Bottled water goes DIY

The market for bottled water has a promising future.  As consumers continue to reject carbonated soft drinks and embrace bottled water, many beverage industry analysts and marketers are convinced that the category will soon become the dominant non-alcoholic beverage.  Health and wellness concerns, the fitness fad and the perennial struggle of many consumers with overweight and obesity have combined to make bottled water the zero-calorie/ultra-low calorie beverage of choice for growing millions of Americans.

However, as seen in Packaged Facts May 2014 report Bottled Water in the U.S., the market for bottled water is being roiled by a number of disruptive forces, even in the midst of this generally upbeat view of the bottled water category.  For one thing, as supermarkets stock their shelves with loss-leading cases of plain bottled water, simply competing on the basis of volume and price no longer seems to make sense to marketers of major brands.  Plain bottled water also faces determined resistance from consumers like the Dallas woman quoted by the Wall Street Journal (May 15, 2013) as saying “I hate water” because it “just has no flavor.” 

To entice consumers to pay a premium for bottled water and thus add value and boost profits in their bottled water businesses, marketers are rushing to launch new bottled water products with bold colors, exotic flavoring and fashion-forward packaging.  They are also hurrying to bring to market a wider range of water enhancers, a category that did not even exist until 2011 when Kraft Foods launched its phenomenally successful MiO brand.  Packaged in small, convenient, portable, squeezable egg-shaped containers, water enhancers allow users to customize the intensity of the flavoring in otherwise plain water.  Water enhancers are especially geared toward meeting the expectations of Millennials, who have grown up accustomed to getting what they want the way they want it and when they want it.

Coca-Cola Company has been particularly active in competing against Kraft Foods in this new and growing market.  After launching DASANI Drops in September 2012, it followed with enhancers for the sports and energy drink markets under its Powerade brand that are meant to compete with the MiO Fit brand extension.  In 2014 it rolled out Vitaminwater Zero Drops and Minute Maid Drops.  Other new water enhancers launched in 2014 include PepsiCo’s Aquafina Flavorsplash enhancer, the Crystal Light liquid enhancer launched by Kraft Foods and Kool-Aid Drink Mix.

Water enhancers have the potential to make a significant impact on sales of bottled water.  According to a marketing executive with the DASANI brand, around 20% of households buying bottled water also buy liquid water enhancers.  Packaged Facts’ April/May 2014 consumer survey has even more encouraging news for marketers betting on the power of water enhancers.  Our survey found that 35% of respondents who had purchased bottled water in the past four weeks also bought a water enhancer such as MiO, Dasani Drops, Powerade Zero Drops, Aquafina FlavorSplash, Crystal Light Liquid or Minute Maid Drops.  As liquid water enhancers multiply in terms of numbers and innovative characteristics, they are likely to play a major role in shoring up the bottom lines of major beverage marketers.

This blog is based on research featured in Packaged Facts’ Bottled Water in the U.S., published in April 2014.  Add this report to your own intelligence library and receive a 5% discount during our promotional period effective through August 1, 2014. Use code PF05WATER