1. Bottled Water
UK - May 2011

2. Issues in the market
Q: Will bottled water ever recover to the heights achieved five years ago?
A: Mintel’s report finds that this is unlikely. This is because this product is so closely correlated with the economy and the economic landscape of the last five years is very different to 2000 – when bottled water sales soared.
Not only do UK consumers have less consumer expenditure as inflation outstrips wages, but their mind-set has changed, with people re-evaluating whether they can really justify purchases such as bottled water (which in tap water has a competitor at a fraction of the cost).
Nevertheless, Mintel does not forecast that the bottled water market will see the same levels of sales decline as between 2007 and 2009: the market is much more robust than this.
Q: To what extent are consumers switching to tap water and how can this be prevented?
A: Mintel’s research suggests that consumers are switching. For example, 53% try and fill up their water bottle as often as possible in order to save money, while consumers are much less reticent about asking for tap water when dining out.
Nor should it be under-estimated the extent to which adverse publicity about the environmental disadvantages of bottled water has put off drinkers. In the UK, almost two in five (37%) think that drinking bottled water instead of tap water is bad for the environment.
These factors have undoubtedly contributed to the 6% points decline in UK penetration which the market has seen since Not only have consumers fallen out of the category but the proportion of heavy users has also shrunk from 21% of all bottled water drinkers to 17%.
However, Mintel’s research shows that UK consumers are still on the whole very positive and reassured about the advantages of bottled water over tap. For example, just over half (51%) of the UK population think that bottled water contains less impurities than tap water, despite the UK’s drinking water being amongst the safest in the world.

3. Issues in the market
Q: What drives people to buy one bottled water brand over another?
A: There is cynicism about whether there is actually any difference in quality between bottled water brands.
Indeed, what people value most of all is the trust of established brands as well as that the brand is British.
The support for British brands is reflective of a protectionist mind-set that has affected consumers since the onset of the economic downturn, especially among older (45+) consumers.
People – 16-24s especially – are also more concerned (or seen to be concerned) about environmental issues and shipping bottled water from abroad when it is a resource we have in Britain seems unnecessary to many.
The success of own-label – which has a significant slice of the take-home market (27.4%) – combined with the enormous success of value brand Pure Life is testament to this. In other FMCG categories own-label and value brands have not performed as well as many predicted following the economic downturn.
Q: What occasions should bottled water companies target?
A: The most popular occasion for buying bottled water for is when travelling
Many also buy bottled water for when generally out and about as a convenient way to hydrate oneself when shopping, visiting a museum, etc.
Many consumers – especially C2DEs - also buy bottled water to drink at home, but targeting this occasion overtly risks competing directly against tap water. This is a road bottled water companies should best avoid as scientific evidence refutes the assumption among a large minority of consumers that bottled water is actually better for you than tap.

4. Market Drivers – ensuring a value proposition
Bottled water saw sales decline rapidly from late 2007 onwards as consumer confidence nose-dived and people started to re-evaluate what was and was not value for money.
Unsurprisingly, water was an obvious area to save money, and people responded by ordering more tap water when out and refilling bottles of water for on-the-go.
However, a major reason why bottled water sales have recovered is that the industry has responded by deep discounting (particularly around multipacks) and a more competitive price-point from the major brands as they seek to become more competitive. There has also been increased consumer take-up of own-label and value brands such as Pure Life.
Changing prices of soft drinks compared to bottled water,
% change
*Retail Price Index measures how prices increased annually
Source: Office For National Statistics/Mintel

5. Market Drivers – convenience, health, sun, British-ness, green
The market’s recovery has also been a product of it meeting key consumer needs: namely, the convenience of hydrating on-the-go.
Met Office figures show that weather conditions have improved in the UK in the past decade, which has helped to grow sales that remain tiny in comparison to hotter European nations.
Consumers are increasingly buying British products due to a more protectionist attitude fostered by the recession as well as the perceived environmental wastefulness of shipping water from overseas.
The industry has done well to counter the adverse environmental publicity, which exacerbated the decline in sales from 2007 onwards. Research shows that, while concern for the environment has lessened during the economic downturn, it is nevertheless crucial to brand equity.

6. Market Drivers – macro-economic factors
The bottled water market is highly sensitive to economic conditions, and the greater health of the economy has helped to shore up falling sales.
However, currently inflation is outstripping wages, meaning 2011 is proving to be particularly tough for consumers and the economy is likely to improve only slowly and people are likely to continue to spend cautiously for some time yet.
The continued rise of the ABC1 population means that premiumisation and convenience remain important factors for the market.
The bottled water sector also has the challenge of proving its worth to a sceptical over-55 generation who grew up without bottled water and are therefore understandably cynical regarding its merits.
A comparison of sales in bottled water and consumer expenditure,
Source: Office for National Statistics/Mintel

7. Companies, brands & innovation
The greater desire among the British to buy British products, combined with adverse publicity about being environmentally wasteful for shipping water from overseas has combined to hurt market leader Danone.
Both Evian and Volvic have seen double digit declining sales in the take home channel between and This is despite spending significantly relative to the rest of the market on above-the-line and below-the-line marketing activity, combined with deep supermarket discounting.
However, they are still comfortably the leading brands in terms of sales. Not only this, but according to Mintel’s brand research they are way ahead of competitors in terms of trust and differentiation.
The mainstream British brands Buxton (owned by Nestlé) and to a lesser extent Highland Spring have capitalised on consumers desire for not just British but established brands which they can trust. However, Mintel’s brand research shows that they need to do much more to emotionally engage with consumers who view the brands currently as, at best, functional, and, at worst, tired.
The value sector has also done particularly well reflecting the fact that many bottled water buyers see little difference in quality between water brands, something which own label brands and niche brand Pure Life have used to their advantage.
Innovation has focused mainly on flavoured water as well as ensuring that the majority of new products to market have an ethical/environmentally friendly claim. The UK currently lags behind the US and other global markets in its innovation around enhancing water through vitamins and minerals.

8. Market share for bottled water
Market share for value sales of bottled water brands in the take-home market, 2010
Source: SymphonyIRI Group/Mintel estimate

9. Market size & forecast for bottled water
Bottled water has managed to halt its dramatically falling sales, mainly due to lowering its price point through huge discounting activity, and the minor economic recovery.
Over the next five years, Mintel forecasts the market will plateau in actual sales but allowing for inflation will see a 15% decline as manufacturers are forced to deal with a combination of high inflation and extremely price- sensitive consumers.
Market size and forecast for value sales for the bottled water market,
Source: SymphonyIRI Group / Mintel estimate

10. Market segmentation for bottled water
Enhanced water (ie flavoured/vitamin-infused) remains a niche market, accounting for only just over a quarter of the total take-home bottled water market. However, this sector is beginning to gain more momentum and should steal more share from plain water over the next few years.
Value sales of bottled water in the take home channel, by water type,
Source: SymphonyIRI Group/Mintel estimate

11. Brand research for bottled water
The bottled water brands in terms of brand attributes split broadly into two groups. In one group are the mass market French and British brands and in the other are the niche brands.
Among the mass market brands, the French brands occupy a more premium position and are considered of higher quality and reputation compared with their British counterparts, this is especially so for Evian.
In contrast, the British brands are more value based, especially Highland Spring, and are understandably seen as better for the environment (ie less ‘food miles’) and with more trust among a public which is increasingly protectionist when it comes to brands they perceive as British.
Attitudes by water brand, March 2011
Base: internet users aged 16+ who have heard of the brand and expressed a view
This chart shows the level of association of each brand surveyed with a set of key performance attributes core to water brands overall. The more significant an attribute is as part of a brand’s image relative to other attributes, the nearer it will be to that attribute. If a brand is between a number of attributes, it is reasonably closely associated with each of these.
Source: GMI/Mintel

12. Consumer usage of bottled water
The pool of bottled water drinkers has shrunk by 6% points over the past five years as more people migrate towards tap water due to an increasing need to be frugal.
The proportion of heavy users has also shrunk as people are more likely to refill their bottles with tap water or order tap water in restaurants.
Penetration is dominated by ABC1 young women, who are especially likely to drink water when out of the home and on the go.
Bottled mineral water drinkers, by gender, social grade and age, 2010
Base: adults aged 15+/drink bottled mineral water
Taken from the TGI survey of around 25,000 adults
Source: GB TGI, Kantar Media UK Ltd Q (Oct-Sep)/Mintel

13. Consumer usage of bottled water (cont…)
However, C2DEs actually consume bottled water more often than their ABC1 counterparts due to being more likely to buy it for drinking at home, with less viewing it as an unnecessary product or environmentally unfriendly.
The importance of convenience/portability means that consumers are most attracted to smaller formats, and this applies to drinking bottled water in the home as much as on-the-go.
Still water dominates compared to fizzy water with 77% of all bottled water drinkers drinking the former in 2010, although this was down from 79% in 2009.
Occasions where people purchase bottled water to drink, March 2011
Base: 1, adults who have drunk bottled water in the past six months
Source: Toluna/Mintel

14. Consumer attitudes: bottled water versus tap water
Bottled water’s greatest USP compared to tap water is its convenience for drinking water (and staying hydrated) when out and about, something which more than three in five of the UK population agree with.
However, many people – in particular younger adults – see it as containing less impurities and actually tasting better than tap water, giving them a powerful dual reason to buy it regardless of having less income.
C2DEs and ABC1s have similar attitudes to the benefits of bottled water over tap. However, where they do differ is that the former are less likely to see the product as an unnecessary indulgence and as bad for the environment, therefore rationalising their high in-home usage.
Attitudes among UK consumers towards bottled water versus tap water, March 2011
Base: 1,500 internet users aged 16+
Source: Toluna/Mintel

15. General consumer attitudes to bottled water
Consumers are generally quite cynical about there being much difference in quality between bottled water brands.
However, what they do value are established brands due to the importance of trusting that the water is of good quality.
Equally being British is a pull for almost half of bottled water drinkers. This explains why mainstream British brands such as Buxton and Highland Spring have gained such momentum.
Bottled water remains a compelling proposition to consumers in spite of the economic downturn due to its convenience, as well as its health (especially hydration) and beauty benefits (e.g. being good for skin/hair).
Younger consumers are particularly attracted to brands with eco-credentials and style, and the two are not mutually exclusive for this more self-conscious group.
Mintel’s research shows that there is untapped potential among young men for vitamin water. This group has helped grow the energy drinks market to being worth close to a billion pounds.

16. Consumer attitudes: perceived health benefits of bottled water
Perceived health benefits of bottled water, March 2011
Base: 1,104 internet users aged 16+ who have drunk bottled water in the last 6 months
Source: Toluna/Mintel

17. Jonny Forsyth Your contact Senior Drinks Analyst mintel.com
mintel.com