Image By: Jim Johnson Gary Hemphill predicts water will soon be the largest beverage sales category in the U.S.
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ORLANDO, FLA. – It's certainly not going to happen in 2014. And it won't happen in 2015.
But, in the not-too-distant future, bottled water will overtake carbonated soft drinks as the largest beverage category in the United States, according to one industry expert.
Gary A. Hemphill, managing director and chief operating officer of research and consulting firm Beverage Marketing Corp., predicts that bottled water consumption will eclipse carbonated soft drink consumption in three or four years.
And plastic will continue to gain market share in the beverage container market thanks to the ongoing success of bottled water.
"The best news for plastic is the likelihood of continued growth in bottled water, a category that plastic dominates," Hemphill said at The Packaging Conference in Orlando. "One of the key categories for plastics is bottled water.
"Our projection is ultimately (water is) going to surpass carbonated soft drinks as the biggest category on a volume basis in the U.S. That's not going to happen this year, and it's not going to happen next year. But by 2017, 2018, something like that, it seems inevitable that that's going to happen," he said.
Bottled water, the way that Beverage Marketing analyzes the market, is a broader category than just single-serve containers. It includes water cooler jugs as well as larger containers, like one- and two-gallon jugs, sold at grocery stores.
But make no mistake, those single-serve containers are what's fueling the growing popularity of the segment.
"The overall category has been growing by about mid-single digits, so that 4-to-6 percent range," Hemphill said. "What's really driving it is the single-serve market for bottled water. The way we define that is 1.5 liters and under. That's roughly two-thirds of the bottled water category," he said.
And that's a sweet spot for plastic.
"There's some interest and people have looked at other packaging materials for bottled water, but at the end of the day, that is about as perfect as you can get for that category," he said about using plastic. "Portability is really important. Resealability is really important."
"Those are key attributes that consumers want, retailers want," he said, along with plastic's lighter weight compared to other containers and its "unbreakability."
"It's probably the best-positioned packaging right now for beverages. But all the packaging types have their niche and have their uses. Obviously, the can has been amazingly successful for a number of years and continues to be," he said.
The popularity of bottled water continues to grow as companies look to aggressively take costs out of their production. That includes installing high-speed filling systems and lightweighting bottles.
Some companies, particularly private-label firms, have attacked their cost structures to a point where there is not much more room to improve. But Hemphill said there still space for additional efficiencies across the entire market as not all bottled water firms have taken such an aggressive approach.