Sales of bottled water will overtake carbonates as the leading global soft drinks category in the next two years, according to data from beverage market research company Canadean.
Canadean said the global trend toward bottled water is being bolstered by its healthy image, as well as necessity in areas of the world that are lacking alternative safe water supplies.
Asia
The main driver behind the category re-positioning is coming from Asia, according to Canadean. Volume sales in Asia are predicted to rise by 16 per cent in 2013, which is more than twice the global rate of increase.
The Asian region already absorbs one in every three litres of packaged water consumed globally, but per capita intake remains well below the international average, especially in under-developed markets like Pakistan, the Philippines and Vietnam. Canadean said the less developed markets in these countries, where per capita consumption is still less than ten litres, represent a “huge market potential”.
Canadean said its research shows that India is also seeing “dynamic advances”, with growth at well over 20 per cent a year.
Growth of bottled water in the Asian region has had a strong dependency on China, where major suppliers like the Blue Sword Group, China Resources Enterprises, Coca-Cola and Zhejian Nongfushanquan Water Co are helping to drive expansion. But the Chinese market remains fragmented. According to Canadean, despite a combined volume order of seven billion litres, the four major players are responsible for less than a third of category sales.
North America
The North American bottled water market is also huge, with Canadean’s research showing that sales have grown to more than 30 billion litres.
But the pace of development is far less vibrant in North America than it is in Asia. According to Canadean, volumes in North America suffered during the recessionary years and have taken time to recover.
Recent progress has been partly driven by packaged water’s improved value offering, with consumers switching from other beverage categories where prices have risen more steeply. At the same time, Canadean said the category has benefited from its intrinsic low calorie proposition relative to other mainstream soft drinks.
However, Canadean said conditions in the North American market remain “very challenging” due to a combination of relatively low growth and slim profit margins, which have made it difficult for suppliers to commit to long-term investment in brand support.
“Positive future”, despite challenges
Despite difficulties in some regions, Canadean said that it “sees a positive future” for bottled water globally.
Some challenges for the category include the competition posed by water filters and local authority initiatives promoting tap water in Italy, and a market that is approaching maturity in Germany.
Nevertheless, Canadean said market positivity is slowly returning, with almost 900 million litres predicted to be available in the market by 2018.
