Bottled Water – Waving, Not Drowning

Unlike vodka, whiter-than-white water has health benefits on its side, but isn’t the marketing of one odourless, colourless liquid rather like another? asks Jonathan Goodall

In the ironically named Noughties, now that our bodies are temples rather than the amusement arcades of more debauched decades, the bottled water market is in the rudest of health. As the problem of binge drinking moves centre stage, what would the wine trade give for doctors to recommend that we drink at least eight glasses a day? This is the sort of endorsement that money just can’t buy.

According to Zenith International, the font of all water-related knowledge, some 26 million British adults, that’s 52% of the adult population, drink bottled water, but 71% of these do not drink anything like the recommended eight glasses a day. We consume about 35 litres per capita (a measly 0.09 litres a day) compared with the Western European average of 112 litres. France leads with 158 litres with Italy close behind. Yet the British bottled water market still weighs in at around 2.3 billion litres with a retail value of £1.2 billion. And this is expected to grow by about 9% per annum for the next five years to reach 3.18 billion litres by 2009.

And here’s the really scary bit; if the 52% of the adult population already drinking bottled water actually did drink the recommended eight glasses a day we’d be sloshing back a staggering 17 billion litres of the stuff. The potential, quite clearly,
is enormous.

A far cry from the mid-1980s when sparkling Perrier was the UK bottled water market, still water now dominates with 86% market share (1.7 billion litres). This is up 1% on 2004 and growth is being driven by consumers trading up to bigger packs for everyday use. Of the different types of bottled water, natural mineral water, which must be bottled untreated from a recognised and protected source, accounts for 67% of sales and is growing by 3.3%; spring water, which must also come from a known and protected source but can be treated, is stable at 22%; while purified or table water, essentially glorified tap water, has a dwindling 11% share.

There are more than 200 bottled water brands competing in the UK but it’s the recognised brands that are driving the market. The top five brands account for 30% of sales and are growing their combined share by 8.7%. Supermarket own-label brands have a 55% share but this declined by 1.9% last year. In ascending order of market share, Aqua Pura and Strathmore share the fourth position with 2% each; Buxton and Vittel, both owned by Nestlé Waters, share third place with 3% each; Highland Spring and Volvic are in joint second place with 7% each; and Evian is on top with a 10% market share.

Volvic and Evian, as well as Badoit, are owned by Danone, by the way, which probably explains why they are far too busy to talk to the press. Perrier and San Pellegrino belong to the Nestlé camp. 

Organic growth

The beauty of the bottled water market is that, because of our growing concerns with health, hydration and obesity, its phenomenal growth is consumer led. It seems the market would grow organically, with or without brand intervention, though this would be small consolation for a brand languishing in 200th place.

This is where the marketing of bottled water gets fascinating. For all the emotional attachment a brand manager would have for his or her baby, the average Joe (or Josephine) tends to regard all water – it just drops out of the sky, doesn’t it? – as pretty much the same. In this respect, flogging this colourless, odourless liquid is rather like selling vodka. Yes, the market is growing, but how do you switch the punters on to your brand rather than your competitors’?

“There’s been a massive blurring of the lines between soft drinks and bottled water brands,” says Nick Whatmoor who runs the horeca sector for Nestlé Waters. “Robinsons is now doing water with a splash of fruit and there are fizzy waters with fruit which could almost be called soft drinks. They’re encroaching on each others’ territories. However, the bottled water market will continue to grow as long as the brands continue to understand the need to be distinctive, to differentiate between themselves; hence Nestlé’s portfolio of brands.”

Whatmoor runs through his family of brands, explaining their key points of difference. “Perrier is iconic and builds on its stylish French heritage. It’s unashamedly adult and positioned in bars and clubs as an alternative to alcoholic drinks, which is why we asked Dale DeGroff to come up with some Perrier-based cocktails for us,” says Whatmoor. “San Pellegrino is elegant and classic and positioned as the ideal accompaniment for dining, playing on its Italian credentials; while Vittel, which was the first bottled water to have a sportscap, is a useful, everyday water to sustain sporty, active people throughout the day.”

So, there you have it. Not quite Posh, Scary, Sporty and Ginger, but you get the point. “People want their brand of water to say something about them, which is why water brands have had to get a lot more savy,” adds Whatmoor.

Sugar-free flavours

Pursuing the point of differentiation, Vittel is launching flavoured bottled waters – raspberry and lemon – but they have the USP that they are sugar-free. Some flavoured waters contain as much as five teaspoons of sugar per 330ml serving, which is well on the way towards fizzy drinks which frequently contain as much as nine teaspoons. “This is not a me-too product,” says Whatmoor.

“We don’t have any flavoured brand extensions because it contradicts the essence of naturalness,” says Highland Spring’s marketing director, Sally Stanley. Her brand builds its unique identity around provenance. “All natural mineral waters are different to each other anyway, because they’re all taken from different regions and boreholes with different mineral analyses,” she explains.

In this respect, the catchment areas for natural mineral waters can be seen as being rather like wine appellations, and Highland Spring has developed an identity not too dissimilar to the “clean, green” image of New Zealand wines. “There is a growing demand for natural food and drink from known sources,” says Stanley, “and NOP research has shown that 42% of bottled water consumers think Scotland produces the purest, freshest water.” France, by the way, registered 17% and England 15%.

But Highland Spring has taken this concept several steps further by becoming the first British brand to be granted organic status by the Soil Association. Farming and habitation are not permitted within its 2,000 acre catchment area in the Ochil Hills in Perthshire and the land has been kept free from pesticides and pollution for more than two decades.

Returning to the vodka analogy, we’ve carried features in the drinks business decrying some vodka packaging as the emperor’s new clothes, but, with water, the packaging takes on a life of its own. “Basic modifications to packaging formats can create new demand in themselves,” says Stanley. Put another way, new formats extend the boundaries of water consumption by opening up new routes to market, and the big players aren’t missing any tricks. In fact, “being available anytime, anywhere to meet consumer expectations is a real creed” for Nestlé Waters.

The bulk of bottled water growth is being driven by PET multi-packs for regular use throughout the day, as distinct from, say, one-litre glass bottles which are aimed at the dining occasion. PET multi-packs now account for 56% of bottled water sales compared with 48% only two years ago.

Sportscaps (those poppy-uppy things for people on the go) have also seen dramatic growth from 90m litres in 2002 to 160m litres in 2003 and now account for 21% of the bottled water market.

Children first

These have opened up new avenues for consumption, not least of which is the children’s market which, you might be surprised to learn, is forecast to leap from an underperforming 9m litres to as much as 30m litres by 2007.

“It’s the fastest growing sector of the market, but still tiny compared to where we think it will go,” says Highland Spring’s Stanley. The company now claims 43% of the children’s market having launched Highland Spring Natural Mineral Water For Kids last April. Nobody could accuse it of not doing exactly what it says on the label. “We sell it as a 330ml 12-pack and it’s a perfect fit for the lunchbox,”
says Stanley.

Nowadays we can expect to find small, chilled bottles from hotel mini-bars to garage forecourts where, incidentally, sales have grown 17% in the last two years. Nestlé has developed a five gallon (18.9 litre) home delivery format and Perrier has led the way into vending machines. Highland Spring is even delivered by Dairy Crest along with the daily milk. “Water is almost ubiquitous now,” says Stanley.
Or, to quote the Ancient Mariner, there’s “Water, water, everywhere …”  db