It's springtime!

Going with the flow is not an option for water producers in the UK market. Amanda Marcus looks at market trends.

There's little change in the overall picture of the British beverage market - in a nutshell, hot drinks (namely tea and coffee) are in decline and soft cold drinks keep on growing. Among the fast movers, water and fresh juices are booming, as still drinks gain ground from carbonated and demand for natural and healthier products continues.

The 25-35 age group has doubled its consumption of soft drinks in the past 10 years, according to Twinings, and 14% of the 18-plus population don't drink any alcohol. The result is more choice than ever as everyone looks for a share of the cold drinks market.

Water, water everywhere
Bottled water represents everything that today's consumer is looking for - health and wellbeing, convenience and style, affordability and individuality, according to Kevin Bolt, sales and marketing director of bottled water producer Well Well Well.

Grand words, perhaps, but based on substance. Bottled water consumption grew by 6-12% last year (reports differ) but even the lower figure is impressive when other beverages are struggling to retain market share.

The on-premise market varies significantly from the retail side. Almost 80% of retail sales are still water, compared with less than 49% on-premise. Sparkling water is in decline in retail but its on-premise sales continue to grow - on-premise still water sales grew by 34% in the year to the end of September 2001, while sparkling was up by just 5%, according to AC Nielsen figures.

Well Well Well relaunched its Aqua-Pura brand in 2001 under the "pura mind, pura body" strap. It also owns the Ashe Park label, aimed at the top end of the hotel and restaurant trade and coming in still, sparkling and slightly sparkling varieties, and in bottles ranging from 33cl to magnum - useful for parties, says the company's group marketing manager, Jason Williams.

According to Zenith International, unflavoured water is the fastest-growing major product in the soft drinks category, as consumers are more health-conscious about selecting mineral water as their soft "drink of choice", because of its recognised health benefits. Evian, Volvic and Highland Spring Still lead the field. Highland Spring recently revamped its 330ml single-serve glass bottle to complement its one-litre green bottle, and is launching a campaign with the slogan "clearly perfect".

Soft drinks in premium packaging such as glass also seem to be gaining momentum, says Caledonian Clear, which claims to offer the UK's first range of sparkling fruit-flavoured Scottish mineral waters. On average, it says, for every 10% rise in temperature above 17¼C, soft drink sales rise by 5% and water sales by 12%.

Kids' stuff
Highland Spring pioneered the first bottled water exclusively for children last year. Called Looney Tunes Water, it is now worth £500,000 and 14% of sports-cap sales. Do children really care about healthy options, though? No, but their parents do and they are the ones who pay for it, says Abbey Well's managing director Tony Robson. The company last year launched Still Fruits from Waters & Robson, a blend of mineral water with natural fruit flavours - Citrus, Fruits of the Forest, and Peach & Apricot. A low-calorie option aimed at caf‚s, sandwich shops, pubs, bars, and sports and leisure centres, and exclusive to food service, the range is proving a winner with customers aged 11 and upwards, Robson says.

Pep-up options
For those not keen to stick to water, there are plenty of other alternatives. Interest in herbal ingredients is strong, says Twinings, which has launched Elderflower and Ginseng Green Tea in its iced tea range.

Herbal sparkling fruit drink Am‚ has been repackaged by Britvic and now incorporates the Japanese symbol am‚ (meaning "gentle rain") on the bottle to "strengthen its Oriental credentials".

Energy drinks are still growing, says GlaxoSmithKline, and are up by 11.4% year-on-year, compared with 3.5% growth year-on-year in the overall carbonates market. The company will be heavily promoting its Lucozade Energy, Lucozade Sport and Ribena brands this summer, using the likes of Michael Owen and the Lara Croft icon.

"Functional energy drinks have the highest cash rate of sale of any carbonated soft drinks," comments Robson, who is also managing director of the Recharge energy drink. "The retail sales of functional energy drinks almost trebled in 1999, and on-trade sales were estimated to be worth an additional £260m."

Among the traditional soft drinks brands, J2O and Red Bull did well in pubs and clubs in 2001, according to Britvic, while Tango and Fanta suffered competition from premium fruit juices. Cola continues to be the dominant sub-category in leisure and catering, sold mainly through quick-service restaurants on draught.

But total soft drinks sales in pubs and wine bars are in decline as people look for alternative ways and places to spend their time. Britvic says that pubs have been slow to respond to changing lifestyles and increasing health awareness, but the potential is there for those who recognise it - especially the growth in family food opportunities and increasing numbers of women in pubs.

Water Week

Organised by the Natural Mineral Water Information Service (NMWIS), Water Week is scheduled for 29 April to 5 May.

Co-sponsored by Highland Spring, Water Week will encourage people to drink the eight glasses of natural mineral water a day recommended by nutritionists and doctors.

The NMWIS also offers a series of free booklets outlining the benefits of drinking natural mineral water as summer approaches.

For further details, telephone NMWIS on 020 8341 0081.

Keeping cool at work

Helping to spread the bottled water habit are water coolers in the workplace, which have more than tripled in number in the past five years.

Consumption of water from coolers now represents some 20% of the total market, and manufacturers are introducing new models for homes as well as offices, and seeking bespoke presentations to keep customer loyalty.

Offices with more than 60 employees, or restaurants with a medium to large footfall, could save money by bottling their own - literally, according to the Pure Water Company. It provides a compact, on-site purification plant, chiller and carbonation unit, which filter and cool mains water. The service includes maintenance and Pure Water bottles, glasses and coasters, which can be bespoke-branded.

Eco Pure has launched a new Office Water Dispense System for refilling 19-litre water bottles, aimed at offices, works and education facilities. It guarantees savings of 60-80% compared with bought-in refills.

On-premise sparkling water market shares in the UK

Total value for year to September 2001: £97m

Strathmore - 18%
Abbey Well - 11%
Perrier - 9%
Ballygowan - 6%
Hildon - 5%
Decantae - 5%
Others - 46%

Source: AC Nielsen, Well Well Well UK Bottled Water Report 2002

On-premise still water market shares in the UK

Total value for year to September 2001: £83m

Strathmore - 15%
Hildon - 12%
Highland Spring - 10%
Decantae - 7%
San Pellegrino - 6%
Ballygowan - 6%
Abbey Well - 5%
Evian - 5%
Others - 34%

Source: AC Nielsen, Well Well Well UK Bottled Water Report 2002

Thirsty work: did you know?

• Some 48% of Vittel drinkers in Britain are aged 15-24.
• 65% of bottled water drinkers in Britain are women and 35% live in London.
• Aqua-Pura has the most female-orientated profile of the leading brands in Britain.
• Evian has the greatest reliance on London consumers.
• Sparkling water consumers tend to be older and wealthier than still water drinkers.
• Flavoured water consumers tend to be younger and less wealthy than the norm.

Sources: Well Well Well Bottled Water Report 2002, TGI, AC Nielsen