This month, Tom Vierhile at Datamonitor introduces us to the concept of "bottled water-plus". Could this be the saviour for the carbonated soft drink industry?

Carbonated soft drink (CSD) makers have been trying for years to revitalise the fortunes of the once-vibrant market for fizzy drinks. Nothing has really worked so far, as per-capita soft drink consumption in markets like the US has been declining for well over a decade. But, now the industry is beginning to coalesce around the concept of “bottled water-plus” as a new way to reinvigorate CSDs, by adding flavour and fizz to bottled water.

Is “bottled water-plus” the next step in the evolution of the CSD market? It is beginning to look that way, with a growing number of beverage producers experimenting with drinks that use sparkling water as a base, and then add light fruit flavour and sweetener to bridge the gap between bottled water and soft drinks. These fizzy waters attempt to leverage the healthy halo of bottled water, and combine it with the flavor pizzazz of soft drinks to create a product that offers the best of both worlds. The timing for this experimentation may be spot on, with volume sales of bottled water in the US poised to top those of soft drinks sometime in the next decade, according to Beverage Digest.

The idea represents a reversal in thinking for the category, where the trend in the past was to lighten the taste and calorie profile of 'regular' soft drinks to broaden the audience for CSDs, while at the same time appeasing health regulators worried about issues like obesity. This new approach, however, may be a savvy move, as CSD makers can no longer take for granted that their products will be freely available wherever or whenever consumers want them. 

Coca-Cola appears to be moving in this direction, with an expected April 2013 launch of Fruitwater, a line of carbonated, fruit-flavoured waters that builds on the success of Coca-Cola’s Vitaminwater and Smartwater brands. Said to be packaged much like bottled water, Fruitwater is fruit-flavoured, although it reportedly contains no fruit juice. To bulk up the health profile of the beverage, Fruitwater is said to contain vitamins and minerals including various B vitamins, magnesium and more.

Bottled water brands are also moving forward with similar products that court fizzy drink lovers that may be questioning their product choices for various health reasons. Nestle Waters North America is moving forward with Perrier Lime, a lime-flavoured version of Perrier sparkling water packaged in a slim metal can that looks like an energy drink. According to a company spokesperson: “The big trend right now in the beverage market is toward sparkling water, which is a natural transition from CSDs.” If this is the case, then bottled water and CSD makers may be on something of a collision course that could add even more excitement to the mix.

Seltzer water has always been marketed as a mixer to be used with alcohol beverages, but there are signs that seltzer is also jumping into the fray as it represents a natural bridge between bottled water and CSDs. Charlestown, MA-based Spindrift Beverage Company takes the seltzer water concept and embellishes it with a soft drink billed as “America’s first sparkling water made with fresh squeezed juice and fruit purees.” Spindrift Seltzer is said to be a “fresh take on sodas” with low calorie counts and fresh flavours, all without syrups, juice concentrates, additives or preservatives. The raspberry, lime and tangerine flavours of Spindrift Seltzer each have just ten calories per serving, and are sweetened with cane juice. 

Other drinks brands that are experimenting with the “bottled water-plus” concept include Hint Inc., the maker of Hint Water. The concept behind Hint was bottled water with a hint of flavour, a novel approach back in 2005. But, many consumers like the carbonation of soft drinks; they’re just turned off by sweeteners and heavy flavors. For them, Hint recently introduced Hint Fizz, a line of unsweetened, fruit-flavoured sparkling waters pitched as soda alternatives, without the diet sweeteners. The brand’s slogan – “Drink Water, Not Sugar” – summarises what many new entrants in the “bottled water-plus” sector are trying to accomplish.

Honest Tea, a company best known for its lightly-sweetened teas, is also keen on the 'fizz' concept with its new Honest Fizz line, which is aimed at white space in the market. Owned by Coca-Cola, Honest Tea is marketing Honest Fizz as a CSD for natural food consumers that feel they currently have few options to choose from. Honest Fizz is naturally sweetened, with erythritol and stevia leaf extract, and comes in traditional soft drink flavours like orange pop, organic root beer, lemon limey, and Professor Fizz (a spicy cherry-flavored drink).

Cleaner, more pure ingredients are also the focus of the Capi Soft Drink line from Australia, which aims to shake up the soft drink market and ride the coattails of Capi’s mineral water products that source water “direct from Australia’s world quality springs”. “We wanted to get our hands on the finest botanical ingredients in the world and see what we could create,” says Pitzy Folk, the creator of Capi, as reported in Australia’s TheShout.

Time will tell whether these drinks can turn around the fortunes of the CSD market. It is clear, though, that a significant number of consumers like the concept of a zero calorie drink like bottled water, but are bored by plain water.

Kraft was able to turn that boredom into a US$200m-plus opportunity in short order with MiO Liquid Water Enhancer. Now it’s up to the soft drink and bottled water companies to see if they can do the same with products that seek a middle ground between soft drinks and bottled water.