The ongoing concern over the quality of tap water and the search for healthier lifestyles has helped underpin growth in the bottled water market between 1995 and 1999. The demand for bottled water became year-round rather than seasonal, and prices were driven down by the growth of private label and budget-price brands.

The market was characterised by constant packaging innovation, with some single-serve bottles featuring push-and-pull sports-style caps. PET (polyethylene terephthalate) plastic packaging has come to dominate the market due to its lighter weight and greater convenience, although Germany continues to be dominated by glass packaging.

Still water, with its health associations, forms the largest sector in most key markets as, its nature, it can be sipped easily throughout the day in large quantities. Carbonated water, by contrast, generally requires cooling and immediate consumption, and can cause discomfort if drunk in large quantities. Flavoured water achieved only niche status and suffered consumer confusion as the result of an association with soft drinks.

Brands such as Evian, Volvic and Perrier are recognised throughout the world, but regional brands continue to hold sway in a number of key markets. This scenario is likely to change with the entry of soft drink giants Coca-Cola and PepsiCo into the bottled water arena. Regional brands are likely to have to think in national terms to compete.

Sales by packaging format and size - volume

Packaging types in relation to sales varied widely. In France and Italy, 92% and 98% respectively of bottled water sales were packaged in plastic. The review period saw a significant trend towards the use of PET plastic rather than PVC (polyvinyl chloride) in France. The recyclable PET bottle is considered by manufacturers to provide them with a more environmentally friendly image, which will encourage good consumer relations.

In Germany, glass bottles remained the most important packaging type for bottled water over the review period. This is partly due to the strict regulations controlling the quality and purity of water in Germany. In the opinion of the German centralised distribution organisation, Genossenschaft Deutscher Brunnen (GDB), the glass bottle is the most suitable packaging type for maintaining standards.

The vast majority of German brands are distributed in this way. However, the share of glass bottles declined over the review period. This is attributable to the success of PET bottles. PET bottles proved very popular among consumers as they are more convenient than glass. As PET bottles increased their share of the market, a variety of packaging sizes gained inimportance.

In Japan and Spain, the most dominant packaging format for bottled water is PET plastic. In 1999 almost 85% of all volume sales in Japan were accounted for by plastic bottles. In Spain, the purchase of bottled water is still very much related to the frequency of drought conditions in many parts of Spain and poor-quality tap water.

The UK volume share of plastic bottles continued to expand in 1999, reaching almost 75%. Innovation of plastic packaging, reflected in the introduction of sports caps, became more widespread over the latter stages of the review period. US packaging is focused on PET bottles, which accounted for 89% of the market in 1999. Both glass bottles and aluminium cans are marginal packaging types, together taking less than 5% of the market.

Market Size by Sector - Volume and Value

With the notable exception of Germany, still water constituted the largest sector of the bottled water market in both volume and value terms in all the key markets in 1999. Some 90% of volume sales in Japan, Spain and the US were due to still water.

Although the carbonated sector led in Germany, with 58% of volume sales and 53% of value sales, the sector has a reduced presence in most other key markets. Carbonated waters often have a premium positioning, but do not have the same health associations as still water and cannot be drunk over a long period of time or in large quantities.

Flavoured water failed to establish a significant presence in most key markets, largely because of confused positioning and competition from soft drinks. The sector rarely exceeded 2% of the overall market in most key countries.

Within the still sector in France, Germany and Spain, mineral water led the market. In Italy, standard water is the closest approximation to tap water and led the still sector over the review period. In Japan, loyalty to domestic brands gave them a lead over imports. In the UK, the still sector is segmented in terms of packaging size, while the carbonated sector followed a similar pattern to the still sector in France, Spain and the UK, with mineral products outselling spring waters.
Still products led the flavoured sector in France and Japan, but carbonated flavoured water was more popular in the US. This sector is relatively new in many countries, with Italy witnessing its launch as recently as 1996 with the brand Bevi il Gusto from San Benedetto.

Market size by sector - growth

The still sector is the only sector of the bottled water market to witness positive growth in both volume and value terms in all seven key markets over the 1995-1999 review period.

In France, Japan and the UK, the flavoured sector was the strongest performer in both volume and value terms. Spain was the only country in which the carbonated sector achieved the strongest growth (in both volume and value terms) over the review period. Within the still sector in France, spring products experienced the more dynamic growth over the review period, as consumers substituted this cheaper alternative for tap water. In Germany and the US, the increased popularity of PET-packaged brands underpinned growth. In Italy, special/diuretic varieties of still water were the most dynamic as new product launches. Japan saw dynanism in the still water sector as it was marketed as a cooking ingredient and stock equipment for earthquake emergency kits. The mineral water market performed well in Spain as traditional spa names were given importance. In the UK, larger packaging sizes performed well.

Perceptions of health benefits underpinned the growth of the carbonated mineral water market in France and Spain. In Germany, the popularity of carbonated water declined over the review period as German consumers became enamoured with wassersprudlers, devices that enrich tap water with carbon dioxide. In Italy, consumers shifted away from products perceived to cause greater stomach problems, towards moderately carbonated water. Domestic carbonated waters out-performed imports over the review period in Japan.

By contrast, carbonated spring water gained from UK consumer confusion over classification. Mineral water attracts a higher margin and some consumers assumed that spring water was a similar cheaper product, and purchased that instead. In the US, carbonated water failed to carve out a niche in the bottled water market, and maintained a significant presence only as a premium-positioned brand such as Perrier.

Within the flavoured sector, carbonated products suffered from soft drinks comparisons and although the waters tend not to be high-calorie and sugar-laden, consumer confusion impacted negatively on these products. In France, the sector performed well over the review period, largely due to strong launch activity and promotions targeting children.

Flavoured water in Germany is generally regarded as a seasonal drink and under-performed due to a succession of weak summers. Japan saw a dynamic growth in flavoured brands, especially the carbonated brands, although the low range of flavours constrained the market. In the UK, flavoured waters are perceived to be healthy alternatives to soft drinks, but the US market was characterised by a lack of new product innovation in the flavoured water sector.

Market shares - by company

The French bottled water market underwent dramatic changes in terms of brand ownership in 1992, when the Swiss food giant Nestle bought all of Perrier's mineral water brands except Volvic, which was sold to BSN (now called Danone). Nestle added Perrier and its subsidiary Contrexeville to a portfolio which already included Vittel and Hepar. However, in 1993, Nestle was ordered by the European Commission to sell eight Perrier businesses to redress the market balance. In 1997, Perrier Vittel France expanded again by adding the Italian bottled water brand San Pellegrino to its portfolio.

The German market for bottled water has been very fragmented, with distribution often only on a regional scale. There are only a few nationally distributed brands, such as Apollinaris, Gerolsteiner and Volvic. There are also companies producing both national and regional brands, for example Blaue Quellen AG with its nationally distributed brands, Vittel and Perrier, and its regional products, Fnrst Bismarck and Harzer Grauhof.

The Italian bottled water market is characterised by the presence of about 160 companies and about 250 brands. The forerunner has been San Pellegrino, belonging to the Nestle group, with its leading brand, Levissima.

Manufacturers involved in the rapidly expanding Japanese bottled water market are those generally involved in the beverages market as a whole. Apart from Nestle Japan, the majority of companies involved have only one or a maximum of two brands in their portfolios.

In 1999, the Spanish market for bottled water had about 100 companies - more than 50% of domestic companies are based in Catalonia. Two companies lead this market, the multinational Danone and Vichy Catalbn. Danone operates in Spain through Font Vella SA (with its Font Vella, Evian, Font Picant and Fonter brands) and Aguas Lanjaron (with its Lanjaron, Fonteforte, Neval and Agua de San Vicente brands), and these brands had a combined share of just over 28% in volume terms in 1999. Vichy Catalbn was placed second with a volume share of 9.5% in 1999.

The UK bottled water market remained highly concentrated with the top five players and private label taking a combined share of some 86% in 1999. Over the review period the market became steadily more concentrated with the acquisition of various brands by multinationals, such as Perrier Vittel's acquisition of San Pellegrino and the purchase of Coca-Cola & Schweppes Beverages by Coca-Cola Enterprises.

Foreign companies using PET packaged water are still heavily represented in the US. Market leader Nestle is somewhat unusual from the other top manufacturers in that it holds a strong presence in each of the three sectors of the market - still, carbonated and flavoured. Foreign companies led the US bottled water market for much of the review period but with the entrance of PepsiCo and the Coca-Cola Co, this is likely to change in the near future.

Tables compiled by Euromonitor, taken from un-rounded data.

Volume sales of bottled water by packaging format: % analysis 1999

% volume analysis

 
France
Germany
Italy
Japan
Spain
UK
US
Plastic
91.8
8.9
98.2
84.6
87.4
74.7
89.0
Glass
8.1
89.4
1.3
3.9
11.6
24.8
4.6
Carton
0.1
1.6
0.5
1.2
1.0
-
-
Can
0.1
0.1
-
0.3
-
0.5
0.3
Others
-
-
-
10.0
-
-
6.1
 
TOTAL
100.0
100.0
100.0
100.0
100.0
100.0
100.0

Volume sales of bottled water by sector and by country: % analysis 1999

% volume

 
France
Germany
Italy
Japan
Spain
UK
US
Still
82.5
40.7
71.3
97.9
96.6
61.9
92.7
Carbonated
15.8
58.3
28.7
0.9
3.4
33.7
4.9
Flavoured
1.7
1.0
0.0
1.2
0.0
4.4
2.4
 
TOTAL
100.0
100.0
100.0
100.0
100.0
100.0
100.0

Volume sales of bottled water by sector and country: % growth 1995/1999

% volume

 
France
Germany
Italy
Japan
Spain
UK
US
Still
21.1
18.3
10.9
78.6
21.9
34.4
87.7
Carbonated
15.2
-2.3
4.6
95.8
944.0
13.3
-3.6
Flavoured
27.1
-13.3
-
157.4
81.1
5.0
 
% TOTAL
20.2
5.0
9.0
79.4
25.7
27.8
76.2

Volume sales of bottled water by sector and by country: % analysis 1999

% volume

 
France
Germany
Italy
Japan
Spain
UK
US
Still
21.4
11.6
16.2
88.1
19.2
28.6
60.7
Carbonated
15.7
-7.6
8.5
79.3
733.0
1.6
-6.6
Flavoured
27.5
-15.1
-
159.4
-
69.3
1.4
 
% TOTAL
20.0
0.1
14.0
89.1
30.3
19.4
49.7

Source: BRAND STRATEGY

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