Operators hoping to do well with bottled and flavored waters in 2010 need to understand what both water and bottles mean to today’s consumers. Following a decade of steady growth, bottled water sales in c-stores declined last year as consumer spending lagged due to higher fuel prices and the economic recession. But many retailers and suppliers still expect significant growth and revenue opportunities ahead for what has in recent years been one of the most profitable packaged beverage segments.
“Like all refreshment beverages, bottled water’s performance has been challenged the last two years due to the weakened economy. However, prices have been declining and operators should take advantage of the lower prices to promote this trend with their customers,” said Gary Hemphill, vice president of Beverage Marketing Corp., the beverage industry research group based in New York City.
Doing so, Hemphill explained, may boost sales especially among value-conscious consumers. “Flavored and enhanced waters have seen less pricing pressure and are likely to offer greater profit to operators,” he said. “Thus, they should be an important part of the beverage offerings mix in any convenience store.”
Retailers should make an effort in 2010 to use bottled water as an effective impulse item near the checkout. Though space is tight, Hemphill noted, consumers’ desires are paramount.
Keeping consumer attitudes in mind is critical. Operators, according to Jim Monroe of Handee Marts Inc. in Gibsonia, Pa., “need to buy what they sell, not sell what they buy. In other words, use your stores’ scan data and vendor market data to make sure you have what the customer wants in your vault.” Handee Marts operates more than 60 7-Eleven stores in four Mid-Atlantic states.
Two trends among c-store operators are SKU rationalization and the growth of private-label brands. Operators like 30-store Forward Corp. in Standish, Mich., have decreased the number of SKUs they carry due to sales drop-offs. But Forward Corp. still carries nearly a dozen different bottled water SKUs. Nice N Easy Grocery Shoppes in Canastota, N.Y., also has seen category sales slow, but along with other chains reported strong growth in private-label brands, which generally retail for 10-25 cents less than national brands.
In 2010, new products that keep health and the environment in mind also can do well. “No matter what the size of your cooler, you have to make space for new SKUs,” Hemphill said. “They won’t all be home runs, but there can be a strong short-term sales gain to be had from new products.”
WATER STAYS STRONG: The convenience store industry rang up more than $2.48 billion in total single-serve
bottled water sales in 2009, according to IRI, with an average unit cost of $1.45.
|BRAND||SALES DOLLARS||UNIT SALES||AVERAGE PRICE||ONE YEAR PRICE CHANGE|
|Total Convenience/PET Still Water||$2,484,114,000||1,717,009,000||$1.45||$0.03|
|Glaceau Vitamin Water Pet Still Water||$434,426,100||242,480,200||$1.79||$0.07|
|Aquafina Pet Still Water||$357,466,500||248,291,100||$1.44||($0.01)|
|Dasani Pet Still Water||$321,492,100||233,249,300||$1.38||$0.04|
|Private Label Pet Still Water||$125,389,400||100,837,000||$1.24||$0.05|
|Glaceau Smart Water Pet Still Water||$117,054,100||67,482,220||$1.73||$0.07|
|Poland Spring Pet Still Water||$104,955,900||76,371,520||$1.37||($0.09)|
|Nestle Pure Life Pet Still Water||$102,703,300||65,759,080||$1.56||$0.33|
|Deer Park Pet Still Water||$97,376,730||81,033,850||$1.20||($0.01)|
|Ozarka Pet Still Water||$93,180,290||78,987,730||$1.18||($0.04)|
|Sobe Life Pet Still Water||$91,102,500||65,875,640||$1.38||$0.06|
Source: Information Resources Inc. (IRI) for the 52 weeks ended Dec. 27, 2009