Bottled water sales reach saturation point in China while other Asian markets grow

By Lester Wan contact

- Last updated on GMT

Sales volume growth of bottled water in China is expected to further fall to 2.8% by 2021, according to market intelligence agency Mintel. ©GettyImages
Sales volume growth of bottled water in China is expected to further fall to 2.8% by 2021, according to market intelligence agency Mintel. ©GettyImages
China’s bottled water sales volume growth dipped from 5% in 2015 to 4.2% in 2017, due to market saturation and intensified competition in beverages, but other Asian markets are in the top five fastest growing.

Sales volume growth of bottled water in China is expected to further fall to 2.8% by 2021, according to market intelligence agency Mintel.

This is despite China’s bottled water market having been forecast to reach a sales volume of 27 billion litres last year, up from 25 billion litres in 2015.

The growth of China’s bottled water market has been relatively fast, with per capita consumption shooting up from just five litres in 2007 to 20 litres in 2017.

“Due to trends in premiumisation, China’s bottled water industry has seen rapid growth over the past decade,” ​said Loris Li, associate director for Food and Drink at Mintel.

“However, it was only a matter of time before market saturation started inhibiting growth potential for bottled water brands, especially amidst intensified competition in the wider beverage market.

“With more Chinese consumers drinking bottled water, brands are under pressure to differentiate themselves from rivals. Despite a saturated market, innovation opportunities still exist, and premiumisation remains key for value market growth.”

While China remains one of the biggest bottled water markets globally, the sales volume of bottled water is still comparatively low to more developed markets such as Mexico (222 litres per capita) and the US (120 litres per capita).

Other Asian markets growing

Around the globe, bottled water remains one of the strongest performing sectors of the non-alcoholic drinks market with retail sales volume in key markets climbing by 6.5% between 2016 and 2017, to reach an estimated 203 billion litres.

The US is the largest bottled water market in the world, with volumes forecast to reach 39 billion litres in 2017. This is followed by Mexico (28.7 billion litres) then China (27 billion litres) and Indonesia (16 billion litres) representing Asia in the top four globally.

Meanwhile, India’s bottled water sector outpaced the growth of any of the other major global markets between 2016 and 2017, recording an impressive 19% growth, though from a low base — an estimated 4.8 billion litres in 2016 to 5.7 billion litres in 2017, according to Mintel.

“This growth is being driven by rising incomes, consumer concerns over hygiene, and convenience needs, particularly when out of home,”​ said Alex Beckett, associate director for Food and Drink, Mintel.

“India has a fragmented and comparatively unregulated bottled water market but big, global companies appear to be keen to expand their presence in the country.”

Beckett also said that India is still considered a sleeping giant in the global market, with its population being among the largest in the world.

Notably, the rest of the top five fastest-growing bottled water markets are also in Asia. They are Indonesia at 13.2%, Vietnam at 11%, the Philippines at 10.6% and South Korea at 9.9%.

Opportunities and characteristics

Mintel’s research shows, partly due to having more premium options in the market, 50% of Chinese consumers aged 20-49 drank unflavoured sparkling water in 2016 — having greatly risen from only 29% in 2015.

Furthermore, three in five (60%) Chinese consumers drank flavoured sparkling water in 2016, having doubled from only 30% in 2015.

While China’s bottle water market appears to have stagnated overall, these statistics might indicate there are still opportunities in particular premium sub-categories.

Moreover, according to Mintel, more people around the world are switching from carbonated soft drinks (CSDs) to bottled water due to health concerns such as sugar content.

The firm’s research reveals that 25% of Americans claim to be drinking more water and 76% of these say they are drinking fewer CSDs. Additionally, 70% claim to be increasing water intake to reduce sugar intake.

In the UK, as many as 48% of bottled water drinkers/buyers switched over from other drinks such as CSDs, raising bottled water consumers to 55% of the consumers under the age of 34.

On top of that, the Mintel Global New Products Database (GNPD) reveals that there was an increase in the number as well as share of flavoured water launches bearing a low/no/reduced (L/N/R) sugar claim from January to December 2017.

Of all the flavoured waters launched globally in 2017, those bearing a L/N/R sugar claim accounted for 32% of launches, up from 23% in 2016.

Said Beckett, “The growth that the global water market is experiencing reflects consumers’ preference for less sugary drinks, lively levels of innovation, and uncertainty about the safety of domestic water supplies.

“Growth is also benefiting from an increased willingness among consumers in certain markets to pay for premium bottled water. Flavoured waters with the low/no/reduced sugar claim can appeal to consumers who are switching off of sugary drinks, but still want flavour, adding momentum to growth in the wider bottled water market.”

In this vein, speciality food ingredients and solutions firm Tate & Lyle recently doubled its food application laboratory in Shanghai​, to better cater to growing demand from consumers and customers for healthier food and beverage options.

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