The category is showing 8.1% annual value growth, and 4.8% volume growth, illustrating how consumers are seeking added value in their purchases and turning to premium brands.
Consumption volume of premium waters also rose strongly by 26% over the five years to 2017, reaching 11.2 billion litres, according to figures from Zenith’s 2018 Global Premium Water Report.
What is premium?
The overall bottled water market has been growing strongly in recent years as consumers seek out healthy and convenient options. Premium bottled waters set themselves from the mainstream with a unique selling point, attracting a target group of consumers and commanding a higher value than the mainstream market.
This could be linked to the provenance or source of the water, which may have a distinct mineral composition or link to a specific place or area. The purity of the water is often also a key selling point, while for some brands added functionality boosts value. Meanwhile, the branding, positioning and packaging of the product (for example in glass instead of plastic) can help create a more premium image.
The placement of the product can also help create a premium image: for example availability in select channels or exclusivity.
But the definition of premium is complex because perceptions are subjective and may differ from one market to the other – there is not a single defining factor. Consumers in one country may value provenance over purity; and yet this could be the opposite in another country.
Evian, for example, is considered premium in most markets; although sometimes has more mainstream positioning in its native France. Similarly Volvic is considered premium in the UAE but less so in the UK. Other examples of premium waters include Perrier, San Pellegrino, Voss and smartwater.
As a global average, the value per liter for premium water is 2.5x greater than mainstream packaged water. But in strong premium water markets the value can be much greater: reaching up to seven times that of mainstream packaged water.
World market for premium products
In volume terms premium waters take a small share of the global packaged water market – taking a 5% share - but contribute 11% of the category’s value.
Anne Wong-Erven, Insight and Advisory Director, Zenith Global, said that demand for premium waters is growing from a niche category of consumers to wider audience.
“What interesting in terms of positioning – because of the popularity of bottled water, its moving from special occasion to every day,” she said, speaking at Zenith’s Global Bottled Water Congress in Evian.
Brands like sparkling water San Pellegrino, for example – traditionally associated with fine dining – are finding a wider audience as demand grows.
“Because of the popularity in sparkling water in some markets what you’re seeing is some of those brands which are considered special occasion purchases are moving towards everyday purchases. Premium is becoming more relevant in consumers’ lives.”
While Western Europe has by far the largest market by volume – accounting for 72% of the world’s premium water market – growth is relatively modest for the category at around 3%, thanks to the premium water market already being well established in the key markets of France, Germany and Italy. It is North America which shows the most growth at 13%; while Asia Pacific and the Middle East also show promise of expansion (both at 6% volume growth).
“In terms of where the biggest opportunities are – big opportunity in North America, sparkling water is the major driver of growth, we anticipate that will continue in terms of double digit growth in the next five years,” said Wong-Erven.
“The other major market is Asia Pacific, with 9% volume share and 6% volume growth.
“There definitely is opportunity and quite a bit of room in terms of moving towards where West Europe is.”
Meanwhile, premium brands are moving beyond bottled water and into other categories. San Pellegrino, evian, Volvic and Perrier, for example, have all expanded their ranges from pure water into flavors, fruit infusions or tea infusions.