Bottled Water Category Overview 2014-2015 Disclaimer The following information is offered in good faith and represents an unqualified interpretation of a range of industry commentary and market data. It does not purport to be a detailed analysis of the market on which business strategy should be hinged to or capital investment considered without additional expert opinion. Introduction The bottled water industry in Australia has remained resilient in recent years despite a range of competitive and market forces applying pressure to the portfolio of products supplied by participating companies. Whilst the health benefits of bottled water are without question, the environmental impacts of the packaging and the constant cost comparison to tap water by well organised anti-industry campaigns continue to challenge market growth. This has been a consistent theme over the last five years.
Packaged Water The category has experienced strong single digit growth. This was largely due to consumers increasingly favoring the health profile of packaged water compared to sweetened beverages. Retailers have been driving the growth of packaged water, mainly because the category offers them a greater profit return than other beverage categories. Growth in packaged water is more due to societal trends to healthier living than economic forces. Australia supplies its own packaged water rather than being reliant on imports. Strong retailer margins means that shelf space continues to increase at the value (private label) end of the category. The outlook for the packaged water remains positive, driven by increasing consumer interest in the health virtues of water. This coincides with a progressive societal shift towards healthy lifestyles, in lieu of the increased media hype surrounding sweetened beverages on health. In this regard carbonated mineral water is expected to continue to growing, because it serves as a replacement for sweetened carbonated beverages and the segment is likely to benefit from the marketing efforts of Coca-Cola with the Mt Franklin brand. Still water is the most popular segment in this category with a 92% share of volume. Low carbonation drinks are growing whilst regular carbonated water is steadily decreasing in volume. This reflects consumer attitudes than carbonated beverages including carbonated water, are less natural and so less healthy. Private Label brands have seen strong growth. This is because retailers are increasing the shelf facings of Private Label, due to higher margin returns and are consequently growing share. Packaged water is largely seen as a commodity product. Premium brands are not seen as offering any significant benefit over value brands. Hence private label appears set for sustained growth in a high growth category. Private label is helping fuel overall category growth by making packaged water increasingly affordable to a larger market segment. Premium products can be 2 times more expensive than private label, with little discernible difference to consumers. The main driver is the high profitability that retailers receive at the value end of the market, leading to increasing shelf facings for private label in supermarkets. This is growing the value segment within the supermarket channel. On-premise value growth follows overall inflation more closely because no one on-premise outlet has disproportionate negotiating strength. All packaging segments are growing within a category experiencing strong growth. Multi packs of single serve bottles continue to attract greater shelf facings. Shift in favour of supermarkets due to keen price points for private label. EDA remains the key channel for on-premise volumes due to overall segment size (ie number of venues) Source: Canadean Partner Report 2014
Key Statistics Source: IBISWORLD Litres (Millions) - All channels Category [2013] [2014] [2015] [2016] Packaged Water [3] 634.8 672.9 699.5 720.0 Bulk/HOD Water [5] 199.8 204.8 207.5 210.5 Source: Canadean Partner Report 2014
Consumption Data - 13.1% of 19-30 year old women consume bottled water - Of these, mean intake is 1064 ml compared to 1385 ml from tap - 11% of males aged 19-30 consume bottled water, with mean intake of 1367 ml - Mean consumption across the population = 87 ml - Mean consumption across all consumers = 1150 ml Source: Unpublished Industry Data (Due June 2015) Source: Beverages Council Kids Eat, Kids Play Report
For more information contact: Australian Beverages Council 02 9662 2844 info@australianbeverages.org