UK bottled water set for further growth
While the UK bottled water market has grown over recent years, low per capita consumption in comparison with European average gives water marketers much reason for optimism. Ben Cooper reviews a report on the market published recently by mineral water brand, Highland Spring.
The children's water category may be a relatively undeveloped segment of the UK bottled water market but it is one with significant potential, says a recent report published by UK mineral water brand, Highland Spring. The market for children's unflavoured water in the UK stood at just 9m litres in 2004, but the Highland Spring UK Bottled Water Report 2005 forecasts that this will rise to 30m by 2007.
With some 10m children in the UK, the current volumes translate to less than 1 litre per child per year, so it is clear to see why growth from this low base is likely. The report also cites Youth TGI data indicating that since 1994 the proportion of children who drink mineral water has risen from 14% to 39%. Interestingly, over the same period children's soft drinks consumption has decreased from 96% to 90%. Currently, only 51% of parents of children aged between 7 and 11 claim to buy mineral water specifically for them, according to a Millward Brown study from 2004.
However, Highland Spring says there a number of factors which limit opportunities to provide bottled water to children within the school managed meals environment, which include contract catering arrangements and "competitive pricing relativities". "Highland Spring has been working directly with the public education sector to trial a cartoned natural water product during school meals," the report says.
The reason for the opportunities present in children's water are much the same as those which are fostering growth in the wider water market, namely the search for a healthier lifestyle. TGI Survey data from 2004 cited in the report indicated that 53% of consumers felt drinking more bottled water would be the most likely way of improving their health, ahead of trying lower fat diets or eating five portions of fresh fruit or vegetables during one day.
According to the report, some 26m adults drink bottled water in the UK, representing 52% of the adult population. The water market could not keep pace with the strong growth seen in 2003, but nevertheless the total market exceeded 2 billion litres, or £1.2 billion in value terms, the report states. Still water accounts for 86% of the market, while bottled water as a whole accounts for 15% of the soft drinks market, a share forecast to rise to 21% by 2008.
After the disappointing weather dampened demand in 2004, bottled water sales are predicted to pick up in 2005, with growth of 9% forecast pushing sales towards the £2.3 billion mark.
The Highland Spring report also says that consumer awareness of the different types of water has improved. "UK consumers are becoming increasingly aware of the real differences between natural mineral water, spring water and processed water with 53% claiming to do so." Natural spring water accounts for 67% of the total bottled water market, with spring water representing 22% and other types accounting for the rest.
In the report, Highland Spring claims that it is the leading sparkling water brand in the UK, outselling its nearest competitor by two to one. The three leading bottled water brands in the UK are Evian, Volvic and Highland Spring, accounting for combined share of nearly 25%.
In spite of increasing consolidation in the supermarket sector, the average retail price of bottled water held steady in 2004 at £0.41 per litre, against £0.75 per litre for soft drinks. It was also reported that the market share of private label brands fell by 1.9% in 2004 to 55%, while the combined share of the top five bottled water brands grew by 8.5% to 37%.
In the on-trade, the report stated that sales of bottled water in restaurants rose by 1% in 2004. A general increase in eating out and the focus on drink-driving prevention have both been positive factors for bottled water growth in the on-premise sector. Sales in traditional pubs and bars remain less developed than in food-serving outlets.
While the UK bottled water market is growing, the report points out that the UK remains some way behind its European counterparts with regard to bottled water consumption, with per capita consumption of 35 litres, against a western European average of 112 litres.
Finally, the report notes that still only 29% of consumers drink the eight glasses of water generally recommended as a healthy intake for an adult. "The potential is enormous," the report says. "If 52% of the population continued to drink bottled water but drank the recommended eight glasses a day, the market would reach a staggering 17 billion litres a year instead of just over 2 billion litres."
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