By Frost & Sullivan

The global bottled water hydration market is witnessing a remarkable and continued growth in the past years. Frost and Sullivan estimate the total global bottled water hydration market to be USD 150.3 billion in 2017 with an annual growth rate of 5.3%, and it is expected to reach USD 242.3 billion by 2024 at a compound annual growth rate (CAGR) of 7.1%. In terms of volume, the current consumption of bottled water stands at 204.5 billion liters as of 2017 and is likely to reach 282.5 billion liters by 2024. According to the findings of Frost and Sullivan analysis, the consumption of bottled water is primarily driven by the rising health consciousness among customers, rising environmentally sustainable packaging solutions and the increasing water contamination levels and its impact on the quality of drinking water. Consumers across the world are demanding more value from already existing bottled water products. According to the Beverage Marketing Corporation, the annual bottled water consumption in 2017 was 39.3 gallons per capita while soft drinks consumption decreased to 38.5 gallons per capita. Demand for healthier beverages is driving companies to invest in new and enhanced water products, such as Hint Water, Just Water, etc. Still Water accounted for 47.6% of the market in 2017, followed by sparkling water at 23.9%. Flavoured and functional water contributed 9.6% and 18.9%, respectively. Though still water will continue to dominate the market throughout the forecast period, growth in the other three segments is accelerating within a rapidly evolving bottled water ecosystem.

Environmental concerns arising due to single-use plastics are influencing both product and business model innovation opportunities along the value chain of the bottled water industry. Eco-friendly packaging is gaining momentum and has become a key trend that will shape the future of the global bottled water hydration market. As consumer’s preferences for sustainable packaging continues to grow, emerging companies such as Just Water and Boxed Water have set new industry benchmarks with their innovating packaging solutions that involve the use of renewable resources. Evian and Highland Spring, on the other hand, are going to introduce 100% recyclable PET bottles.

The regional tastes of consumers and the substantial lifestyle changes in developing and developed nations are providing the platform for new product development. Consumer preferences in the US are steadily shifting from high calorie/sugar drinks towards healthier alternatives. This has resulted in a shift from carbonated drinks such as soda to bottled, flavored and functional water. Traditionally, still water hydration has been a substitute for tap water in countries where drinking water shortages amid sweltering summers or the tap water are not of the good drinking quality. Public awareness highlighting the low quality of tap water has propelled consumers to switch to bottled water in the recent years. Sparkling water is often seen as a substitute for carbonates and is true in the case of flavored sparkling water. Drinks enhanced with various proteins, nutritional, and detox supplements such as Gatorade, Powerade, Napa Hills, Protein2o, etc. will dominate the market in the coming years. New and distinct flavours cucumber, cranberry, grapefruit and blood orange in functional and sparkling drinks will widen the range of offerings.

Europe is the largest consumer market for bottled water, as it accounts for 36.9% share of the global bottled water hydration market. Eastern Europe states are seeing robust growth. Western Europe to a large extent is ranked as the world’s most mature bottled water market. The market is led by France Germany, Italy, and the UK that have a strong foothold in bottled water market growth. Consumers across Europe are looking for a good source of nutrients and added supplements in their beverages. Hence, functional water with added flavors is expected to see solid growth in the forecast period.

Asia-Pacific is the second largest market in terms of total consumption, accounting for 33% market share. It is also the fastest growing market, due to its rapidly growing population, growing middle class, high disposable income, and increasing focus on health and wellness. Aqua Botanical, an Australian bottled water company has sourced a sustainable way of harvesting water from fruit and vegetables that are free of toxins and contains essential plant minerals. Products such as these are eventually gaining momentum and acceptance among consumers.

The bottled water market in North America is mature due to its relative saturation and is expected to grow due to the tangible shift of customers from soda-based drinks to water-based alternatives of sparkling, flavored and functional such as Hint Water, Agua Water, Vitamin Water, and Voss Water. Latin America and the Middle East and Africa are likely to experience rapid growth during the forecast period due to their poor water infrastructure, and unsafe and unclean tap water.

Innovative water treatment systems for residential, light commercial and HoReCa segments are emerging as disruptive applications and a huge threat to bottled water companies, as advanced systems can generate mineral quality drinking water or even flavored and functional water at home. Mitte, for example, is one such company that offers a smart water purifier system that can purify and enhance water through a process that is like natural water cycle. It not only makes the water pure but also enhances it with essential nutrients.

The persisting water crisis caused by drought has led to the deterioration of tap water across the African continent. Consumers are showing more interest in bottled water due to an upsurge in the incidence of waterborne diseases. Efficient business models, such as water filtration systems at grocery and convenience stores where consumers can refill their cans and pay by the liter, will increase revenues and reduce the carbon footprint created using plastic bottles. I-Drop Water was launched in South Africa to empower grocery owners to sell pure and safe water to customers using its nano-purification water filtration technology and global system for mobile communication (GSM)-enabled platform. Customers pay by the literfor refilling their containers.

Partnering with water utility companies will enable bottled water firms to provide safe drinking water to a large number of consumers across the globe. NEWater in Singapore, a subsidiary of Singapore’s Public Utilities Board uses a dual membrane and ultraviolet technologies for purifying wastewater and producing bottled drinking water.

The global bottled water hydration market is highly fragmented and dynamic. Tier I participants are partnering with or acquiring small players to expand their presence and make their products available in remote locations with severe water scarcity. The top tier will remain so in the foreseeable future, with many small and regional participants competing for market shares. Some of the key players in the current global bottled water market are Nestle Waters, Danone, PepsiCo, Coca-Cola, Fiji Water, Hangzhou Wahaha Group Co Ltd, Bisleri International Pvt Ltd, MaiDubai, Hint Water, Frequency H2O, Aqua Botanical, and Penta Water.

Bottled water market is providing significant opportunities and it is imperative that companies capitalize on these to create an edge amongst the competition.

Anagha Lakshmi Jayaprakash is a Senior Research Analyst at Frost & Sullivan.

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