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Bottled Water - UK - October 2009

ISSUES IN THE MARKET
Key themes
Definition
Abbreviations
FUTURE OPPORTUNITIES
Cleaning up its image
Functional means differentiation…
… but functionality also risks throwing purity out with the bathwater
MARKET IN BRIEF
Consumption linked to consumer confidence
Bottled water drinkers seriously question its value…
… despite evidence of clear differentiating advantages
Overall, the market is retaining its user base
British brands see short-term spike
INTERNAL MARKET ENVIRONMENT
Key points
The bottled water backlash
Bottled water as anti-environment
Re-framing the debate away from being compared to tap water
Demand for bottled water is closely tied to consumer confidence
Figure 1: Relationship between usage of bottled water and consumer confidence, by quarter, 2004-09
At the mercy of the British weather
Figure 2: Trends in the quality of UK summers, compared to volume sales of bottled water, 2003-09
Health benefits currently less of a consumer concern than calories
Figure 3: Trends in selected statements about healthy lifestyles, 2005-09
BROADER MARKET ENVIRONMENT
Key points
Disposable income declines in the wake of the recession
A generation lost to bottled water
Figure 4: Total population, by age, 2004-14
Figure 5: Attitudes towards bottled water amongst over-54s compared to all adults, June 2009
Bottled water losing appeal amongst burgeoning middle class
Figure 6: Changes in UK adult population, by socio-economic group, 2004-14
Figure 7: Attitudes towards bottled water among ABs compared to all adults, June 2009
COMPETITIVE CONTEXT
Key points
An increasingly competitive marketplace even before the credit crunch
Figure 8: Trends in consumption of non-alcoholic drinks, by type, 2004-08
Non-alcoholic drinks steal share from alcoholic
Figure 9: Comparison of total UK value sales for alcoholic and non-alcoholic drinks, 1998-2008
STRENGTHS AND WEAKNESSES IN THE MARKET
Strengths
Weaknesses
WHO’S INNOVATING?
Key points
The trend for functionality in soft drinks leads to vitamin-enhanced water
A healthier product – but what about the added sugar?
A wide range of health claims
Is enhanced water the future or a dead end?
The introduction of slimming water
Vitamin Waters put their faith in wisdom of the crowd
Using scent to sell
MARKET SIZE AND FORECAST
Key points
Market is closely aligned to consumer confidence
Figure 10: Relationship between usage of bottled water, consumer confidence and GDP, by quarter, 2007-09
Expect the market to grow again, but only modestly
Figure 11: Forecast of volume and value sales of total bottled water market (includes plain water, enhanced water and water coolers), 2004-14
Plain water is victim of commoditisation
Enhanced water has the most growth potential
Figure 12: Forecast of volume and value sales of plain bottled water (including water coolers), 2004-14
Figure 13: Forecast of volume and value sales of enhanced bottled water (either flavoured or fortified with vitamins/supplements), 2004-14
Figure 14: Forecast of proportion of total water value sales made up by plain and enhanced water (water coolers are included in plain figures), 2004-14
Factors used in the forecast
MARKET SEGMENTATION
Key points
A shift away from on-premise consumption
Figure 15: Forecast of volume and value sales of total bottled water (incl. plain water, flavoured water and water coolers), by channel 2004-09
Plain carbonated unable to grow its share
Figure 16: Volume sales of plain water, by type, 2004-09
Sales growth of new flavoured functional segment defies recession
Figure 17: Forecast of volume sales of flavoured water, by type, 2004-09
MARKET SHARE
Key points
A good time to be British
Figure 18: Manufacturers shares in UK take-home value sales of bottled water, 2007-09
Figure 19: Manufacturers’ estimated shares in take-home value sales of bottled water, 2009
COMPANIES AND PRODUCTS
Key point
Britvic Soft Drinks
Coca-Cola
Danone Waters
Greencore
Highland Spring
Nestlé
BRAND ELEMENTS
Key points
 BRAND MAP
Figure 20: Attitudes towards and usage of bottled water brands, April 2009
 BRAND QUALITIES OF BOTTLED WATER BRANDS
Evian healthiest, Highland Spring natural, but Drench has youthful cool
Figure 21: Personalities of various bottled water brands, April 2009
 EXPERIENCE OF BOTTLED WATER BRANDS
Heavy competition, but Danone slightly ahead
Figure 22: Consumer usage of various bottled water brands, April 2009
 BRAND INTENTIONS FOR BOTTLED WATER BRANDS
Loyalty low, competition tight
Figure 23: Consideration of various bottled water brands, April 2009
 BRAND SATISFACTION FOR BOTTLED WATER BRANDS
Satisfaction average for most, but Perrier lacking
Figure 24: Satisfaction with various bottled water brands, April 2009
 BRAND COMMITMENT TO BOTTLED WATER BRANDS
Drench has highest loyalty
Figure 25: Commitment to various bottled water brands, April 2009
 PERRIER
What the consumer thinks
Figure 26: attitudes towards the Perrier brand, April 2009
 DRENCH
What the consumer thinks
Figure 27: Attitudes towards the Drench brand, April 2009
 EVIAN
What the consumer thinks
Figure 28: Attitudes towards the Evian brand, April 2009
BRAND COMMUNICATION AND PROMOTION
Key points
Advertising spend remains steady
Figure 29: Main monitored media advertising spend on bottled water, compared to volume sales, 2005-09
Figure 30: Main monitored media advertising spend on bottled water, % by media channel, 2006-08
Britvic increases its investment
Figure 31: Above-the-line advertising spend, by brands, 2006-08
The rise of ethical branding
2009 sees the return of the Evian babies
CHANNELS TO MARKET
Key points
Market plays into the hands of the supermarkets
Figure 32: Estimated volume sales of plain bottled water (incl. water coolers), by outlet type, 2007-09
Challenging on-premise conditions
CONSUMER USAGE
Key points
2007 sees beginning of the decline
Figure 33: Trends in frequency of drinking bottled water, 2005-09
Young, and getting younger
Blue-collar hydration
Regional rewards
Still water leaves sparkling behind
Figure 34: Trends in types of bottled water drunk most often, 2005-09
Increased demand for smaller bottles
Figure 35: Trends in size of bottled water formats drunk most often, 2005-09
Kids market parallels the adult
Figure 36: Trends in penetration of bottled water among kids and where drunk, 2006-09
HOW HAS CONSUMPTION CHANGED OVER THE PAST TWO YEARS?
Key points
Figure 37: Changes in consumption of bottled water in the past two years, June 2009
What are the drivers of change?
Figure 38: Net difference* in attitudes towards bottled water amongst those consuming more bottled water and those consuming less in the past two years, June 2009
Those who drink less (15% of the population)
Those who drink more (14% of the population)
CONSUMER ATTITUDES TOWARDS BOTTLED WATER
Key points
Figure 39: Attitudes towards bottled water, either still, fizzy or flavoured, June 2009
Bottled water scores low on value for money
Purity gives bottled water the edge over tap water
No calories proves a major selling point
Practical benefits offer a route into attracting the huge 55+ market
Environmental concerns have limited effect on consumption habits
Price dominates motivation to purchase
Figure 40: Most important things driving purchase of bottled water, June 2009
Fuelling an on-the-go youth lifestyle
TARGETING OPPORTUNITIES
Key point
Figure 41: Marketing groups for bottled water based on attitudes, June 2009
Seeking Enhancement (15% of bottled water drinkers)
Needing Reassurance (26% of bottled water drinkers)
On The Go (26% of bottled water drinkers)
Unconvinced (33% of bottled water drinkers)
APPENDIX
Consumer research
ACORN
Advertising data
APPENDIX – BROADER MARKET ENVIRONMENT
Figure 42: Trends in PDI and consumer expenditure, 2004-14
APPENDIX – BRAND COMMUNICATION
Figure 43: Above-the-line advertising spend on bottled water, by media type, 2006-08
Figure 44: Main monitored media advertising expenditure on bottled water, by top 10 companies, 2006-08
APPENDIX – CONSUMER USAGE
Figure 45: Trend in volume importance index for bottled water drinkers, 2005-09
APPENDIX – HOW HAS CONSUMPTION CHANGED IN THE PAST TWO YEARS?
Figure 46: Attitudes towards bottled water, either still, fizzy or flavoured, by changes in consumption of bottled water either still, fizzy or flavoured in past two years, June 2009
Figure 47: Most important things in buying bottled water, by changes in consumption of bottled water either still, fizzy or flavoured in past two years, June 2009
Figure 48: Changes in consumption of bottled water either still, fizzy or flavoured in past two years by demographics, June 2009
APPENDIX – CONSUMER ATTITUDES TOWARDS BOTTLED WATER
Figure 49: Attitudes towards bottled water, either still, fizzy or flavoured, by demographics, June 2009
Figure 50: Attitudes towards bottled water, either still, fizzy or flavoured, by demographics, June 2009 (continued)
Figure 51: Most popular things in buying bottled water, by demographics, June 2009
Figure 52: Most popular things in buying bottled water, by demographics, June 2009 (continued)
Figure 53: Attitudes towards bottled water, either still, fizzy or flavoured, by changes in consumption of bottled water either still, fizzy or flavoured in past two years, June 2009
Figure 54: Most important things in buying bottled water, by changes in consumption of bottled water either still, fizzy or flavoured in past two years, June 2009
APPENDIX – TARGETING OPPORTUNITIES
Figure 55: The five most important things in buying bottled water, by target groups, June 2009
Figure 56: Target groups, by demographics, June 2009
Figure 57: Changes in consumption of bottled water in the past two years, by target groups, June 2009
Figure 58: Attitudes towards bottled water, either still, fizzy or flavoured, by target groups, June 2009

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