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Bottled Water Is Poised To Edge Out Soft Drinks For No. 1 Spot

Posted On: 7/18/2016

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TAGS: Beverage Marketing Corp., beverage consumption data, soft drink consumption, bottled water consumption, vending machine, micro market, Michael Bellas, carbonated soft drinks

NEW YORK CITY -- On top of another year of robust growth and amid fizzling soft drink consumption, bottled water is on track to become the No. 1 beverage, in terms of volume, by the end of 2016, according to the latest data from Beverage Marketing Corp. With summer upon us and more consumers out, about and thirsty, BMC's annual snapshot is a valuable resource for vending, micromarket and office coffee service providers who want to key in on current beverage consumption trends.

Overall, the U.S. liquid refreshment beverage market grew more quickly in 2015 than in 2014, and represented the strongest upswing in several years, according to the New York City-based research firm. Beverage-specific dynamics, such as the vibrancy of the sizeable bottled water segment, as well as general factors, like the continuing economic recovery, contributed to the overall increase in beverage volume, which approached 32 billion gallons in 2015.

Carbonated soft drinks remained the biggest liquid refreshment category, but they might not be for much longer, as CSDs continues to lose both volume and market share, according to BMC. Volume slipped by 1.5% from 12.8 billion gallons in 2014 to 12.6 billion gallons in 2015, which lowered CSD market share to less than 40%.

CSDs accounted for five of the 10 biggest beverage trademarks during 2015, with Coca-Cola and Pepsi-Cola retaining their usual first and second positions; only one of the leading brands, Sprite, managed to grow during the year.

Four companies accounted for all of the leading refreshment beverage trademarks. Pepsi-Cola had four brands; Coca--Cola had three; Nestlé Waters North America, two; and Dr Pepper Snapple Group, one.

Bottled water had four entries among the leading trademarks in 2015, and every one of them grew well in advance of the overall liquid refreshment beverage category.

In conjunction with the International Bottled Water Association, BMC released 2015 bottled water statistics indicating that bottled water is poised to overtake CSDs as America's largest beverage category by volume by 2017, if not by the end of 2016.

Reflecting a clear trend of consumers increasingly choosing pure, convenient, zero-calorie bottled water, BMC reported that by 2015, bottled water had achieved a new volume record -- almost 3 billion gallons higher than it had been in 2007. Soft drinks, on the other hand, had their 11th consecutive year of volume reductions in 2015.

Bottled water sales increased by 8.9% in 2015, and now total $14.2 billion (wholesale). In 2015, total U.S. bottled water consumption grew by 7.9% to 11.7 billion gallons, up from 10.87 billion gallons in 2014.

In addition, per-capita consumption was up 7.1% in 2015. Americans increased their annual intake by more than 11 gallons, from 25.4 gallons per person in 2005 to 36.5 gallons a decade later. During the same period, per capita consumption of CSDs dropped by 12.4 gallons. Per capita consumption of other major beverage categories, including milk and fruit beverages, also fell.

"Consumer demand for bottled water looks likely to remain strong in the years ahead. Increases in per capita consumption indicate enthusiasm for a product that consumers regard as a healthful alternative to other beverages," said BMC chairman and chief executive Michael Bellas. While some consumers have turned away from regular, full-calorie sodas in favor of their diet versions, many others have become wary of artificial sweeteners and transitioned to bottled water instead, the beverage research expert noted.

Niche categories continued to outperform most traditional mass-market categories like CSDs and fruit beverages, according to BMC. Energy drinks and, especially, ready-to-drink coffee grew significantly in 2015.

RTD coffee outperformed all other segments, with a 16.5% volume increase in 2015. However, the segment accounted for a very small share of total liquid refreshment beverage volume. It was the smallest, behind value-added water, which registered growth after having declined significantly the year before. Energy drinks advanced by 9.8%, but also remained modest in size. Predictably, no energy drink, RTD coffee or value-added water brand ranked among the leading trademarks by volume. No fruit beverage brand did, either.

Sports beverages, on the other hand, had Gatorade (including all brand variations) as the sixth largest liquid refreshment beverage trademark during the year. Exceeding 1 billion gallons for the first time in 2011, Gatorade dipped below that level subsequently, and returned to that level in 2015.

"Consumers have spoken," said BMC's Bellas. "They've made their preferences clear. The rapid growth in bottled water and functional and niche alternatives like energy drinks expresses a shift away from most large traditional beverage categories."

Beverage Marketing Corp. charts, beverage consumption data