Make no mistake—the move away from carbonated soft drinks (CSDs) to what consumers perceive as healthier beverage options is for real. This includes a shift from diet CSDs as well as full-caloried offerings. And one of the major beneficiaries of this move has been the bottled water category, including flavored and enhanced offerings.
According to Nielsen convenience store data, the bottled water category has enjoyed almost a 15% bump in retail dollars over the past two years. A 12.6% spike between 2011 and 2012 was followed by a more modest 2.9% gain this past year. It all has created a very healthy $2.3 billion profit center at retail.
Perhaps the category’s most important calling card is constant innovation that creates excitement and energy among consumers. “Lots more innovation in the category,” said Butch Fulton, merchandise manager for Beaverton, Ore.-based Plaid Pantry. While still water has its limits on innovating—primarily coming out with new packaging (sizes, sports caps, etc.), the flavored and enhanced segments have the world as their stage. “The enhanced and flavored waters are constantly coming out with new flavors,” said Fulton, adding that still water has made a comeback as well. At Plaid Pantry, which operates 109 stores, the category is downright vibrant.
“Counting flavored and enhanced water, you’re probably looking at 14% growth year after year,” Fulton said.
While the category leaders like Nestlé Waters (Poland Spring, Pure Life, among others), Coke (Dasani) and Pepsi (Aquafina) have done well, the smaller, super-premium brands have been earning their keep at convenience stores.
At Plaid Pantry, for example, Glacéau’s Smartwater is the top-selling brand and Fiji is No. 2, Fulton said. (Glacéau is a subsidiary of Coca-Cola, which gained national distribution through the Coke system).
The Beverage for Everyone
The reason for bottle water’s popularity is easy to see. It is one of the intrinsic products of nature—everyone drinks it.
“It’s a unique product because it literally appeals to every customer segment,” Fulton said. “Moms have their kids drinking it, and if you’re into sports or exercise, you’re not drinking pop anymore, you’re drinking water or isotonics.”
Indeed, isotonics (or sports drinks) have been an offshoot of the bottled water category that have blossomed into big business. Today, the sports drink category, with dozens of brands offered many manufacturers, represent a $2.3 billion category in c-stores, according to Nielsen data.
Gatorade has gone from a 32-ounce bottle to a 28-ounce bottle at the same price, Fulton said. While it’s still early in the transition, the new packaging was introduced in late December 2013, Fulton hasn’t noticed any drop-off in
Sports Drink Sales Flat
While the bottled water market grew in 2013, the sports drink market seemed to cool off a little bit as sales dollars and unit sales slipped slightly. The category remains a very healthy portion of the cold vault, however, with sales eclipsing $2.45 billion, IRI reported. Gatorade and Powerade both had solid years, as did newcomer Body Armor.
Dollar Sales Sales % Change Unit Sales Unit Sales % Change Avg. Unit Price
Total Sports Drinks $2.45 Bil (0.26) 1.43 Bil (2.36) $1.71
Gatorade Perform $1.63 Bil (1.3) 908 Mil (2.87) $1.79
Powerade Ion4 $359.29 Mil (16.11) 256.64 Mil (15.12) $1.40
Gatorade G2 $153.58 Mil (12.14) 86.89 Mil (14.29) $1.77
Gatorade $138.72 Mil 596.5 67.65 Mil 590.68 $2.05
Powerade Zero Ion4 $62.72 Mil (12.78) 42.37 Mil (11.14) $1.48
Powerade $59.64 Mil 235.94 44.48 Mil 227.42 $1.34
Private Label $10.04 Mil (0.02) 9.06 Mil 18.13 $1.11
Gatorade G2 $9.56 Mil 2.98 5.28 Mil (1.1) $1.81
Body Armor $7.30 Mil 73.74 3.12 Mil 85.03 $2.34
Gatorade X Factor $3.60 Mil 30.05 1.69 Mil 20.66 $2.12
Source: Nielsen C-Store ScanTrack, Total U.S. Convenience, 52 Weeks Ended Dec. 21, 2013