Water Log, 2004

Bottled water is an industry born out of worry — health concerns and municipal water quality. Fortunately, worry turns out to be very profitable for business. In fact, worries are so profitable that water claimed the No. 2 position among beverages in the United States last year, with higher per-capita consumption than beer, milk and coffee. Water is second only to soft drinks, and analysts are predicting that by the end of the decade, water will nudge soft drinks out of the top spot.
Bolstering this sentiment, sales of bottled water continue to be robust. Bottled water sales in the United States were up 11.5 percent in 2003, topping $3.2 billion in food, drug and mass merchandising outlets, excluding Wal-Mart, according to Information Resources Inc. But due to price wars during the past couple years, unit sales rose only a modest 1.8 percent vs. a year ago.
PepsiCo’s Aquafina brand still floats atop the category with more than $376 million in sales, up 16 percent from a year ago. Private label bulk still water sits solidly in the No. 2 spot with nearly $325 million in sales — a drop of almost 4 percent from a year ago. Unit sales were down 7 percent. Balancing the picture is the convenience size sales of private label water, which rose 29 percent to $266.5 million. Consumers drink bottled water for its perceived purity and healthfulness. Brand loyalty is secondary and consequently, price sensitive. Private label is reaping the benefits, especially in the convenience size bottles.
Rounding out the top five brands is Coca-Cola’s Dasani brand and Nestlé’s Poland Spring. Dasani is No. 3, with $271 million in sales, up 11 percent, yet with a downturn in unit sales of just less than 1 percent. Coca-Cola reportedly tried to hold the line on price this year, which is reflected in these numbers. Poland Spring sits in the fifth spot with $144 million in sales, a 7 percent increase in dollars, but a 3 percent decrease in unit sales from a year ago. Building on consumers’ love of convenience, new multi-packs that fit easily onto refrigerator shelves have migrated into the water category this year from other areas of the beverage market.
Flavorful water
The water category is expanding with the help of flavored waters. Lightly sweetened, flavored waters are striking a chord with consumers — especially low-carb consumers. Propel Fitness Water, Pepsi/Quaker’s Gatorade spin-off, is the standout in the category with $111 million in sales, up 48 percent. Unit sales also rose significantly — 31 percent. Propel added two new flavors this year — Natural Grape and Natural Tropical Citrus. It also expanded the bottle size for its Natural Lemon flavor to 33.8-ounces.
Veryfine Fruit2O is the other flavored entry enjoying significant sales — $38.5 million, up 25 percent from a year ago. The brand’s success did not go unnoticed. Kraft bought Veryfine earlier this year. Other flavored waters flooding the market this year include more of the same — Energy Multi-Vitamin Enhanced Water with varieties like Power-A Peach-Strawberry Natural Flavor Vitamin C; a new flavor of Glaceau Vitaminwater — Peach-Mango; Buzzy’s Enhanced Water in Green Apple and three other flavors; and Apple & Eve WaterFruits — purified water with fruit juice in varieties such as Watermelon Wave and Berry Breakers. And then something a little different — Soy2O — a blend of fruit-flavored water and soy isoflavones.
Water with spark
While still water dominates the category, sparkling water sales continue to expand. Dollar sales in the segment reached $267.5 million for the year ending July 11, 2004, according to IRI. Dollar sales increased by almost 14 percent and unit sales were up about the same, showing more stability in pricing. Private label has the lion’s share of the segment with sales of more than $85 million. Perrier, San Pellegrino, LaCroix and Poland Spring round out the top five brands in that order. All the other brands have less than $10 million in sales through the measured channels.
Sparkling water sales include both flavored and unflavored products. What’s old is new again in the segment — Clearly Canadian reformulated its Sparkling Flavored Waters with half the carbs and only 45 calories per 8-ounces. Perrier added a 1-liter plastic bottle to its product array. Using plastic widens the distribution opportunities for this granddaddy of the sparkling segment.
New bottled water products were down in 2003 vs. 2002, according to Marketing Intelligence Service’s Productscan data. In 2002, 231 SKUs were added, while in 2003 there were only 138. The new product pace has picked up slightly this year, with 88 SKUs being added to the market through July. Waters plus — calcium, fluoride, vitamins, minerals, even nicotine — while these products never claim a large part of the market, they do spur new product activity, and this year is no different.
This year’s crop includes Power Water, another oxygenated water. Then there’s Eon — a structured water that claims to deliver cellular hydration through technology that restructures the water in bio-molecular clusters. The water is said to provide cellular absorption while enhancing the body’s oxygenation. Also in this vein, there’s Nitro H20 Energy Water. It’s a caffeinated, oxygenated water for consumers with an active lifestyle. Zaqua! is a micro-structured water with minerals added. The pH is adjusted to a level that helps buffer a typically acidic diet and helps flush waste from the system. Another pH-controlled water is Rush Living Water. It promises super hydration and slimming. In light of these previously mentioned products, Wegman’s Food You Feel Good About Spring Water with Fluoride seems tame. BI

Percent increase in orange juice exports from Brazil for the 2003-2004 crop year, as reported by the Brazillian Citrus Exporters Association. Sales to the European Union rose 39.4 percent, while exports to NAFTA countries fell 24.2 percent.
Number of Starbucks stores visited during the past seven years by John Winter Smith, a freelance computer programmer with the goal of stopping at every Starbucks location. Smith, who says he has a cup of coffee and takes a picture of himself at each location, has 1,000 — and growing — outlets to visit to reach his goal.
Percent of U.S. dollars spent on imported wines that go toward purchases of Italian wines, according to the Italian Wine & Food Institute. Australian wines follow at 27 percent, and French wines at 21 percent.
Number of entries submitted in last month’s American Homebrewers Association’s 2004 National Homebrew Competition. The number, which represents a 33 percent increase over 2003’s competition, is a record for the association, and is said to make the competition the largest beer contest in the world. 1,058 homebrewers from 46 states and three countries participated in the competition.
Number of additional Target stores the Minneapolis-based retail chain plans to retrofit this year to its P2004 format, which includes a wider selection of consumables and packaged foods. The company opened its first P2004 stores last fall.

Top convenience/still bottled waters by brand
% change vs.
prior year
% change vs.
prior year
AQUAFINA $376,274,600 15.97 17.06 -0.23
DASANI $271,154,000 10.59 12.30 -0.78
PRIVATE LABEL $266,515,100 29.03 12.09 1.07
POLAND SPRING $143,888,100 6.90 6.53 -0.65
ARROWHEAD $114,723,500 7.00 5.20 -0.51
PROPEL $111,239,900 47.52 5.04 1.02
DANNON $107,158,000 36.87 4.86 0.69
DEER PARK $81,361,670 77.23 3.69 1.24
EVIAN $75,676,050 -4.51 3.43 -0.79
CRYSTAL GEYSER $74,737,720 -4.87 3.39 -0.80
CATEGORY TOTAL $2,205,046,000 17.57 100.00 0.00
Source: Information Resources Inc. Total supermarkets, drug and mass merchandisers, minus Wal-Mart, for the 52 weeks ending July 11, 2004
Sparkling mineral waters by brand
% change vs.
prior year
% change vs.
prior year
PRIVATE LABEL $85,227,360 21.36 31.85 2.00
PERRIER $36,397,220 11.97 13.60 -0.21
SAN PELLEGRINO $22,365,840 22.01 8.36 0.57
LA CROIX $16,646,460 11.03 6.22 -0.15
POLAND SPRING $13,148,730 2.83 4.91 -0.52
CALISTOGA $8,577,898 -4.40 3.21 -0.61
CRYSTAL GEYSER $7,525,883 4.69 2.81 -0.24
ARROWHEAD $6,887,414 11.67 2.57 -0.05
CLEAR CHOICE $6,079,700 27.43 2.27 0.24
TOPO CHICO $5,897,872 28.07 2.20 0.25
CATEGORY TOTAL $267,573,700 13.74 100.00 0.00
Source: Information Resources Inc. Total supermarkets, drug and mass merchandisers, minus Wal-Mart, for the 52 weeks ending July 11, 2004