Bottled Water

Bottled Water

• Males buy 20% more water than females from a convenience store.
• Water penetration is 13% of the beverage category.



Bottled Water - Top 10 SKUs = 67.0% of total Bottled Water sales.

Item Description	Manufacturer	Brand
Mount Franklin Spring Water 600ml	Coca Cola Amatil	Mount Franklin
Mount Franklin Spring Water 1.5l	Coca Cola Amatil	Mount Franklin
Pump Spring Water 750ml	Coca Cola Amatil	Pump
Cool Ridge Spring Water 1.5l	Schweppes P/L	Cool Ridge
Pump Spring Water 1.25l	Coca Cola Amatil	Pump
Cool Ridge Spring Water 600ml	Schweppes P/L	Cool Ridge
Pumped Lemon Fix 750ml	Coca Cola Amatil	Pumped
Pumped Berry Storm 750ml	Coca Cola Amatil	Pumped
Glaceau Vitamin Wtr Xxx 500ml	Coca Cola Amatil	Glaceau Vitamin Wtr
Glaceau Vitamin Wtr Power C 500ml	Coca Cola Amatil	Glaceau Vitamin Wtr

Source: Aztec

AT A GLANCE • Some 32% of total bottled water sales are generated through the convenience channel. • Unflavoured water is growing at 8.7%, while flavoured water is declining at -1.3%. • Ambient stands or off-location displays, as well as any consumer touch point on the way to the register will increase the probability of an incremental in-store water purchase.

The healthy bottled beverage that’s still flying off the shelves

Bottled water has been one of the most amazing success stories of the convenience world in recent years and its reach into the channel seems destined to grow yet further.

Recent research carried out by Auspoll shows people choose bottled water for two main reasons ... convenience and consistency. In other words, when people are out and about they look for a healthy beverage option that they know will be of a consistently high quality. It is no surprise to learn then that bottled water already performs very well in convenience, with some 32% of total sales generated through the channel.

Industry body, the Australasian Bottled Water Institute (ABWI), certainly sees a bright future ahead.

“With a third of bottled water sales coming through convenience there are obvious opportunities for operators,” said the organisation’s CEO, Geoff Parker. “The industry forecasts this channel to continue to perform well for those brands already with a foothold in this space, as well as an opportunity for new entrants to gain exposure to this important route to market.”

A seasonal category

With summer now upon us, it is obviously critically important that C&I operators are fully aware of the potential the warmer weather brings with it. Water is a highly seasonal category selling more than 30% of annual volume in summer (December-February) with January being the largest volume month for the year.

Research conducted by Roy Morgan in 2009 revealed that an amazing 24% of Australian adults purchase bottled water regularly. While the main consumers of bottled water are traditionally females in the 18-34 years bracket, bottled water seemingly appeals to all demographics. For example, the Government’s 2007 survey of children’s nutrition and physical activity found 20 per cent of kids aged 2-16 drink bottled water.

People enjoy bottled water for a number of reasons but the ABWI says that, for the most part, bottled water doesn’t compete with tap water. It says that when people are out and about, tap water isn’t always available or appropriate. And that’s great news for C&I operators.

“Also, while many areas of Australia do have good quality municipal water supplies, other areas aren’t so lucky,” Mr Parker said. “Many residents of larger cities prefer the ‘cleaner’ taste of bottled water without chlorine which can be present in a lot of tap water, and a significant proportion of bottled water drinkers choose it over tap because of the absence of fluoride.”

Coca-Cola Amatil, which produces market leading water brands such as Mount Franklin, Pump, Pumped and glacéau vitamin water, says its current strategy of highlighting the positive benefits of drinking water is proving highly successful.

“This is a category driving initiative that encourages consumers to ingrain the daily habit of drinking water at a time when looking and feeling good is top of mind for many,” said a Coca-Cola Amatil spokesperson. “Previous similar campaigns were highly successful in delivering volume with a 14% increase across both Pump and Mount Franklin over the period.”

Understand your customer

The proof of the pudding, however, is in the eating and bottled water sales certainly look set to proceed on their upward trajectory. Coca-Cola Amatil says total water continues to grow at 8% year on year. Breaking those figures down shows that unflavoured water is growing at 8.7%, while flavoured water is declining at -1.3%. Within the unflavoured segment, it says growth is coming from private label as well as premium brands that have a clear consumer proposition, such as Pump and Mount Franklin.

While, to the uninitiated water may seem like water and bottled water may seem like bottled water, the truth is rather more complicated. Spring water, mineral water, flavoured water ... as the list grows, so too does the need for C&I operators to understand their customers and their water needs.

For example, Pump/Pumped is targeted at males and females 16-39 years who are busy, active and social. Accordingly, much of Pump's marketing budget is spent on outdoor media allowing it to speak to consumers when they are out and about and the product is most relevant.

Then there is the functional water segment which comprises all flavoured and enriched waters and which is still very much in its infancy in Australia. Household penetration and brand awareness of functional waters may still be relatively low here but products such as Coca-Cola Amatil’s vitamin-enhanced glacéau vitaminwater, which has been in the Australian market since early 2008, has already achieved strong market share.

While the company says the taste and functionality of glacéau means it appeals to males and females of all ages, it is teens and young adults who are at the heart of the glacéau brand.

“For these consumers, glacéau is the perfect accessory to their 24/7 lifestyle and the convenience and route channels are well suited to their on-the-go consumption behaviour,” said the Coca-Cola Amatil spokesperson. “Our biggest priority for glacéau right now is spreading the love and building awareness of glacéau vitaminwater and its core range of variants.”

The heart of the revolution

While functional water may be a relatively new kid on the block, spring water could be said to be at the heart of the bottled water revolution.

When spring water started out in Australia in the ’90s, no one really expected it to achieve the volume of sales it has seen. However, the timing of its introduction was good as many people were starting to move away from traditional soft drinks and fizzy drinks in their search for a healthier beverage.

Established brands such as Schweppes’ Cool Ridge Spring Water and Fiji Water have continued to build on their established popularity ... and look set to do so for some time yet.

“As consumers continue to seek healthier lifestyles in the coming years, we would expect bottled water to grow in line with this trend,” said Schweppes’ Marketing Director Darryn Wallace, “The Cool Ridge brand in particular is experiencing some outstanding market performance and has been growing at 13.5% in the convenience channel (YTD to 31/7/10, value growth).”

Mr Wallace says convenience and impulse outlet operators will benefit from the ongoing advertising and support behind the brand. It is currently linking up with Australia’s #1 men’s health charity, Movember, and will be donating five cents for each Cool Ridge Spring Water bottle sold, up to $100,000. Last Movember Cool Ridge sales grew significantly as the brand supported the charity, and Schweppes is urging C&I outlets to maximise the sales growth opportunity this time around.

For its part, Fiji Water is positioned as a premium artesian water, appealing to consumers with healthy routines and aspirational lifestyles. This summer it will again be an official partner of the Moonlight Cinema, where consumers have an opportunity to win a night at the silver screen under the silver stars. It will also continue to be one of the largest members of 1% for the Planet, which is a growing movement of companies and brands that donate 1% of their sales to organisations in support of environmental causes.

Key to maximizing water sales

One of the keys to maximising water sales then is to present the right image and to associate with the right lifestyle.

Cause related marketing strategies can be very effective here and its newly established links with Surf Life Saving could therefore well be a masterstroke for grocery bottled water juggernaut, Frantelle. The SurfLife Saving logo will appear on all Frantelle packs as of October 2010 and a percentage of sales will go to Surf Life Saving.

“We are entering into a partnership with one of the most iconic brands in Australia,” said P&N Beverages Marketing Manager, Harris Spyrou. “This is an exciting partnership that should work well for both brands; the link will instill a sense of community into the Frantelle brand and it is a good fit as both are about the water and a healthy lifestyle.”

While Frantelle is the biggest selling spring water through supermarkets in volume, its presence to date in the convenience channel has not been strong ... but that could all be about to change.

“We have just launched Frantelle 750mL with flip top sports cap which should go well in the channel ... it is a different market to grocery but we are slowly making inroads,” said Mr Spyrou.

P&N says it is a leader in innovation and is now specifically developing products for convenience. While brands such as Wicked Energy Drink have made their presence felt in the channel, it certainly doesn’t stop there.

P&N has high hopes for its recently released VW Vitamin Water with zero sugar.

“The vitamin water market has begun to decline, so a low joule alternative should restimulate the category,” said Mr Spyrou. “Normal vitamin water is still quite high in sugar or energy; low joule vitamin water is a new development for the market and it is primarily aimed at women.”

VW Vitamin Water with zero sugar comes in four flavours: dragonfruit; pomegranate blueberry; lemon lime; and kiwi strawberry.

New concepts & innovation

P&N has also just released its Go Coco coconut water which offers something new in water. Coconut water has actually been around for a long time in South America and South east Asia but it is only in the last few years that it has started to gain popularity in the west.

“The water that comes from the young green coconuts rather than mature brown coconuts is high in potassium and electrolytes so is sometimes referred to as nature’s sports water,” said Mr Spyrou. “It is about to be ranged in supermarkets but we have presented it to convenience and are hoping it will be ranged as it is a perfect fit with the channel.”

Go Coco is also low joule because it is sweetened with the natural sweetener ‘stevia’. So, as well as being an all natural product, it is also has the benefit of having a low energy count. Go Coco comes in four flavours: natural; pomberry; mango guava; and pineapple.

P&N will be launching a media campaign in the new year to educate people about coconut water and its benefits.

“This is a quite a new concept and P&C tends to get quite excited about a new brand so this will be a good opportunity for outlets to lift sales and be involved in the campaign,” Mr Spyrou said. “What operators do in store is key because it is a much more impulsive channel and people are only in store for a short period of time in which to entice them to buy.”

Certainly, the appearance of a new product from NutrientWater last December was exceptionally well received in the channel. The company further innovated the enhanced water category with the successful launch of super-low calorie NutrientWaterX, which is naturally sweetened with stevia leaf.

“In a relatively short period of time and with limited but growing distribution through petrol and convenience the NutrientWaterX range has performed extremely well,” said NutrientWater Director Luke Marget. “The main driver for success is that, while the existing NutrientWater range is itself a low-calorie offering, NutrientWaterX offers calorie conscious consumers a natural super-low calorie alternative to diet drinks which contain artificial sweeteners.”

He says that in petrol and convenience, the NutrientwaterX A-Game variety has already positioned itself as the number four variety by sales volume in a total range of eight varieties.

Mr Marget says NutrientWater has shown 48% growth MAT (Nielsen 27/6/10) and is among the fastest growing brand in the functional water category in Australian convenience.

Summer is obviously a great time for C&I operators to benefit from up-weighting promotional activity to drive the peaks even higher.

“The dual water campaign delivered by Pump and Mount Franklin aims to deliver all necessary collateral to help retailers deliver big volume uplifts over summer including off-location displays, case stackers and POS which remind consumers of the positive benefits of drinking water,” said a Coca-Cola Amatil spokesperson. “Each part of a store has a different role to play in terms of driving sales and promoting products ... our main focus across the store is to communicate brand personality and functionality and continue the dialogue we start through our media campaign on the pathway to purchase.”

Coca-Cola Amatil says that significant opportunity also exists to drive volume though off location displays aligned with price promotions.

And, of course, range is also considered critical.

Range & packaging crucial to sales

“Glacéau has a range of seven unique variants, each specifically designed to meet consumers’ unique needs throughout the day,” said the spokesperson. “By ensuring that the full range is always in the fridge, retailers can generate maximum shelf standout from the glacéau ‘rainbow’ and maximise sales by offering consumers what they need, when they need it.”

Schweppes broadly agrees, saying that increasing the range and selection of bottled water in store will help to maximise sales.

“Shopper data indicates that consumers will buy water so long as they are sufficiently prompted,” says Schweppes’ Darryn Wallace. “Easy wins include ambient stands or off-location displays and, in addition to this, any consumer touch point on the way to the register will increase the probability of an incremental purchase in store.”

Of course, as the very nature of water means that not too much can be done to most of its taste, the way a brand is packaged is crucial in helping it stand out on shelf or in fridge and drive sales. As previously mentioned, Frantelle has already introduced a flip top sports cap to help it gain popularity in the convenience, and other manufacturers are also trying new things.

“We find that, in the impulse and convenience channel, the packaging format of bottled water plays a large role and variety in bottle type, size and cap can play an important role in the consumer’s overall purchase decision,” said Mr Wallace. “At Schweppes Australia, we have launched Cool Ridge in a newly developed ergonomic bottle, which has been developed in line with consumer needs ... we have also listened to feedback, adding a sipper cap and a launching in a 1-litre pack format to adapt to a lot more ‘on the go’ occasions.”

Similarly, Fiji Water is now available in both a convenient 500ml on-the-go bottle and a 1-litre bottle.

Coca-Cola Amatil also believes that packaging is key to building brand personality and communicating the functionality of brands such as glacéau.

“Our 500ml pack format is the perfect on-the-go size, well suited to the impulse consumer who is purchasing through the convenience channel,” said the Coca-Cola Amatil spokesperson. “Another key component of our packaging is our labels – each one starts a conversation with the consumer in glacéau’s unique voice, and also provides key information on the blend of vitamins each variant offers.”

It also says that Pump and Pumped packaging is extremely important in defining and supporting its positioning and differentiating it from competitors. As Pump/Pumped is an active, on-the-go brand, it says its big squeezy bottle and convenient pop-top has been designed specifically to complement these occasions.

So, while water may ultimately still be water, there are definite differences in source, content, image and packaging that can make one product stand above another in the C&I outlet fridge.

People tend to purchase bottled water for hydration purposes while ‘on the go’ and therefore, if presentation and pricing is right, sales as a whole through convenience are likely to remain extremely strong. And that’s got to be good news for all C&I operators.