Nonalcoholic Beverages: How Have US Consumers' Tastes Changed?
Growing demand
Unlike carbonated soft drinks, bottled water is gaining traction in the US liquid refreshment beverage market. The second-largest liquid refreshment beverage category, bottled water, recorded 7.6% volume growth in the United States in 2015 (Sources: Plasticnews, Beverage Marketing Corporation). This 2015 growth compares to 7.3% growth in 2014 and 4.7% growth in 2013.
A natural, zero-calorie, portable source of hydration without any harmful ingredients, bottled water contrasts with sugary soda beverages. These advantages are some of the things working in bottled water’s favor. Per-capita bottled water consumption in the United States increased to 34 gallons in 2014 compared to 32 gallons in 2013.
An overview of bottled water category
The US bottled water market is dominated by the nonsparkling bottled water segment, which accounted for 95.8% of total 2014 bottled water volumes. Domestic sparkling water and imported bottled water accounted for 3.1% and 1.1%, respectively, of total volumes.
Premium PET is the dominant category in the nonsparkling bottled water segment. The top brands in this category include Nestlé’s (NSRGY) Pure Life, Coca-Cola’s Dasani, PepsiCo’s (PEP) Aquafina, and Poland Spring.
Growth prospects
The bottled water category is expected to continue posting strong growth rates, supported by the continued rise in per-capita consumption. Gary Hemphill, managing director and chief operating officer of research at the Beverage Marketing Corporation, expects bottled water to surpass carbonated soft drinks by early 2017 (2. Source: Plasticnews).
Aside from the dominant nonsparkling bottled water category, there’s also growing demand for sparkling bottled water. In 2014, Coca-Cola (KO) launched Dasani Sparkling, an unsweetened, zero-calorie sparkling water in four flavors. Dr Pepper Snapple’s (DPS) Mexican sparkling water brand, Penafiel, is one of the company’s key growth drivers. Some leading brands in the sparkling bottled water category include National Beverage’s (FIZZ) LaCroix, Talking Rain’s Sparkling Ice, and Nestlé’s Perrier. Bottled water companies are also making their products interesting by extending some product lines. For instance, National Beverage’s (FIZZ) LaCroix offers its line extension LaCroix Cúrate in several flavors, including Melón Pomelo, Kiwi Sandía, and Muré Pepino. National Beverage constitutes 3% of the PowerShares Dynamic Food & Beverage ETF (PBJ).
Not only is bottled water a healthier choice than soda, but the US bottled water category’s future growth is also likely to be driven by growing concerns about tap water contamination. The Flint water crisis is a key example. The crisis started in April 2014, when the City of Flint, Michigan, changed its water source from the Detroit Water and Sewerage Department (treated water from Lake Huron and the Detroit River) to the Flint River, which was highly contaminated with lead.