NEW YORK -- Bottled water passed a major milestone in 2016, surpassing carbonated soft drinks (CSDs) to become the largest beverage category by consumption volume in the United States, according to Beverage Marketing Corp.
Total bottled-water volume grew from 11.8 billion gallons in 2015 to 12.8 billion gallons in 2016, an increase of nearly 9%, which marked the third year in a row of accelerating growth. Per capita consumption of bottled water exceeded 39 gallons in 2016, while average intake of CSDs slipped to about 38.5 gallons from a high of more than 50 gallons in 2006.
Here's a look at how the transition happened and how the trend plays out in convenience stores ...
Reshaping the marketplace
"Bottled water effectively reshaped the beverage marketplace," said Michael C. Bellas, chairman and CEO, Beverage Marketing Corp. "When Perrier first entered the country in the 1970s, few would have predicted the heights to which bottled water would eventually climb. Where once it would have been unimaginable to see Americans walking down the street carrying plastic bottles of water, or driving around with them in their cars' cup holders, now that's the norm."
Except for two relatively small declines in 2008 and 2009—when most beverage categories contracted in the wake of the Great Recession—bottled water volume grew every year from 1977 to 2016. This period included 17 double-digit annual volume growth spurts. Since resuming growth in 2010, bottled-water volume has consistently increase at solid single-digit percentage rates.
Beverage Marketing expects that to continue well into the next decade, likely reaching per capita consumption of 50 gallons by 2025.
In convenience stores, bottled water sales haven’t grown quite as dramatically. Yes, water has seen consistent growth in the past couple of decades and CSD sales have slowed, but soft drinks still outsell water by more than two to one. In 2016, c-stores sold 5.1 billion units of CSDs (down 0.79% compared to the previous year) and 2.4 billion units of bottled water (up 5.32%), according to IRI data.
In 2016, the single-serve segment enlarged by more than 9% to reach 8.6 billion gallons, Beverage Marketing said. Yet all other segments, including larger, multiserving bottles as well as home and office delivery, sparkling water and imports, also registered growth in 2016. Indeed, both domestic sparkling and imports advanced at double-digit rates, albeit from comparatively small bases.
‘The ultimate beverage’
The comparison of the two largest beverage types is illustrative, according to the Beverage Marketing report.
Bottled water's ascent coincided with and encouraged shifts in consumer preferences for healthier refreshment and rehydration. As “the ultimate portable and affordable beverage,” bottled water spawned new usage occasions and habits. Suitable for consumption at any and all times of day, and not necessarily in need of being kept ice cold, or carbonated, “bottled water simply became the preferred beverage not only for consumers aiming to cut back on calories or artificial sweeteners but also for consumers of all kinds wanting to consume a healthy all-natural refreshment beverages.”
Looking forward, Beverage Marketing expects bottled water to continue building on its history of enlargement and put more distance between itself and CSDs.
New York-based Beverage Marketing Corporation is a leading research, consulting and financial services firm dedicated to the global beverage industry.