Beverage Marketing Corporation: Bottled water will continue as ‘undisputed’ top player of beverage market

Last year also marked the first time that bottled water surpassed carbonated soft drinks​ as the largest beverage category, led by continued solid growth of the single serve water segment, managing director and COO of BMC Research, Gary Hemphill, said at the Beverage Forum in Chicago last week.

Bottled water outperforms all other categories​

Setting itself apart from mainstream beverage category trends, bottled water has thrived growing 8.6% in volume in 2016, according to BMC.

Between 2011 and 2016, total annual non-alcoholic beverage consumption increased by 2.2 billion gallons with bottled water leading market share increasing from 15.2% in 2011 to 20.6% in 2016.

Coffee and sports beverages experience modest market share increases of 1.2% and 0.3%, respectively.

Hemphill also contributed the positive performance of the bottled water category to pricing increase of carbonated soft drinks coupled with significant pricing declines in bottled water. In 2016, the wholesale price for soda hit $4.27 per gallon while the bottled water fell to $1.21 per gallon.  

Diet soda in decline​

Compared to bottled water, diet carbonated soft drinks now account for one-quarter of category volume as opposed to 31% in 2011, spurred by the consumers shift away from diet soda to bottled water and other drink categories, BMC found.

“Diet soft drinks have hit a ceiling and are declining at a faster rate than regular soft drinks though performance has improved in each of the last three years,”​ Hemphill said.

Additionally, diet soda registered a -4.8% CAGR compared to regular soda which saw a -0.4% CAGR in 2016.

Tap water continues its descent​

Despite consumers ditching sugary beverages in favor of less-caloric and healthier drink options, tap water has been on the decline for the past eight years, BMC found.

Tap water volume growth spiked during the recession hitting 23.7% between 2007 and 2008 but has dropped off sharply falling 9.2% in 2016.

“One reflection of a healthy beverage industry is the decline in tap water, and tap water consumption has been trending down in recent years,”​ Hemphill said.

Outlook for bottled water​

BMC forecasted that bottled water will increase another 8% to 9% in 2017 and value-added water will register a 9% to 10% increase in volume for the year.

“As CSDs continue to decline and bottled water continues to grow, the gap between the two categories is only likely widen,”​ Hemphill added.

“CSDs and fruit beverages will need to innovate and provide healthier options to rekindle growth.”​