Proprietary Brands Prosper
With consumers seeking less expensive options, private label sales are increasing across all channels, but struggling in c-stores, where they brought in $3 billion in sales, but were down 3.3% compared to last year, for the 52 weeks ended Feb. 21, 2009. In contrast, Wal-Mart’s private label sales were up by 10.8%, and in the drug channel, they were up 14.4%. In the jug/bulk still water category, the best selling water at c-stores was private label—which accounted for $6,678,700 in sales, according to Information Resources Inc. data for the 52 weeks ended April 19, 2009.
Bottled water is holding its own in c-stores, outselling milk and juice and remaining a trendy product with consumers despite the surge in sales of energy products.
Just how bottled water sales are faring in the recession depends on the data consulted. Water sales at c-stores totaled $699 million, down 9.23% compared to the prior year, according to Information Resources Inc., a Chicago-based market research firm, for the 52 weeks ended April 19, 2009. According to Nielsen data, during the 52 weeks ended March 21, 2009, bottled water at c-stores brought in $2.5 billion in sales, a 0.6% increase from the prior year. Milk brought in $2.3 billion, a 2.2% decrease compared to last year, which means bottle water is outselling milk at c-stores. One reason might be that the current economic recession has fewer households shopping c-stores than in the past.
About 50% of bottled water sales take place outside the traditional grocery store channel, the Nielsen study revealed. Packaged beverages as a whole made up 14.1% of the $114,010 average monthly sales at c-stores, and 16.6% of the average monthly profit of $36,466, according to the 2009 NACS State of the Industry report. NACS reported average packaged beverage store sales totaled $11,587. Bottled water sales made up 12.8% of those sales, and brought in $2.57 billion in sales, up 1.5% from the previous year.
One trend worth noting is that consumers appear to be reducing bottled water consumption in favor of tap water to save money for a variety of reasons, ranging from the economy to the perceived environmental impact caused by plastic bottles. In response, bottled water manufacturers from Nestlé to Coca-Cola have responded with bottles featuring reduced plastic. The new 16.9-ounce Aquafina bottle from Pepsi Co., for example, weighs about 20% less than the previous version.
Specialty Waters Growing
Enhanced waters also are increasing in popularity. According to a Nielsen study, the unsweetened flavored water category is growing faster than other segments in the bottled water category. “In bottled water, it’s the ability to take a bottle of plain water and move in a direction that’s more functional, creating energy elements, fortifying it with calcium or protein,” said Jim Fiene, senior vice president for Open Pantry Food Marts of Wisconsin, which operates 26 stores in Wisconsin and Illinois.