Bottled water sales reached record levels last year as Americans continued to turn to healthier alternatives to carbonated beverages, reports Mintel.
U.S. bottled water sales leapt 6.4% in 2015, to reach $15 billion—and they’re projected to grow by another 34.7% by 2020, according to Mintel’s new report on the category. That growth includes a whopping projected sales increase of 75.1% in the sparkling/mineral water/seltzer segment.
In Mintel’s research, price was the top factor influencing purchases, cited by 62% of bottled water drinkers. Yet, 53% said that they prefer to drink premium brands.
Among consumers overall, 39% said that buying bottled water is worth the cost, and 51% are unfamiliar with premium waters.
To attract more price-conscious consumers, premium brands should stress the “sophistication” and health benefits of their products, noted Mintel beverage analyst Elizabeth Sisel.
Consumers also show a clear preference for water with no calories (31%), as opposed to water products with less than 100 calories (13%).
The Big Drivers: Flavor, Functionality
Beyond the desire to drink healthier beverages, the big factors driving bottled water growth are flavor and functional claims, according to Mintel.
Nearly half (48%) of bottled water drinkers reported that they are drinking more flavored waters to replace high-sugar drinks.
Flavored-water consumption is highest among those 18 to 34 (66% versus 48% of consumers overall),
Those 18 to 34 are most likely to consumer flavored water (66% versus 48% of consumers overall), and also most likely to consume any still bottled water (93% versus 85% of consumers overall).
On the functional attributes front, 43% of consumers report interest in bottled water enhanced with vitamins, 29% agree that the “ideal” bottled water should contain minerals, and the same percentage would like “energy” enhancers added.
Bottled water drinkers also desire “purity”, with 43% saying that the ideal product would have no artificial sweeteners or artificial flavors, and 40% saying it would have no artificial colors.
In addition, one-quarter said their ideal bottled water would be GMO-free or organic.
The trend in increased demand for organic food and drink options continues as Mintel research indicates 37% of consumers feel better about themselves when they buy organic foods and beverages.
“Bottled water brands benefit from the overarching consumer trend toward more healthful, better-for-you alternatives to unnatural and high-sugar drinks. This has spurred sales growth of bottled water with even greater projected growth over the next five years,” said Elizabeth Sisel, Beverage Analyst at Mintel.
“In coming years, consumers will likely put even greater value on no artificial ingredients in bottled water,” predicts Sisel, who advises brands to emphasize free-from claims on packaging, as well as continue to innovate on flavors and functional attributes, she added.
Sustainability Concerns Also Growing
Consumers’ increasing concerns about the environmental effects of bottled water could temper the gung-ho outlook a bit.
In fact, 39% of bottled water drinkers agreed that they’re drinking less bottled water because of its environmental impact.
Mintel’s research indicates that 78% of U.S. bottled water drinkers recycle their bottled water packaging, ad 75% say they wish that more bottled water packaging was reusable.
Mintel, noting that these growing concerns have led to proposed and implemented bottled water bans in some U.S. municipalities, advises brands to take steps to increase awareness of the measures they take to address the products’ environmental issues.