New flavors, new packaging and consumer demand are among the primary reasons retailers remain excited over bottled water. The category continues to post some of the strongest sales numbers in the store, and is expected to keep increasing for the foreseeable future. The 82 respondents in CSD’s Brand Preference Study operate 12,300 stores accounting for $243 million in bottled water sales. While the category is growing at a healthy clip, 14% of the decision makers, or 11 key people, reported no sales presentations from bottled water suppliers in the last two months. In fact, 48% of buyers reported presentations from less than half of the top six companies on the market.
Nestle Waters, Pepsi (Aquafina) and Coca-Cola (Dasani) were far and away the top three companies, according to retailers participating in the study in the three key areas: most effective sales program, the best product quality and best bottled water supplier. Each scored high in retail presentations as well, the buyers reported.
Ron Gillion, category manager for the Texarkana, Texas chain E-Z Mart Convenience Stores, keeps a close eye on his coolers, making adjustments to maximize profitability. E-Z Mart has shifted the amount of space devoted to products based on movement and has narrowed its flavor and package varieties based on scan data. As a result, the company has increased bottled water space a half door on average and it’s cautiously expanding energy drink space to a full door, thanks to the segment climbing 4.5% from its last year’s sales data.
"We’ll get two to three new products [for the cooler] a week, so you have to stay on top of category data," said Gillion, who also looks at product market share to identify the best sellers.
According to Steve Seager, senior retail marketing manager for Nestle Waters North America, an effective product mix of bottled water should focus on variety, both in flavors and package sizes.
"To meet the primary consumer usage occasions the still water (spring/drinking) section should include 20-ounce, sport top 24-ounce, 1-liter, 3-liter and 1-gallon sizes," Seager said. "The sweetened/enhanced section should include .5-liter and 20-ounce and 23.7-ounce sizes. Regarding flavors, there are so many offerings out there today, but retailers should carry three or four."
While popular with consumers, the category is not without some controversy, most notably in Chicago, where a 5-cent tax on bottled water, ostensibly to capitalize on the beverage’s popularity, took effect Jan. 1. Curiously, the $10.5 million the city claims it will raise from taxing water is earmarked solely for general revenue purposes, not for environmental purposes.
The beverage industry is rallying around suppliers and retailers to invalidate the tariff by filing suit against the city.
"We’re going to stand up for our customers, both retailers and consumers who are being forced to pay a tax on a healthy product like bottled water," said Susan Neely, president of the American Beverage Association, which represents the non-alcoholic beverage industry including bottled water producers. "We’re not just going to take a tax like this without raising a challenge. It’s disconcerting that government spending is leading government officials to start taxing products that are good for you simply to cover their budget deficits."
The four plaintiffs in the lawsuit are the American Beverage Association, Illinois Retail Merchants Association, Illinois Food Retailers Association and the International Bottled Water Association.
"This tax just defies common sense any way you look at it," Neely said. "We’re hopeful this lawsuit will help common sense reign again for the sake of our customers."