Canadian Packaging

Bottled water poised to become the soft drink leader

With global consumption of bottled water doubling over the past decade, continued growth could see it supplant carbonated beverages as the leader in the soft drinks category by 2015.


April 24, 2013
by Canadian Packaging Staff

The concept of purchasing bottled water seemed ludicrous not too long ago, but the past few decades have shown that demand for it has skyrocketed.

A mere 10 years ago, world consumption of bottled water stood at 100 billion liters, but since then—and despite the global economic downturn—volumes have actually doubled.

Perhaps even more amazing is that, according to the latest calculations by industry research analysts, Canadean, packaged water will actually overtake carbonates as the leading soft drinks category in just two years—2015.

This anticipated result is being bolstered by water’s healthy image, a fact always known, but only recently heeded. As well, water is still a pertinent necessity in many global areas lacking safe water supplies.

The main thrust behind this category re-positioning is coming from Asia, where volumes are predicted to rise by around 16 per cent in 2013 alone—more than twice the global rate of increase.

In Asia, it absorbs one in every three liters of packaged water consumed around the world, and yet its per capita intake still remains well-below the international average, in areas like Pakistan, the Philippines and Vietnam where it is still less than 10 liters per capita.

Because of this, Canadean says there is still a huge market potential for growth of packaged water still to be realized.

Asian growth has a strong dependency on China where major suppliers like the Blue Sword Group, China Resources Enterprises, Coca-Cola and Zhejiang Nongfushanquan Water Co are helping to drive expansion.

However, though the Chinese market is large, it is also fragmented.

Despite a combined volume in the order of seven billion liters, these four players are responsible for less than one-third of category sales.

Even more telling, according to Canadean, while China represents the cornerstone of Asian packaged water consumption, it says that India has shown more growth, at well over 20 per cent a year.

The North American packaged water market is also huge, with current sales in excess of 30 billion liters, but the pace of development is far less vibrant than in Asia.

Canadean says that consumption volumes of bottled water suffered in North America during the recent recession, and has been slow to recover, though it’s annual growth rate shows signs of accelerating.

Recent progress has been driven partly by packaged water’s improved value offering, with consumers switching from other beverages where prices have risen more steeply.

At the same time, the category has benefited from its intrinsic low calorie proposition relative to alternative mainstream soft drinks.

However, conditions remain very challenging as a combination of relatively low growth and wafer thin profit margins make it hard for suppliers to commit to long-term investment in brand support – but Canadean says this is not a deterrent to future volume growth.

What is most reassuring for packaged water is that Canadean sees a positive future across all regions, even in West Europe where demand was struggling to increase even before the start of the economic crisis.

Canadean says that the overall outlook in western Europe has been negatively affected by category maturity in Germany. and the threat posed by competing water filters and local authority initiatives promoting tap water in Italy.

Nevertheless, market positivity is slowly returning, with almost 900 million liters predicted to join the regional pool by 2018.

For more information on Canadean, visit www.canadean.com.