Enhanced water not likely to grow as fast as predicted

Posted June 24, 2008 5:30 pm by BevNET.com Staff

The enhanced water market may not expand as much as had been
previously predicted, according to one analyst that made those predictions.

“We believe our 3-5 year forecast for the enhanced water
category and vitaminwater could be too high,” wrote Morgan Staley Analyst Bill
Pecoriello.

Pecoriello based this conclusion on challenges Coca-Cola
faced integrating vitaminwater into its distribution system, increased
competition within the category and new consumer research.

Pecoriello’s data showed that perceptions toward enhanced
water had remained essentially flat, while both sports drinks and plain bottled
water had made notable gains in several perception categories, especially
thirst quenching.

The enhanced water category’s tepid reception contributed to
Pecoriello’s revision of vitaminwater’s expected growth – down to 50 percent
from an expected 80 percent – but glaceu has fared better than others that have
crowded into the category.

Pecoriello’s research found that vitaminwater and Propel scored
higher marks on most brand equity questions, including “easy to find,” “fun to
drink,” and “good value.”

class=”MsoNormal”>Propel earned slightly better scores than vitaminwater.
Together, the two drinks combined to account for 69 percent of the category,
while SoBe Lifewater, Aquafina Alive, Snapple Antioxidant Water, and Fruit2O
fought over the remaining third of the market.

Despite leading the category, Pecoriello found that both
brands are losing their ability to turn people that try the products once into
regular customers, “raising the issue as to whether our 3 year 35 percent
category growth rate is too aggressive.”