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MP15001

MAPS BOTTLED & MINERAL WATER SEPTEMBER 2001

Overview

Editor: Market Assessment
ISBN: 1-86111-299-8

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This report covers: Still water, sparkling water, usage occasions, seasonal trends, soft drinks, spring water, table water, flavoured water, travelling consumption, hot weather consumption, carbonates, health regime

Companies covered include: Perrier Vittel, Highland Spring, Ballygowan, Spadel, Benjamin Shaw and Sons, Gleneagles Spring Water, DanôneWaters,Well Well Well,Strathmore,Cadbury Schweppes,Camsie Spring,

Table of Contents
Executive Summary
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TABLE OF CONTENTS

Executive Summary	1
1. Introduction	4
2. Strategic Overview	7
Overview	7
General Factors Driving the Market	7
Social, Economic and Demographic Factors	7
Table 1: Household Disposable Income (£bn), 1989-2000	8
Table 2: GB Population and Household Growth (million and percent), 1961-2000	9
Table 3: The UK Labour Force by Sex (million and percent),1971-2011f	10
Table 4: Average Mineral Water Consumption by Standard Regions (cc per person per week), 1997-1999	10
Figure 1: Average Mineral Water Consumption by Standard Regions (cc per person per week), 1997-1999	11
Health and Lifestyle Factors	12
The Weather and Holidays	12
Table 5: Average Hours of Bright Sunshine, England and Wales (hours per day), January 1996 – June 2001	13
Table 6: Household Consumption of Mineral Water (cc per person per week), 1994-1999	14
Figure 2: Household Consumption of Mineral Water (cc per person per week), 1994-1999	14
Overview and General Segmentation of the Market	15
Bottled Water within the Total Soft Drinks Market	15
Table 7: The Total Soft Drinks Market by Volume and Value(million litres and £bn), 1995-2000	16
Table 8: Changes in Volume Sales Year-on-Year ( percent), 1995-2000	16
Figure 3: Changes in Volume Sales Year-on-Year ( percent), 1995-2000	17
Bottled Water Sales through Retail Outlets	17
Table 9: Retail Sales of Bottled Water by Volume and Value, 1995-2000	18
Per Capita Consumption of Bottled Water	18
Table 10: Per Capita Consumption of Bottled Water, 1995-2000	19
Other Segments of the Bottled Water Market	19
Advertising and Sponsorship	21
Market Forecasts	21
3. Market Segmentation	23
Still and Sparkling Water	23
Table 11: Retail Sales of Still and Sparkling Bottled Water by Volume and by Value (million litres and £m), 1995-2000	23
Figure 4: Retail Sales of Still and Sparkling Bottled Water by Volume and by Value (million litres and £m), 1995-2000	24
Table 12: Retail Sales of Still and Sparkling Bottled Water byDistribution Outlet by Volume (million litres), 1999 and 2000	25
Flavoured Bottled Water	26
Table 13: Sales of Flavoured Bottled Water Through AllRetail Outlets (million litres and percent), 1995-2000	26
Figure 5: Sales of Flavoured Bottled Water Through AllRetail Outlets (million litres), 1995-2000	27
Natural Mineral, Spring and Table Water	27
Table 14: Retail Sales of Natural Mineral, Spring/Table and Unsweetened Flavoured Water (million litres), 1995-2000	28
Figure 6: Retail Sales of Natural Mineral, Spring/Table and Unsweetened Flavoured Water (million litres), 1995-2000	29
Table 15: The Total Market for Natural Mineral, Spring and Other Purified/Table Water (million litres), 1995-2000	30
Figure 7: The Total Market for Natural Mineral, Spring and Other Purified/Table Water (million litres), 1995-2000	30
Brands and Retailer Own-Label Bottled Water	31
Table 16: Retail Sales of Bottled Water by Brandsand Own Label by Volume (million litres), 1995-2000	31
Table 17: Retail Sales of Bottled Water by Brandsand Own Label by Value (£m), 1998-2000	32
Table 18: Own-Label Retail Sales† of Bottled Water by Main Distribution Outlet (£m and percent), 2000	33
Figure 8: Own-Label Retail Sales† of Bottled Water by Main Distribution Outlet, 2000	34
Producers’ Brands of Bottled Water	35
Table 19: Retail Sales Shares† of Still Bottled WaterHeld by Major Brands ( percent), 1995-2000	35
Figure 9: Retail Sales Shares† of Still Bottled Waterheld by Major Brands ( percent), 1995-2000	37
Table 20: Retail Sales Shares† of Sparkling Bottled WaterHeld by Major Brands ( percent), 1995-2000	38
Figure 10: Retail Sales Shares† of Sparkling Bottled Water Held by Major Brands ( percent), 1995-2000	39
Table 21: Retail Sales Shares† held by Major Brands,by Distribution Outlet by Value ( percent), 2000	40
Distribution Outlets for Bottled Water	41
Table 22: Retail Sales† of Bottled Water by Main Distribution Outlets by Volume and Val―ue (million litres and £m), 1999 and 2000	42
Figure 11: Retail Sales† of Bottled Water by Main Distribution Outlets by Volume and Val―ue (million litres and £m), 1999 and 2000	43
Packaging of Bottled Water	44
Table 23: Retail Sales† of Bottled Water by Pack Size Volume ( percent), 2000	45
Figure 12: Retail Sales† of Bottled Water by Pack Size Volume ( percent), 2000	46
Table 24: Sales of Bottled Water by Material and Pack Size in Retail, On-Trade and Cater―ing Outlets by Volume ( percent), 2000	47
Import and Export Trade in Bottled Water	47
Table 25: Imports by Volume of Natural Mineraland Other Water (million litres), 1995-2000	48
Table 26: Imports by Value of Natural Mineraland other Water (£m), 1995-2000	48
Table 27: Sources of Imported Water(million litres and percent), 1995-2000	49
Table 28: Exports by Volume of Natural Mineraland Other Water (million litres), 1995-2000	50
Table 29: Exports by Value of Natural Mineral and Other Water (£m), 1995-2000	50
Table 30: Destinations for Exported Bottled Water (million litres), 1995-2000	51
4. Advertising and Sponsorship	52
Advertising Expenditure	52
Table 31: Advertising Expenditure on Bottled Water by Medium ( percent), April to March 1997/1998-2000/2001	52
Figure 13: Advertising Expenditure on Bottled Water by Medium ( percent), April to March 1997/1998-2000/2001	53
Table 32: Advertising Expenditure on Bottled Water as a percentage of Retail Sales by Value(£m and percent), 1995/1996-2000/2001	53
Table 33: Advertising Expenditure by Bottled Water Brands (£000), 1995/1996-2000/2001	54
Sponsorship	55
5. Distribution — Importance of Sectors	56
Overview	56
Table 34: Grocery Outlets† and Share of Grocery Sales ( percent), 1999	57
Table 35: Grocery Retail Structure (number of outlets, 2001	57
Grocery Multiples	59
Other Sectors	59
Retail Prices for Bottled Water	60
Table 36: Grocery Multiples’ Prices for Bottled Water (£), July 2001	61
6. International Bottled Water Markets	64
Table 37: Western European and US/Mexican Consumption† of Bottled Water(billion li―tres), 2000	64
7. Economic and Social Analysis	65
Economic Factors	65
Social Factors	65
8. Consumer Dynamics	67
Overall Responses	67
Table 38: Consumer Purchase and Consumption of Bottled Water ( percent respondents), July 2001	67
Table 39: Those Who Buy or Drink Bottled Water ( percent respondents), July 2001	69
Those who never used to buy but now do/Those who drink more than 1 year ago	70
Table 40: Those who Never Used to Buy But Now Do/Those Drinking More Now Than 1 Year Ago ( percent respondents), July 2001	71
Those who drink at home quite often/Those who prefer still to spar―kling	72
Table 41: Those Who Drink at Home Quite Often/Prefer Still to Sparkling or Carbonated ( percent respondents), July 2001	73
Those quite likely to drink with lunch in the week/Frequently drink―ing when out at bar, pub, restaurant	74
Table 42: Those Quite Likely to Drink With Lunch/Frequently Drinking When Out at Bar, Pub, Restaurant ( percent respondents), July 2001	75
Those sometimes buying flavoured mineral water/Preferring un―sweetened flavoured water to sweetened	76
Table 43: Those Sometimes Buying Flavoured Mineral Water/Preferring Unsweetened Fla―voured Mineral Water to Sweetened ( percent respondents), July 2001	77
Those only buying bottles of branded water/Only buying retailer own label	78
Table 44: Those Only Buying Bottles of Branded Water/Only Buying Retailer Own Label ( percent respondents), July 2001	79
Those saying that there are too many brands to choose from/That they prefer to drink carbonated soft drinks	80
Table 45: Those Saying that There are Too Many Brands/Preferring to Drink Carbonated Soft Drinks ( percent respondents), July 2001	81
Those buying bottled water because it is healthy/Because they do not trust the purity of their tap water	83
Table 46: Those Buying Bottled Water Because It Is Healthy/Drinking at Home Due to Not Trusting Purity of Tap Water ( percent respondents), July 2001	83
9. Company Profiles	85
Major Producers	85
Table 47: Estimated Shares of the Retail Bottled Water Market held by Major Producers by Volume and Value ( percent), 1998-2000	85
Table 48: Producer’s Shares of Retailer Own-LabelSales of Bottled Water by Volume ( percent), 2000	87
Danône Waters	87
Perrier Vittel	88
Highland Spring	89
Well Well Well	89
Strathmore Mineral Water	89
Cadbury Schweppes	90
Benjamin Shaw & Sons	90
Spadel	90
Ballygowan	90
Campsie Spring	91
Gleneagles Spring Water	91
Other Producers	91
Retailer Brands	92
Table 49: Estimated Retail Shares of Bottled Water Market held by Grocery Multiples’ Own Labels by Value ( percent), 1999 and 2000	92
10. The Future	93
Overview	93
Market forecasts	93
Table 50: Forecast Retail Sales of Bottled Waterby Volume and Value (million litres, £m, pence, million and litres), 2000-2006	94
11. Further Sources	95
Trade Association	95
Major Bottled Water Producers	95
Major Grocery Multiples	96
Market Research Organisations	97
Trade Journals	98
General Sources	98
Bonnier Information Sources	99
Government and Official Sources	100
Key Note Research	101
The Key Note Range of Reports	102

EXECUTIVE SUMMARY

There have been a number of social and economic factors that have continued to drive the bottled water market forward, even through the recession of 1989 to 1993. These include the acceptance of ‘buying water’, with drinking bottled water becoming a more mainstream activity, in the late 1980s and through the 1990s, compared to being viewed more as exclusive or trendy, prior to that time. Additionally, changes in work and lifestyles have benefited the market. The trend away from family mealtimes and towards individuals eating when convenient to them, in part as a result of the increasing numbers of working women, has led to significant growth in the value of ‘convenience’. Also, the recession led, through sweeping redundancies, to leaner resourced companies and fewer employees having to cover more work. This resulted in an increase in working lunches, featuring takeaway foods and drinks, at the expense of restaurants.

But, arguably, the main driver has been the continuing interest in health and fitness, aided by programmes and articles in the media, which has led younger females, particularly, to buy and drink bottled water. Producers, thus, very often use sport and fitness related images in their promotions. This health factor has been supported by occasional drinking water pollution incidents (e.g. chemical spills, leaching of fertilisers, etc. into rivers), increasing the numbers of people drinking bottled water. Lastly, the weather is, undoubtedly, an important factor in market growth, with spells of hot weather increasing sales of bottled water substantially. However, 2000 was a very poor year for sunny weather, yet bottled water sales still showed a significant increase.

The consequent dynamic nature of the bottled water market, showing strong volume and value growth and significant changes in its segmentation, has been the reason for Key Note continuing to cover the sector. Attracting younger (and female) purchasers, in particular, the market has switched from being split equally between sparkling and still water, to substantially still, and from supply being met significantly from imports, to UK sourcing. This has led to the spring (and ‘table’) water segment increasing at the expense of natural mineral water.

The major sources of data used have been ACNielsen, whose retail audits cover all the most substantial outlets in detail, and Zenith International, whose research covers the total soft drinks market. Additionally, NOP has been exclusively commissioned by Key Note to investigate agreement to selected statements regarding purchasing and consumption of bottled water, with answers identified principally by sex, age group, socio-economic status and geographic region. As a whole, this report presents the most complete and up-to-date coverage of an important grocery sector, with information on market size and segmentation, producers and retailers, market and consumer trends and forecast sales, over the next 5 years.

Bottled water has increased its share of the total soft drinks market 1990, to and 2000. Volume share is predicted to continue to increase over the period to 2005. A substantial proportion of sales are estimated to have been made through retail outlets, in 2000, with the remainder being made through the on-trade and catering outlets and 18 percent through use in office water coolers.

Although per capita consumption of bottled water, in the UK, has grown substantially, in recent years (showing the highest growth in Western Europe), it is still low compared to many other Western European countries and the US. The survey identifies that lower consumption in the UK is, in part, due to the fact that only just over a third of households regularly consume any bottled water — although two-thirds are shown to drink bottled water, when less regular consumers are included.

Over the last decade, changes in preference have moved bottled water consumption from sparkling to still water. Additionally, supply of water has moved from imports, UK sources. This has resulted from the substantial growth in retailer own-label water sales, both still and sparkling, with almost all being UK sourced. France now accounts for a large proportion of imports, by volume, represented particularly by the leading brands of Evian, Volvic and Perrier, and smaller brands Vittel and Badoit. Retailer own label now accounts for a considerable proportion of market volume and value.

A dominant, and increasing, share of retail sales of bottled water, according to ACNielsen’s retail audit coverage, goes through grocery multiples/co-ops . The balance is made through petrol station forecourt shops, grocery independents, off-licences and CTNs (confectioners, tobacconists and newsagents). However, ACNielsen does not cover the wide range of other outlets through which bottled water is available. These include variety stores, medicines/toiletries retailers, department stores, sandwich and snack shops, kiosks, railway/airport shops, garden centres, etc., and it is estimated that retail outlets other than grocery multiples could account for a significant proportion of sales volumes. The fact that sales by value substantially exceed volume, through these smaller ‘impulse’ outlets, makes them of significant interest to producers of bottled water brands, particularly those who do not make for own label. These producers can largely avoid competition with

own-label brands, at these outlets, and also achieve higher profit margins.

Advertising expenditure has been increasing since the low point, in

1996/1997. Television, and increasingly posters, are the major media used, although individual spends by producer vary considerably from year to year. Most producers are also substantial sponsors of sporting and cultural events with their brands — such as Wimbledon tennis (Perrier and now Buxton), Scottish snooker players (Highland Spring), MCC Cricket (Buxton), and UK/GB Athletics (Aqua Pura).

Danone Waters, with the Evian and Volvic brands, is substantially the major player in the branded sector of the still water market, followed by Perrier Vittel (with Buxton and Vittel) and Highland Spring. Within the sparkling branded sector, Perrier Vittel (with Buxton and Perrier) is the market leader, followed by Highland Spring. The fourth-largest supplier to retail outlets, Well Well Well, with its Aqua Pura and smaller Ashe Park brands, is much more significant in own-label production — second only to the major

own-label supplier Campsie Spring. A further important own-label producer is Benjamin Shaw.

After slowing growth predicted for 2001 and early 2002, volume and value growth is predicted for the period to 2006. A large proportion of volume sales are forecast to be still water, by 2006, and per capita consumption is expected to increase.

Text 2001MAPS

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