ATLANTA — Bottled water experienced remarkable growth in 2014 and is predicted to have another strong year again in 2015 as the beverage continues a march toward becoming the nation's largest drink category.
It's an inevitability that's going to come sooner than later, according to Gary Hemphill, managing director and chief operating officer of Beverage Marketing Corp.
For now, carbonated soft drinks continue to be the largest selling beverage in the United States, but bottled water has been gaining on the leader for years and years.
Thanks to a 7.1-percent increase last year, and a projected growth of 5 to 6 percent this year, the research and consulting firm now predicts bottled water will overtake carbonated beverages by the end of 2016.
Single-serve bottles measuring 1.5 liters or less, typically made from PET, dominate the bottled water market with about two-thirds of that business. While the overall water market grew by more than 7 percent last year, the single-serve PET water bottle business actually grew by 8.4 percent.
“In fact, 2014 was a pretty remarkable year,” Hemphill said, for water.
Hemphill, who spoke about the trend at the Packaging Conference in Atlanta, predicts 2015 will see bottled water's overall share of the beverage market continue to increase from 28.1 percent to 29.3 percent. And PET bottles will see their share increase from 18.8 percent to 19.7 percent, according to Beverage Marketing estimates.
Carbonated soft drinks, meanwhile, will see their share again drop, this time from 33.1 percent to 32.2 percent, Hemphill estimated.
“Water, we think, is going to continue to have very strong growth,” he said.
The continuing drop of carbonated soft drinks will impact the use of plastic to some degree in that category, but also will have an effect on aluminum beverage containers, he pointed out.
Plastic, overall, has seen its share of beverage packaging increase from 34.3 percent in 2008 to 39.1 percent in 2013, Hemphill said.
A trio of factors is helping single-serve water bottles continue to gain market share, the managing director said.
Aggressive pricing by private label products has created a value story in the water market, allowing private label companies to increase their overall market share from 15.6 percent in 2009 to an estimated 43.6 percent in 2014, Hemphill said.
High-speed bottling lines, stable or declining resin prices and continued light weighting has allowed private-label water companies to remain aggressive in their product pricing.
“Their costs really all are production, operational costs. So resin becomes a key component of that,” Hemphill said about private label producers. “Their cost structure is different than some of the branded companies where they are investing in marketing.”
While Beverage Marketing is predicting the ascension of bottled water by the end of 2016, he indicated out that there were several specific cities in the United States where that beverage already is the top choice.
“I would say 2014 was almost astounding for bottled water,” Hemphill said.
The overall bottled water market is expected to grow by 5 to 6 percent this year, he said, but PET bottled water is predicted to even faster at 6.5 percent.