Interbev 2010: Water Bounces Back

While bottled water might have experienced a recession-induced slump in 2009, it seems that it’s set to bounce back in 2010 – one of the insights revealed during the Interbev 2010 seminar, U.S. Market Trends. So far, analysts feel that bottled water has had a “healthy” first half of the year, but it “could be doing better.”

According to Gary Hemphill of Beverage Marketing Corporation, who hosted the seminar, the PET market is at 60 percent of the segment and it is the one that is expected to continue to drive the most growth. In fact, analysts believe that PET water will increase by 3.6 percent across the rest of 2010.

Additionally, significant bottled water manufacturers in this segment have remained the same across the first half of this year, with Nestle as the biggest company in the industry. PepsiCo is a “significant player,” and on the private label side, Niagara is the largest in the marketplace.

In 2010, an increasing number of trendy enhanced waters have hit the market, but, as Hemphill explained, “consumer perception will have a huge impact on the category’s future.” Such value-added waters represent 22 percent of total revenues and 8 percent of volume of the total premium water market, according to BMC. Currently, Hemphill says analysts are expecting “flat-ish performance” from the category this year.

Moving on to other areas, Hemphill noted that energy drinks have also experienced positive developments in 2010. The category has grown by six percent this year, with Monster and Red Bull still the dominant brands, he said. Monster holds the largest market share with 33.6 percent, but Red Bull is not far behind with a share of 29.6 percent.

RTD tea has also fared well during the first half of 2010 and is outperforming loose and bagged teas in the U.S., according to Hemphill. Projected growth in this segment is expected to be 5.2 percent from 2009 to 2010.

Looking forward, four key categories to watch are coconut water, protein drinks, energy shots and relaxation beverages, he said. In addition, companies will continue to focus on low-calorie and healthy alternatives, a trend precipitated by general consumption of fewer beverage calories, Hemphill revealed. For example, in 2005, Americans consumed an average of 250.9 calories from beverages per day. By 2006, this number had started to fall to 247.7; it has continued to drop since then. As such, the industry should expect “several years of continued decline in the future” concerning the amount of calories ingested from beverages.

In terms of consumer marketing, the beverage industry should learn to target their product to multiple age groups, Hemphill advised. This strategy will be essential in the marketplace, Hemphill explained, and the approach represents a significant change from past strategies, when companies chose to focus on specific demographics. Products that fulfill certain “need states” will also become popular, and marketing strategies will shift to speak directly to these requirements. For example, products made for convenience or specific social occasions are two such examples. According to Hemphill, this development will also bring about more niche-based products and premium priced products – a trend that will continue as the economy keeps improving.