Bottled Water - UK - March 2018

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Bottled water sales power forward
The category faces uncertainties on many fronts
Figure 1: UK value sales of bottled water, 2012-22
Unflavoured still water continues robust growth
Figure 2: UK retail value sales of bottled water, by segment, 2016 and 2017
On-premise sees inflation return
Figure 3: UK value sales of bottled water, by retail and on-premise channels, 2016 and 2017
Plastic waste is in the spotlight
Sugar reduction remains on the health agenda
Companies and brands
Volume sales are supported by price cuts for market leader Danone
Highland Spring becomes third biggest brand
Figure 4: Leading brands’ value shares in the UK bottled water retail market, 2016/17*
Low-sugar innovation rise in flavoured water
Functional claims rise
Advertising spend dips
The consumer
Three in four drink bottled water
Figure 5: Frequency of drinking bottled water, by type, December 2017
A low price is key purchase factor
Figure 6: Important factors influencing the choice of unflavoured bottled water, December 2017
Low/no sugar is important for flavoured water
Figure 7: Important factors influencing the choice of flavoured bottled water, December 2017
Fortified waters for kids garners interest
Functional ingredients have strongest appeal among the young
Figure 8: Interest in product concepts in bottled water, December 2017
Recycling ambitions are high in bottled water
Figure 9: Behaviours relating to bottled water, December 2017
Category blurring could alienate consumers
Figure 10: Attitudes towards bottled water, December 2017
What we think
ISSUES AND INSIGHTS
A need for brands to go beyond recyclability
The facts
The implications
Functional ingredients present a tangible way to add value to bottled water among the younger generation
The facts
The implications
Looking to stronger flavour profiles should attract the younger generation
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Bottled water sales power forward
The category faces uncertainties on many fronts
Unflavoured still water continues robust growth
On-premise sees inflation return
Plastic waste is in the spotlight
Sugar reduction remains on the health agenda
MARKET SIZE AND FORECAST
Bottled water sales continue to power forward
Figure 11: UK value and volume sales of bottled water, 2012-22
The future
Long-term impact of Sugar Levy uncertain
Focus on plastic waste leaves bottled water vulnerable
Squeezed household budgets could curb sales
Overall inflation expected to push values up
Figure 12: Forecast of UK value sales of bottled water, 2012-22
Figure 13: Forecast of UK volume sales of bottled water, 2012-22
Forecast methodology
MARKET SEGMENTATION
Unflavoured still water posts robust growth
Flavoured still water sees steepest deflation
Inflation boosts value growth for sparkling waters
Figure 14: UK retail value and volume sales of bottled water, by segment, 2015-17
Inflation returns on-premise in 2017
Figure 15: UK value and volume sales of bottled water, by retail and on-premise channels, 2012-17
MARKET DRIVERS
Plastic waste and its environmental impact is in the spotlight
The presence of microplastics in bottled water draws attention
Widespread feelings of guilt related to plastic waste
Offering more free water refill points aims to cut plastic waste
Companies are making moves to address plastic waste issue
Support for deposit return schemes
Inflation returns to food and drink market
Squeezed consumer incomes could dampen sales
Figure 16: Annual percentage change in CPI and AWE (regular pay), monthly basis, January 2014-December 2017
Sugar reduction remains on the health agenda
Concerns over sugar benefit bottled water
Flavoured water steps up innovation in L/N/R sugar variants
Moderation in alcohol consumption could offer opportunities
Aging population a challenge, growth in kids offers opportunities
Figure 17: Trends in the age structure of the UK population, 2012-17 and 2017-22
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Volume sales are supported by price cuts for market leader Danone
Highland Spring becomes third biggest brand
An upsurge in low-sugar launch activity in flavoured water
Functional claims rise
Advertising spend dips
MARKET SHARE
Price cuts support volumes for market leader Danone
Volvic sees value sales fall
Evian grows behind the overall market
Figure 18: Leading brands’ sales and shares in the UK bottled water retail market, by value and volume, 2015/16 and 2016/17
Highland Spring powers past Buxton to become third biggest brand
Pure Life drives Nestlé’s growth
Retailers continue to gain share
Growth from smaller manufacturers increases competition
Figure 19: Leading manufacturers’ sales and shares in the UK bottled water retail market, by value and volume, 2015/16 and 2016/17
LAUNCH ACTIVITY AND INNOVATION
Flavoured water grows share of launches
Figure 20: Share of new product launches in the UK bottled water retail market, by segment, 2013-17
Low sugar an increasing focus in flavoured water innovation
Figure 21: Share of flavoured bottled water launches featuring an L/N/R sugar claim, 2013-17
Vimto makes its debut in bottled water
Feel Good Drinks extends its portfolio with Infusions line
Glacéau Smartwater and Perrier branch out into flavoured sparkling water
Wonky fruit and veg water launched by Dash Water
Nuva relaunches as No&More; Ugly Drinks gives range a shake-up
Category blurring remains a trend
Functional claims rise
Figure 22: Share of flavoured and unflavoured bottled water launches featuring a functional claim, 2013-17
Functional water target active consumers
Actiph launches alkaline ionised water to ‘enhance hydration’
Vegesentials target gut health
Protein trend inspires launches in bottled water
Volvic and Disney looks to make hydration more fun for kids
ADVERTISING AND MARKETING ACTIVITY
Adspend dips in 2017
Figure 23: Total above-the-line, online display and direct mail advertising expenditure on bottled water, by segment, 2014-17
Nestlé becomes top spender
Perrier’s new flavoured duo supported by adverting push
Figure 24: Total above-the-line, online display and direct mail advertising expenditure on bottled water, by top advertisers (sorted by 2017), 2014-17
Danone encourages volcanic inner strength, looks to Snapchat for ‘Live Young’
Volvic launches motivational ‘Find Your Volcano’ campaign
Volvic flavoured water push looks to connect with millennials
Evian ‘Live Young’ campaign sidesteps TV in favour of Snapchat
Sports sponsorships remain an integral part of bottled water marketing
Highland Spring links hydration with everyday success for ‘Brave By Nature’ push…
…and targets Christmas entertaining occasions
Robinsons Fruit Shoot celebrates kids’ self-expression
Harrogate Spring launch recycling push
Nielsen Ad Intel coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
Three in four drink bottled water
A low price is key purchase factor
Low/no sugar is important for flavoured water
Fortified waters for kids garners interest
Functional ingredients have strongest appeal among the young
Recycling ambitions are high in bottled water
Category blurring could alienate consumers
USAGE OF BOTTLED WATER
Three in four drink bottled water
Figure 25: Usage of bottled water, by type, December 2016 and December 2017
Just one in five drinks unflavoured still bottled water daily
Figure 26: Frequency of drinking bottled water, by type, December 2017
16-34-year-olds and high-earners are the core users
Figure 27: Usage bottled water, by type of bottled water and age, December 2017
Usage of water filters remain low
Figure 28: Usage of water filter products at home, December 2017
FACTORS INFLUENCING CHOICE OF BOTTLED WATER
Price is key driver
Figure 29: Important factors influencing the choice of unflavoured bottled water, December 2017
On-the-go consumption drives need for portability
Sugar content is firmly on shoppers’ radar
Figure 30: Important factors influencing the choice of flavoured bottled water, December 2017
Strong flavours in demand
INTEREST IN PRODUCT CONCEPTS IN BOTTLED WATER
Scope for fortified waters for kids
Figure 31: Interest in product concepts in bottled water, December 2017
Functional ingredients have strongest appeal among the young
Interest in energy-boosting ingredients echoes wider focus on energy levels
Interest in canned water is limited
BEHAVIOURS RELATING TO BOTTLED WATER
Recycling ambitions are high in bottled water
A need to go beyond recyclability
Figure 32: Behaviours relating to bottled water, December 2017
Colour points to sugar for many
ATTITUDES TOWARDS BOTTLED WATER
Category blurring could alienate consumers
Figure 33: Attitudes towards bottled water, December 2017
Sparkling flavoured water in strong position as fizzy drinks alternative
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Forecast methodology
Figure 34: UK value sales of bottled water, best- and worst-case forecast, 2017-22
Figure 35: UK volume sales of bottled water, best- and worst-case forecast, 2017-22
APPENDIX – LAUNCH ACTIVITY AND INNOVATION
Figure 36: Share of new product launches in the UK bottled water retail market, by brands and private label, 2013-17
Figure 37: Share of new product launches in the UK bottled water retail market, by top 10 companies (sorted by 2017), 2013-17
Figure 38: Share of new product launches in the UK bottled water retail market, by top 10 claims, 2013-17
Figure 39: Share of new product launches in the UK bottled water retail market, by package type, 2013-17