Bottled water innovation
Innovations in flavored water helped fuel the global bottled water market.

BATH, UNITED KINGDOM — Innovations in flavored water with reduced or no sugar and functional water with natural ingredients helped the global bottled market register a 7% compound annual growth rate from 2005 to 2015, according to a Zenith International webinar on Sept. 15.

Growth should continue at 6% to 7% this year and over the next few years, said Esther Renfrew, marketing intelligence director for Bath-based Zenith International. Opportunity for more growth arises in children’s bottled water, she added.

Global bottled water volume came in at 375 billion liters in 2015, up from 190 billion liters in 2005, according to the Zenith International research covering 72 countries.

Bottled water made up 17% of total beverage volume globally in 2015, which compared to 14% in 2010. Only tea, at 22% in both 2010 and 2015, led bottled water in 2015. Bottled water globally grew by 97 billion liters in total from 2010 to 2015. Tea, growing by 55 billion liters, was second in volume growth among all beverages.

“Water is outpacing, in terms of value, any of the other categories by a significant amount,” Ms. Renfrew said.

The category is taking share from other beverage categories, particularly carbonated soft drinks, which fell to 12% of total beverage volume globally in 2015 from 13% in 2010.

Bottled water chart
Bottled water made up 17% of total beverage volume globally in 2015.

“Carbonates is plateauing, and in some markets it is declining because of the issues around obesity and sugar and so forth,” Ms. Renfrew said.

Within the bottled water category, global sales of flavored water rose 4% in 2015 to reach 7.5 billion liters. Zenith International expects the category to reach 9.5 billion liters by 2020.

Sugar-free flavored water has sparked volume growth, Ms. Renfrew said. Other key themes in flavored water include plain water brand extensions, natural and organic, premium positioning, fruit flavors, herbs or flowers, transition products, child-oriented products, and packaging innovation, according to Zenith International.

The functional bottled water market was not doing well in 2008 and 2009, but it has rebounded, Ms. Renfrew said. Volume grew 12% in 2015 to reach 5.5 billion liters.

Bottled water chart
Functional bottled water volume grew 12% in 2015 to reach 5.5 billion liters.

Natural sweeteners and other natural ingredients are spurring sales in functional water, Ms. Renfrew said. Other key themes in the category are diversified flavor offerings, energy waters, beauty and wellness waters, vitamin waters, protein waters, innovative functional ingredients and claims, and minimalist packaging.

Children’s bottled water draws a higher price, about 20% to 50%, higher, in the bottled water category, according to Zenith International. The market potentially may reach 52.9 billion liters in 2016, and Zenith forecasts the market globally to grow by 7% a year to 2021.

“That’s doing very well, mainly because of the concern of obesity and sugary drinks,” Ms. Renfrew said of children’s bottled water.

Children's bottled water
Zenith forecasts the children's bottled water market to grow globally by 7% a year to 2021.

Geographically, Asia is the fastest-growing region for bottled water, rising to 39% of global volume in 2015 from 32% in 2010. Within Asia, China’s volume grew by 33 billion liters from 2010 to 2015. North America accounted for 12% of the global market in 2015, down from 14% in 2015. Western Europe, Eastern Europe, the Middle East and Latin America also slipped in percentage share.

“All of these regions are growing,” Ms. Renfrew said. “It’s just that Asia is growing at a faster pace.”

The U.S. volume in bottled water grew by 9 billion liters from 2010 to 2015.

“Without a doubt water has been a very successful story over the last few years in the U.S., particularly as people are trading across from other categories into the bottled water market,” Ms. Renfrew said.

Bottled water chart
 Bottled water globally grew by 97 billion liters in total from 2010 to 2015.

The success of bottled water has brought more companies and products into the market.

“It’s a very crowded market,” said Richard Hall, chairman of Zenith International. “People are very buoyant about their brands, but actually the margins are tough and gaining access to supermarket shelves or on-line sales or direct distribution is difficult and demanding. It’s easy to enter (the market). It’s more difficult to succeed.”

Ms. Renfrew said pricing points for small packs (10 liters or less) of bottled water are 50c to 60c per liter.

“We’re not seeing much movement on price, mainly because there’s so much competition in the market now,” she said.

Yet market volume should continue to rise.

“The core messages of health and hydration have enabled the bottled water category to grow, and we look for more growth to come in the future,” Ms. Renfrew said.