If this generation of kids ends up anything like their parents, they’ll be drinking a lot of water.
Among other things — hurricanes in Alabama, the death of Prince — this past decade will be remembered as the one in which U.S. consumers, spurred on by a combination of mainly health-related factors, put down their sugary beverages and soft drinks in favor of bottled water. Fueled by the success of zero-calorie sparkling waters and premium-positioned still varieties, bottled water is both the most consumed segment of the beverage market, and that impact is starting to be felt in kids drinks. As parents seek to steer their children towards healthier options — namely ones with less sugar and no artificial additives — pure water would seemingly present the ideal choice.
That theory is in the midst of being tested; over the past several years, both established brands and ambitious startups have staked individual claims to a piece of this potentially fertile new territory of kids waters. New drinks from Juicy Juice and Apple & Eve show how legacy juice brands are incorporating water in their kids product assortments, while new players like Rethink, Hapi Water and WONDER+WELL have focused exclusively on delivering hydration for young people. Yet while consumer buying habits and nutrition trends are providing healthy tailwinds for the nascent category, developing a strong identity for a kids water — to say nothing of building a business around that concept — remains a challenge for all involved, particularly in the face of declining sales for the entire kid-positioned beverage market.
A Changing Market
As emerging brands attempt to forge a market for kids waters, they are entering a category grappling with shifts in consumers’ diet and nutritional preferences. Changing attitudes towards sugar, including fruit juice, and dairy are being felt across retail channels, sparking an overall sales decline in the category.
According to data from market research group SPINS, sales for the $1.6 billion kid-positioned beverage segment fell by 7.4% over the past year. Within the classification, the two largest categories by dollar share — shelf-stable juices and refrigerated drinkable yogurts and kefir — took the biggest hits, the former suffering sales declines of 6.9% from last year and the latter dropping 9.0%.
The overall decline in kids beverages sales is being driven down by weak performance from conventional and specialty positioned products. The former has recorded an 8.6% decrease in dollar sales over the last year, falling by nearly $100 million, while the latter has seen a 19.3% drop.
Just as in other categories, however, the trend away from sugar and dairy has been a boon for natural and plant-based beverages. In the kids beverage segment, natural positioned products saw a 12.2% increase in sales to $89.6 million. The emerging market for kid-focused plant-based milks — which has seen brands like Ripple, OWYN and Elmhurst recently get involved — also showed strong growth of 40.4% in the past year, edging close to $1 million in sales.
For years, soda has been the primary target in the backlash against sugar-sweetened drinks; However, other beverages that have traditionally been popular with kids — fruit juice and chocolate milk, for example — are also now seen as less-than-healthy options. Some research now suggests that getting kids to not only drink less sugar but also to consume more water is a critical component in fighting obesity, which affects about 13.7 million U.S. children and adolescents aged 2-19, according to the Centers for Disease Control and Prevention.
A recent study conducted by the Water, Health and Nutrition Laboratory at Pennsylvania State University found that 20% of U.S. children don’t drink any water on any given day. Moreover, the study found that children who did not drink water consumed an extra 93 calories daily on average compared with those who did, with 10% of those calories coming from sugary drinks. The research did not establish a definitive cause and effect relationship between drinking water and consuming less calories, but underscored the relationship between dehydration and increased risk of weight gain, obesity and diabetes.
Building the Bridge
As kids grow into young adults and become independent consumers themselves, they will emerge as a driving force in shaping industry trends. Assuming the momentum behind better-for-you products continues unabated, they will become the water buyers of the future, and brands in the space are poised to grow alongside them.
For legacy brands playing in juice and dairy, water presents a way to extend their trademarks beyond those struggling categories. As previously noted, Juicy Juice, a leader in aseptic and shelf-stable kids juice products, launched its first ever flavored water beverage — the sugar-free Juicy Waters — this August in 8-packs of 6.75 oz. juice boxes. Meanwhile, Apple & Eve introduced Cool Waters, which is sweetened with organic fruit juice, in the same format in April. “We want to provide our consumers with different options that will help them lead healthier lives,” said Seth French, president of Apple & Eve parent company Lassonde Pappas, in a press release.
A new generation of low-sugar kids drinks have also added another layer of complexity to the market. Products like Roar Kids, Honest Kids and Good2Grow — positioned as lightly sweetened low calorie juice beverages sweetened with fruit concentrate — occupy a distinct space separate from kids waters, even if some of the better-for-you appeal crosses over between them. Amidst falling overall sales for shelf-stable juice, sales data from IRI shows brands like Good2Grow (10.5% growth) and Honest Kids (over $81 million in sales through mid-August) still performing well. The former brand, as well as Roar, have found success by partnering with the likes of Disney, Marvel and DC Comics to feature popular characters on its product labels.
For some brands, the line between appealing to kids and adults is virtually nonexistent. JUST Water, founded by actor/entertainer Jaden Smith, offers “responsibly sourced” spring water in sustainable, recyclable packaging. Those callouts — along with the launch of naturally flavored SKUs infused with fruit — has helped JUST position itself as an option for kids without an explicit shift in messaging or branding. As marketing gurus will continue to preach, beverage makers shouldn’t overlook the importance of creating products that speak to consumers in an authentic and transparent manner, first and foremost.
“We’re finding that kids get what JUST is about intuitively,” said JUST CEO Ira Laufer in an email. “They gravitate to it because they recognize that it’s a step in the direction that they want to move.”
Like JUST, Hint Water has also leveraged its success in the bottled water section as a means to enter the kids drink aisle, offering the same product with a different positioning and package format. The brand had previously explored a kid-positioned line in the late 2000s, but founder and CEO Kara Goldin explained that she decided to focus on developing a single core line rather than two products, each with different category buyers. Having established Hint as a significant player in the flavored zero-calorie water market, the company returned to the kids section in December 2018 with the launch of a four-SKU line for children in a 200 ml Tetra Pak “juice box” format. The brand’s established customer base and proven track record in the water category helped it breakthrough on a shelf in which legacy brands still exert a tight grip, according to Goldin.
“I think the challenge in the kids juice aisle is the same fight that we’ve seen for years in the soda and water aisles,” she said. “If you’re a small startup that does not have a brand name or does not have a story of being able to [have success] in another area of the store, I think it’s really hard.”
In other cases, the difference between “adult” and “kid” water is less obvious: Hellowater’s experience in developing a kid-positioned version of its fiber-infused zero-calorie flavored water line showed some of the subtle but important nuances involved in crafting water drinks for younger audiences. During Natural Products Expo East 2018, the Chicago-based company showcased a three-SKU kids line in 8 oz. PET bottles that employed the same naming convention as the core product, with varieties like Smile, Sing and Dance. Using a smiling “emoji” face as its mascot, the brand was intended to appeal to kids aged 3-7 years old and give them an entry point into hellowater that could ideally continue with the core product as they grow older.
Yet, during discussions with Walmart earlier this year, a different option emerged. In addition to taking on two flavors from Hellowater’s core 16 oz. lineup, the big box retailer asked for one SKU in the 8 oz. format, but minus the kid branding. That version, labeled “mini,” launched at 800 Walmart stores in April in 4-packs of Mixed Berry. While that might seem to preclude the launch of the kids line in earnest, Hellowater co-founders Rusty Jones and Tom Bushkie believe there will ultimately be room for both to coexist.
“We believe there’s an opportunity for both the mini and the kids branded lines,” said Jones. “It’s easier to create a brand with the kids line, and our goal with the emoji line is to create these characters around it, much like the M&Ms characters, and that really brings this brand to life. That takes a lot of time and effort but we think there’s definitely a path forward from a marketing standpoint.”
Packaging can be one of the fastest and easiest ways to differentiate a kids drink from an adult-positioned beverage, and water brands in the kids space have also been exploring what is possible in that area. To that end, companies have mostly come in familiar formats: Hint, Juicy Juice and Rethink have each adopted 6.75 oz. juice boxes for their kids waters, while Hapi Water is packaged in 6 oz. pouches. As has happened in other beverage categories, though, packaging materials and formats can also communicate a brand’s values. Case-in-point: When Hellowater does finally release its kids line — at the end of this year or the beginning of 2020, according to Jones and Bushkie — it will be in a Tetra Pak juice box, a move that speaks to sustainability while opening up more merchandising and case-stacking options in-store.
“Walmart has been a great partner for us, and as they look to 2025 and beyond with sustainability and reducing plastic packaging, that’s kind of what moves us in the direction of Tetra Pak,” said Bushkie. “It also becomes more of a variety pack, more of a bundle that can be purchased in bulk.”
The common denominator for many brands in this space? Balance. A holistic brand platform that can extend from children to adults, with unique products (or formats) that connect with different age demographics, offers multiple touchpoints for consumers to engage with the brand. Developing an kid-exclusive water brand is a bigger challenge, though not impossible; earlier this year, Hapi Water was awarded a $100,000 grant from PepsiCo’s Nutrition Greenhouse accelerator program.
Hint’s founder, as well, seems to think that a whole-family approach is going to have generational dividends.
“We’ve got a consumer base already that is looking to get their household healthier and I think that, very similar to what Honest did, we were able to play off our existing customer base to the rest of their family and household that may choose to have a smaller format,” said Goldin.