Market Study: Bottled water brands

The cannibalization of the bottled water brands

Got milk, anyone? Apparently not. Sales of milk dropped 13% over the last eight years, signaling a trend that affects many industries and brands. For example, it’s led to the rise of bottled water brands, who now reign over the largest sector of the beverage industry.

There are numerous reasons for milk sinking in preference, of which many brands should take note.

Yes, a greater emphasis on reducing fatty foods (and drinks) from our diet is contributing to milk’s decline. Plant-based milks are eating into market share (although not as much as many think). Fewer people are eating cereal for breakfast.

But, most of all, people just aren’t drinking milk. Instead, they’re taking to the bottled water brands, as well as drinking more coffee, tea and energy drinks.

Where the bottled water brands stand now

The bottled water industry, now the king of the realm, stands in a spot similar to where craft beers have been. (Stay with us here.) So, before we dig deeper into the bottled water brands, let’s consider beer.

The industry has long been dominated by the large American lagers: Budweiser, Miller and Coors. But their market share has been dwindling for some time, even as they remain on top. The emergence of craft beers has eaten into their market share (and more people are drinking wine and liquor than beer).

But there lies the issue. In the case of craft beers, there so many different brands that craft beer drinkers have been trained to simply try what’s new rather than having a craft beer brand preference. Only a few have a brand strategy.

What about vodka? (We’ll get back to bottled water brands in a moment.) Have you seen the vodka section at your local ABC Store lately? It takes up rows and rows of space with brands varied from well knowns like Skyy to the weird ones like Firestarter (its bottle is a fire extinguisher) to Dan Aykroyd’s Crystal Head. Companies want to get into the vodka business (or the craft beer business) because the market is growing. But with so many competitors, they end up just cannibalizing each other and go out of business.

Market growth doesn’t necessarily mean brand growth

Therefore, with consumers moving in greater numbers to bottled water, all those players in that market should take note. Just because your category’s growing doesn’t necessarily mean you will. It just means there will be more competitors coming into your market wanting their piece of the pie.

The problem for bottled water brands is that they feel as long as they have a catchy name (probably something related to fresh water), they will make a profit.

Many will. But many more won’t.

Currently, Dasani (owned by Coca-Cola) and Aquafina (owned by Pepsi) are the leading brands in the US market, each with 8.5% market share. Smartwater and Pure Life follow, each with just over 6%.

However, the market leader is actually all the private label companies, holding 24.3% market share. Most of those are simply store-branded products that often come at cheaper prices.

Why private label brands rule the bottled water segment

What does this tell you? That a bottled water industry that sees about 8% growth each year is driven by consumers just wanting…water.

That’s because none of the bottled water brands have given consumers a reason to prefer one over another. Instead of distinguishing themselves from each other, they simply market the category benefits.

bottled water brandsDasani simply says, “Purified and mineral-enhanced water,” even though it’s just filtered tap water. Its main marketing message is: “Invigorate every day with the purified taste of the world’s most delicious water. Splash into life with the refreshing, crisp taste of Dasani.”

Aquafina, one of the first brands to enter the market, says, “Fresh and pure, Aquafina is the perfect companion for happy bodies everywhere.” The bottle reads: “pure water, perfect taste.”

Although this Aquafina ad is from a few years ago, it’s typical of the industry.

Bottled water brands mean nothing

So, basically, the Dasani and Aquafina bottled water brands mean…water. No wonder consumers buy the cheaper private label brands. They’d be stupid not to. The market leaders have taught them to only care that it’s water. Just like the craft beer brands teaching drinkers to only care it’s a craft beer.

Smartwater isn’t much better: “pure and crisp, try it today.” Smartwater, also owned by Coca-Cola, does have the advantage of its name. But it still doesn’t say why you should try it instead of Dasani or Aquafina.

With so many entrants into the category, positioning yourself against another option (such as soda, coffee and tea) is simply building the category. And right now, that’s just helping the cheaper store brands.

Any bottled water brand that aligns itself with an emotional idea of who their customers are will take the category by storm. Right now, they are identified as just water drinkers, no matter which brand they choose.

Remember, the growth of milk stopped too

This is especially important because the beverage category of bottled water brands may stop growing at some point. There was a time when milk, while never the beverage market leader, was preferred by great many, spurred on by the advertising theme of “Got Milk.”

That theme was highly successful, but ever since, marketers have clearly misunderstood its appeal. You’ve all no doubt seen local brands replace the word milk with their product or service and think they’ve got a clever marketing campaign.

It wasn’t the words of “Got Milk” that made the campaign work. It was the image along with it of a celebrity or sports star with the milk mustache, like they were caught drinking a delight. That is, the campaign identified who the milk drinker was. It wasn’t about “fresh” or “pure” or other product benefits. It was about the customer.

Of course, the campaign was an effort by a category (milk) to increase the size of the market itself. What the milk brands eventually forgot was to develop their own individual brands.

So what happened? The store brands took over, because the brands only taught consumers to drink milk. No one swore allegiance to any one brand.

Bottled water brands, take note.

See more posts in the following related categories: Beverage branding
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