Bottled water use continues to climb

Las Vegas — America's love affair with bottled water continues unabated.

And it continues at the expense at carbonated soft drinks. But that beverage category appears to be stabilizing after more than a decade of plunging consumption.

Bottled water consumption, mostly in single-serve PET bottles, increased by a projected 5.1 percent in 2018, according to new numbers from Gary Hemphill, managing director at Beverage Marketing Corp.

Hemphill has made it a tradition of unveiling a detailed analysis of the U.S. beverage consumption market by his consulting and research firm each year at the Packaging Conference.

This time around, in Las Vegas, he told conferencegoers that carbonated soft drink consumption fell by a projected 0.3 percent last year. That ​ compares with a decrease of 1.3 percent in 2017.

"The typical trends we've seen remain the same. Carbonated soft drinks (CSDs) continue to be soft. Their performance continues to be sluggish. They performed a little bit better in 2018, but probably not enough to go positive, at least not yet in terms of growth," Hemphill said.

"Bottled water continues to be on a growth juggernaut since the early 1990s, widening its gap as the largest category above CSDs," he said.

CSDs and bottled water rely on PET packaging for distribution. CSDs, obviously, also utilize aluminum cans and are served as fountain beverages.

Hemphill told the crowd bottled water consumption's "share of thirst" has increased from 16.5 percent in 2013 to 22 percent last year.

Helping push bottled water consumption higher is the overall interest in more healthy beverages as well as bottled water's continued decrease in cost.

CSDs have had 14 years of consecutive volume declines, and that market still faces "significant headwinds," Hemphill said. But improved consumption in diet drinks are helping moderate the ongoing decrease. This year could feature consumption being flat to a modest decline, he said.

"If it actually hit flat next year, that would be a momentous occasion for the category," he said.

Bottled water, over the past decade, has increased by a compound annual growth rate of 5 percent.

Bottled water's continued increase in consumption means good things for the single-serve PET bottle market.

That segment accounted for 66.9 percent of bottled water sales in 2013 and increased to 69.7 percent by last year, according to preliminary numbers from Beverage Marketing.

So not only has the overall bottled water category gained share, but the single-serve PET segment is capturing an even bigger portion of that larger pie.

"Aggressive pricing and the success of private label have contributed to the segment's ascent in recent years," Hemphill said.

Segment growth has slowed during the past two years, Hemphill told the crowd, but it remains healthy.

Within the bottled water segment, private label PET water bottles also have eaten into the branded company's lead over time, he said.

Branded PET water bottles accounted for a projected 51.3 percent of the market last year, with private label offerings checking in at 48.7 percent. That compares with 57.5 percent branded and 42.5 percent private label in 2013.

Plastic, thanks to its use in bottled water, continues to see its use for all beverages increase.

Plastic was used for 46 percent of beverage packaging last year, Beverage Marketing's figures show. That's up from 39.6 percent in 2013. Cans checked in second last year with 34.4 percent, followed by glass with 14.3 percent and paper at 4.8 percent.

"Plastic has been really the winner over the past five years," Hemphill said. "Plastic has gained over six share points over the past five years. Cans have lost a little bit. Glass has lost a little bit. Everybody has lot a little bit except for plastic."

"It's impacted by the categories you are connected to. In the case of plastic, obviously, the success of bottled water has a lot of impact," he said.

Bottled water first surpassed CSDs as the leading beverage category in 2016, Hemphill said. The category is expected to increase by 3-5 percent this year. "I would expect that growth probably to be closer to the 5 percent than the 3 [percent]," Hemphill said.