US bottled water sales reach record high in 2015, with growth expected to continue: Mintel

By Rachel Arthur

- Last updated on GMT

Functional and flavored waters are the ones to watch, says Mintel. Pic: iStock / Filmwork
Functional and flavored waters are the ones to watch, says Mintel. Pic: iStock / Filmwork

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Sales of bottled water in the US increased 6.4% to reach more than $15bn in 2015, according to research from Mintel. And as consumers continue to look for alternatives to soft drinks, sales are expected to keep growing rapidly.

Flavored waters in particular are replacing sugary drinks; while functional waters are also attracting the interest of consumers.

Mintel expects sales of bottled water to keep growing at a rapid pace through 2020, projecting sales growth of 34.7% for the category, and in particular 75.1% growth for the sparkling/seltzer and mineral water segment.

Bottled water can deliver on a number of consumer trends, such as the demand for better-for-you drinks and a move away from beverages with artificial ingredients. Therefore, brands should consider emphasizing free-from claims on bottles to resonate with consumers, says Mintel.

What consumers want

Premiumization: ​Mintel says that more than half of consumers indicate a preference for premium bottled water, opening the way for unique or sophisticated products. However, Mintel warns that consumers want to know exactly what they are paying for.

“Bottled water’s popularity is allowing it to quickly evolve with more premium, sophisticated offerings, in addition to flavor and function. As more manufacturers enter the space, brands will be challenged with staying relevant to consumer needs, including price sensitivities, while not overwhelming them with an abundance of new launches,” ​says the report from Mintel.

“To increase consumption frequency, manufacturers will have to justify their higher price point by clearly defining why they are premium and how they stand apart from other bottled waters.”

However, 51% of consumers are still unfamiliar with premium waters, showing there is a need to educate people on what they offer, says Mintel.

Functional benefits:​ 83% of consumers want to see functional or nutritional benefits from their ideal bottled water.

“Nutritional benefits, such as vitamins, minerals, and electrolytes, are most important, as many drink bottled water for health and hydration,” ​says Mintel. “As functional water innovation gains speed, manufacturers will need to stay relevant to consumer needs and stand out from competitors entering the space.”

Mintel’s research shows that 43% of consumers are interested in bottled water enhanced with vitamins; 29% would like to see bottled water with minerals, and 29% want energy attributes.

Flavor: ​Innovation in flavor is driving bottled water’s success as a category, says Mintel. Almost half of bottled water drinkers say they are turning to flavored waters instead of high sugar drinks. Consumption of flavored still bottled water is highest among millennials (18-34 year olds), while this category is also the most likely to consume any still bottled water.

Organic and natural: ​43% of consumers say their ideal bottled water would have no artificial sweeteners or flavors, and 40% want products free from artificial colors. 25% want their bottled water to be GMO-free and 24% want organic products.

mintel infographic 1

Challenges: environmental concerns and competing beverages

Concerns about the environmental impact of bottled water sits high with consumers: 39% of bottled water drinkers say they are drinking less bottled water because of its impact on the environment. Such concerns are also reflected in various proposed and implemented bans on bottled water.   

Mintel’s research shows that 78% of drinkers recycle their water packaging, and although reusable and biodegradable packaging is available, 75% of consumers want to see more reusable packaging.

Bottled water companies should address such concerns, advises Elizabeth Sisel, beverage analyst at Mintel. Brands could spread awareness of the environmentally friendly measures they are taking; and that their brands uphold ethical business practices,” ​she said.

Other trending beverages such as coffee and tea present competition to the bottled water category, says Mintel. And while consumers may be moving away from carbonates, the two categories do still remain in competition.  

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