) (by volume) for the eighth year in a row, data from BMC shows,” Culora said. “Bottled water’s total volume sold in 2023 was 15.9 billion gallons, compared to carbonated soft drinks, which sold 11.8 billion gallons.”

In a Mintel February 2024 executive summary report titled “Still and Sparkling Waters – US – 2024,” Julia Mills, food and drink analyst for Mintel, Chicago, stated that bottled water remains popular thanks to its nutrition and convenience.

“Fixation on hydration forms the foundation for demand for packaged waters as a convenient, on-the-go health boost,” Mills wrote in the report. “However, opportunities exist to explore flavors, health enhancements and sustainability to keep the category fresh. Key desired attributes must be kept at the center of new product development.”

The report also noted that, due to price rises, consumers might trade down or opt for premium waters. Financial constraints have led to consumers trading up and down, the report said.

“As inflation continues to impact shopping behaviors, a dichotomy emerges in water purchase,” Mills stated. “Consumers may turn to store brands and larger pack sizes to save money. On the other hand, a desire for aspirational lifestyles may influence trading up to premium waters as an affordable luxury and status signal.”

Other trends have contributed to bottled water’s performance as well.

In Mintel’s report, Mills dove into consumer trends affecting the market.

The report pointed to Generation Z (Gen Z) and millennials as “engaged category users” and noted that younger consumers are high bottled water users creating “major growth potential” for the overall category.

“A combination of active lifestyles and interest in health, form the primary drivers behind their demand for packaged waters,” the report stated. “These consumers are most open to riffs on the classics through added flavors and health benefits.”

BMC’s Bellas shared, in Beverage Industry’s October 2024 issue, that although still unflavored water continued to be the majority of bottled water sales, flavor innovation helped boost the sparkling water segment. He suspects it will continue to impact growth in the sparkling segment going forward.

According to Circana data, non-flavored convenience bottled still water accounted for $17.7 billion in sales, a 1% increase; however, volume was down 0.9% for the 52 weeks ending April 20.

Yet, flavored convenience bottled still water saw sales reach $2.8 billion, up 8.1%, with volume up 1.2%. Seltzer and sparkling also have fared well as flavored seltzer/sparkling/mineral water saw sales reach $5.1 billion, an 8.9% increase, with volume up 4.1%. Meanwhile, non-flavored seltzer/sparkling/mineral water sales were up 7.4%, totaling $1.5 billion, with volume up 2.2%.

BMC’s Bellas also noted that specialty waters have proliferated in the category, but represented a very small share of the overall water beverage market.

In the Mintel report, Mills stated that still and sparkling water use cases deviated.

“Consumers perceive varying water types as suitable for diverse occasions, leading to a necessity for distinctive approaches on positioning,” Mills wrote in the report. “Flavored still and sparkling waters succeed as a drink alternative and ‘social’ beverages.”

The report noted that enhanced and unflavored bottled waters are recognized as useful for health benefits and exercise. It said that young consumers are brand loyal and not segment loyal.

“Gen Z and millennials are more dedicated to the preferred water brands than any other generation,” the report stated. “On the other hand, they are also most open to exploring various water segments. As a result, younger consumers, newer to the category, will prime the market for innovation and revitalized nascent water varieties.”

Predicting the future

In Beverage Industry’s October 2024 issue, experts anticipated the bottled water category would continue to grow.

BMC’s Bellas anticipated steady growth, especially as pricing moderated.

In Mintel’s February 2024 report, Mills noted predictions for the category and expected bottled water sales would continue to ascend “as consumers fall back on it for its perceived superior quality and taste” throughout the year. The report expected Gen Z and millennials to propel the category forward.

“Their interest in added health benefits, sustainability and aspirational lifestyles will cultivate a demand for premium water,” the report said. “As these generations decrease their alcohol consumption, sparkling waters will continue to be an appealing alternative.”

Mintel’s report also stated, “maintaining stock for emergencies will situate bottled waters as a must in many consumers’ homes.” Furthermore, the report said that enthusiasm for sustainability, mainly among younger consumers, would require brands to rethink their sourcing and packaging strategies.

In the report, Mills suggested opportunities for the category, one of which being that water acts as a “blank canvas” for enhancements.

“Build off of water’s inherent health benefits through the addition of enhancements for superior hydration, gut health, skin health and beyond,” she wrote in the report. “Consumers aim to extract more benefits from the waters they drink.”

The report noted that beverage-makers should clearly communicate any additional advantages to persuade consumers that the extras are worth the added costs, but that the inherent benefits of water should be kept at the core of innovation.

“Hydration and low price are strong purchase drivers in the packaged water category, thus forming barriers to an interest in novel products,” Mills said in the report. “Innovating around health, sustainability and flavor can be successful when benefits are clearly communicated and hydration, value and portability are kept at the core.”

The Mintel analyst also emphasized that brands should explore water’s value in the sober curious category.

“As interest in a sober curious lifestyle grows, spaces open for water brands to step in with alcohol alternatives,” she wrote in the report. “Water brands can mimic premium packaging and sourcing claims often used by alcohol brands. Furthermore, added health enhancements in water can potentially replicate the feel-good benefits of alcohol sans the hangover.”