BD: “Are there any taste preferences for consumers in the States versus, say, a big bottled water market such as France in Europe? Is there a preference for higher or lower levels of carbonation, for instance, and do you see flavour variation playing a more important role here – particularly to help consumers cross the bridge over from CSDs? Perhaps the success of Sparkling Ice is quite illuminating in this respect…”
RB: “Canadean data shows there are some consumer taste preferences in the US compared to France or Italy. Predominantly all carbonated water volume in the US contains regular levels of carbonation. 10% of this is flavored and this share increases each year. Flavor variation is starting to play a key role as consumers migrate from carbonates.
“Almost one fifth (approx. 19%) of the French packaged water market is carbonated (both low and regular levels of carbonation), however, only 3% of this is flavored and is growing very slowly.
“In contrast to the US, carbonated packaged water accounts for one-third of the packaged water market in Italy and it is mostly unflavored.
“According to Canadean definitions, Sparkling Ice is a low-calorie carbonate. Although this brand is performing well, generally, low calorie carbonates are currently not faring well in the US (the aftertaste and mouth feel aren’t winning consumers over). Sparkling Ice is marketed with an emphasis on bold flavors, zero calories, natural flavors and taps into the health and wellness trend.”
BD: “What kind of demographics can carbonated waters ‘win’ in? I can’t see kids going for it but perhaps 18-34s will prefer it as a healthier lunch option or as an on premise drink?”
RB: “The 18-34 age group is traditionally the biggest restaurant user group in the US. 45% of carbonated packaged water was consumed on premise last year.
“The trends indicate that consumers are perhaps sampling carbonated water on premise, and then make off-premise purchases for at home consumption.
“Flavor innovations could drive further sales. Although traditional lemon flavor still has the highest volume, flavors such as mixed berries are showing strong growth.
BD: “Crystal Geyser - bottled from private mineral water sources in California - is not a brand we hear much about. What’s the secret of its success?”
RB: “The secret of Crystal Geyser’s success is that it has built a solid national presence in supermarkets and especially in convenience stores."
BD: “Does carbonated water have any particular ‘strongholds’ in the States, areas where it is particularly popular?”
RB: “Unfortunately we don’t have regional volumes.”
BD: “Do you think that flavored liquid water enhancers have a role to play here, given that consumers can use them as bespoke flavor for carbonated waters?”
RB: “Flavored liquid water enhancers do have a role to play. They are convenient, versatile and a relatively low cost way of customizing water. Mio (Kraft Foods) was the first brand to break into this segment and with many more brands having been launched since, the segment is overcrowded.
“Most of these new brands are low calorie, so adding these to packaged water is perceived as a healthy option. Distribution of liquid enhancers has also become relatively widespread across the major grocery channels.”
BD: “Bottled water is quite commodity driven and the margins are lower than elsewhere – is carbonation one way to emphasize a point of difference and perhaps add value?”
RB: “Carbonated water retails at a higher level and single serve sales through convenience stores offer opportunities to raise value.
“Adding vitamins/minerals and functionality to carbonated water could also present opportunities for premiumization.
BD: “Given lower prices that you mention for native brands, what can the likes of San Pellegrino, Perrier etc. do to differentiate? Can they riff on the French/Italian provenance, invest more in packaging, build traction in restaurants and bars?”
RB: “Imported brands can build traction in restaurants and bars in the US. Investments in packaging innovations that are targeted to on premise consumption could also add volume to these brands. Currently only 1% of packaged water volume is in glass bottles which comprises domestic and imported brands, and potentially has room for expansion.”