Sales of commercial water are to overtake those of carbonated soft drinks by 2005, according to a report released to just-drinks today.

In its Global Packaged Water Report global beverage researcher Canadean forecasts that in 2005, packaged and bulk water (water cooler) volumes will reach 190 billion litres, having grown from the present 150 billion litres at 8% per annum. In contrast carbonated soft drinks are growing at the considerably lower rate of 2% per annum, resulting in 2005 estimated volumes of 187 billion litres.

Commercial water sales are currently split into 63% packaged water, 37% bulk water.

"A key factor behind the surge in commercial water volumes is the increasing health awareness of consumers, and the preference for water as the "best" thirst quencher in this respect. Crucially, this trend towards healthier beverages is found across both developed and developing markets - it is not the preserve of the more affluent Western economies.  Furthermore, a shortage of potable drinking water in many developing countries also serves to boost demand for clean commercial water. A look at forecast growth rates of water versus carbonates in some key markets (both developed and developing) illustrates this point: in none of them does the carbonates growth rate exceed that of commercial water," said Canadean.

Average Annual Growth Rate 2002-2005F %
Packaged + Bulk Water

Packaged water, defined as that in containers of less than 10 litres, is expected to grow most strongly in Asia and North America.  Indeed, the US - the world's largest carbonates market - is set to contribute more incremental packaged water volume than any other market, and more than the entire Asian region put together.

"Thus the rise in water demand has strategic implications for the multinational carbonates producers - not only abroad, but perhaps more significantly, in their home market.  It is not surprising that there has already been considerable corporate activity in the packaged and bulk water market, involving multinational soft drinks companies.  Recent examples include Danone's purchase of the Canadian water cooler company Sparkling Spring and the Coca-Cola/Danone partnership agreements in the US covering the Evian brand and several other Danone bottled water brands."

Canadean's report shows that the global split between still and sparkling water is 70:30.  This varies substantially between regions, with still water accounting for over 90% of the North American and Asian markets, whilst in Eastern Europe many traditional local waters are sparkling, and still variants take less than one third share of packaged water consumption.

A key beneficiary of the growth in packaged water is the PET plastic packaging industry.  PET currently accounts for approximately 70% of the pack mix at a global level. This share is steadily increasing, mainly at the expense of glass, as consumers take to the lighter, cheaper and more convenient pack type.

The bulk water market is forecast to grow by nearly 10% per annum over the next three years. Over 85% of the incremental volume growth here is set to come from Asia and Central & South America, driven by the need for clean safe drinking water - and concerns about the quality of local supplies.  In per capita terms, annual global consumption of bulk water stands at a comparatively low level of 12 litres, compared to 18 litres for packaged water and 29 litres for carbonates.