The U.S. Bottled Water: A Multi-Billion Dollar Business Still Gaining Popularity

Author : Nishant Sherkhane | Published On : 16 Apr 2024

The bottled water industry in the United States has seen tremendous growth over the past few decades. Though bottled water has existed for centuries, it started gaining widespread popularity in the U.S. in the 1980s. At this time, concerns were rising regarding the quality of municipal tap water due to pollution and contamination issues. Several bottled water brands started extensive marketing campaigns highlighting that their products were sourced from pristine mountain springs and ensured purity. This helped generate demand for bottled water among health-conscious consumers. By the 1990s, bottled water overtook carbonated soft drinks to become the number one selling beverage in the U.S. grocery stores based on volume.

Dominant Players and Leaders

Currently, the U.S. Bottled Water is dominated by a handful of major companies that control a bulk of the. Nestlé Waters North America is the top player with popular brands like Poland Spring and Pure Life. In 2020, Nestlé waters held share by volume in the U.S. The Coca-Cola Company is second with brands like Dasani and Smartwater, holding a share. PepsiCo’s Aquafina is the third largest brand, followed by Dr Pepper Snapple’s brands like DejaBlue and Evian. Among the independent brands, Topo Chico has seen meteoric growth in recent times, acquired by Coca-Cola in 2021 for $220 million. These top companies spend considerable amounts on advertising and promotions to promote brand awareness and loyalty.

Revenue Trends and Sales Channels

Despite the ongoing COVID-19 pandemic, revenues saw only a minor decline from 2019 levels, highlighting the resilience of demand. Retail channels like grocery stores and mass merchandisers account for the bulk of bottled water sales, estimated at over 70% of total volume. The away-from-home segment, including sales at restaurants, venues, offices, and more, makes up the remaining sales. This segment did see a sharp decline in 2020 due to lockdowns and restrictions, but revenues are recovering steadily with reopenings

Impact of Sustainability Concerns

While bottled water companies tout the convenience and purity of their products, there have been growing concerns regarding the environmental and sustainability impact of single-use plastic bottles. It is estimated that around 38 billion plastic water bottles end up in landfills in the U.S every year, where most never decompose. This has led to a backlash among some consumers and jurisdictions. To address these issues, bottled water majors have started initiatives like using recycled plastic for bottles and providing refill options. However, sustainability remains a challenge given the sheer volumes involved. Some local governments have introduced bottle deposit laws for recycling incentives or banned plastic water bottles outright. This will likely be an area of focus for the industry in the coming years.

Opportunities in New Product Segments

Amid mature competition in the mainstream bottled water segment, companies are looking at new product categories and innovations to fuel further growth. Functional or flavored waters infused with vitamins, minerals and natural essences are gaining traction. Products targeted at kids also show promise. Companies are enhancing bottles with sport caps and integrating them into fitness trackers/lifestyles. Meanwhile, ultra-premium brands offering water sourced from unique microclimates in glass bottles cater to health-conscious, higher income customers. The growing demand for convenience is also supporting single-serve on-the-go bottles and flavors. With constant product iterations, the U.S. Bottled Water remains well-positioned to continue expanding across diverse customer segments in the U.S.

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