The total UK soft drinks market is worth £6.1bn and is growing at 2.8%.
Within this, the bottled water segment represents 10%.
The total UK bottled water segment is currently worth over £610m in annual sales, and declining by 5.3% YOY.
Danone Waters is by far the biggest bottled water manufacturer, with its brands accounting for almost 40% of total sales.
Evian is the best selling water brand, with a 17.1% share of the category.
Volvic is the second best selling water brand, with a 13.2% share of the category.
Bottled water overview
Last year, over 1.2bn litres of bottled water were drunk in the UK, with shoppers spending over £69,000 an hour on bottled water.
Key product drivers within the bottled water segment include the UK’s number one and number two bottled water brands, Evian and Volvic respectively.
Last year’s bad weather, particularly in the key summer, had a severe impact on the bottled water segment, with sales down by 5.3%.
However, if we strip out the summer months of May-July, then bottled qater showed growth of 1.9%, versus last year, with plain still showing good growth of 4.1%.
The bottled water market has been in strong growth over the past five years, 2007 aside, but there is still significant room for growth, with the per capita consumption of bottled water in the UK still lagging significantly behind other countries (approximately half of the per capita consumption of bottled water in the US for example), so there is still a massive opportunity for the UK.
Danone Waters activity in 2008
Evian Detox
Evian’s hugely successful Detox campaign is back for the start of 2008 for the 8th year running, with a £1.5m marketing campaign, which is 15% bigger than last year.
Detox 08 will communicate on the purity of Evian and the role it plays within body renewal, as 60% of your body is made up of water. Every six weeks the water in your body is mostly renewed by what you drink.
Steve Flanagan, category strategy manager at Danone Waters, comments: “The bottled water segment continues to drive the soft drinks market and is predicted to continue to do so. Throughout January, bottled water provides one of the only growth areas for soft drinks in-store – with 91% of this growth coming from plain water.
“Our annual Detox campaign continues to go from strength to strength and we recommend retailers take advantage of the sales opportunity from consumers’ start of year health kick.”
Volvic 1 for 10
Danone Waters has launched its Volvic 1l-for-10l campaign in partnership with international relief and development charity World Vision. For every one litre of Volvic sold in the UK, Danone Waters and World Vision will generate ten litres of clean and safe drinking water in communities across Africa through the provision of mechanised wells.
The 1-for-10 activity will be linked to pack sales across more than 70 million specially branded packs of Volvic from the end of February to September 2008, and will be supported with a £3m marketing campaign.
Steve Flanagan comments: “Being a company that is passionate about water, we feel very strongly about the fact that some people in the world do not have access to the daily water they need. We’re expecting UK consumers to get behind Volvic and World Vision and really support 1-for-10.”
Evian sponsors Wimbledon
Evian, the UK’s number one Bottled Water brand, is to become the Official bottled water of The Wimbledon Tennis Championships in a multi-million pound deal over the next five years.
The new partnership with the All England Club runs until 2012 and will see Evian provide the players, officials and spectators with water throughout The Championships.
Steve Flanagan continues: “We are very excited about our partnership with the All England Club and that Evian will be the Official bottled water of The Wimbledon Tennis Championships for at least the next five years.
“Evian has a recognised association with summertime and tennis, and this particular partnership, with the most iconic and premium of all tennis tournaments, is a perfect fit for the brand.”
Volvic ToF relaunch
The Volvic Touch of Fruit range has been reinvigorated with a brand new label design in order to boost on shelf-appeal and to drive trial amongst consumers.
The new labelling, which will almost double in size, has rolled out across all bottles within the range from the 50cl bottles right through to the 1.5l bottles.
Steve Flanagan comments: “Along with the label change, we have introduced coloured caps to the Volvic Touch of Fruit original range, to further re-enforce both the range and flavour differentiation in-store: VToF Strawberry Original will now have a red cap and the VToF lemon & lime variant will have a yellow cap. The sugar free range will remain in the iconic blue caps.”
Danone Waters’ brands
Evian – the market leader
Evian is the market leader in the bottled water segment, currently holding a 17.1% market share, Evian is worth almost £105m in annual sales, and consists of a range of formats to meet every consumption occasion, including 33cl, 50cl, 1l, 1.5l, 2l as well as a SportsCap 75cl, all available in multipacks as well as the single bottles.
Volvic – Another top seller
Volvic plain still is the UK’s second best selling plain still water brand. Volvic has a 13.2% share of the UK’s bottled water category and is worth over £80m in annual sales. The Volvic line up consists of 50cl, 1l, and 1.5l formats, available as single bottles or in multipacks.
Touch of Fruit
In addition to Volvic plain still water, a further member of the Volvic family is the flavoured Touch of Fruit variant. Launched just eight years, Volvic Touch of Fruit is now the number one brand in the flavoured still water category, and is available in 1.5l and 50cl formats, with flavours such as Strawberry, Lemon & Lime and Orange & Peach.
The flavoured water segment is worth over £165m each year. Volvic Touch of Fruit is the most recognised and leading brand in flavoured still, accounting for around 35% of the segment with sales of almost £58m. Volvic Touch of Fruit is available in a choice of either Original or Sugar Free.
Volvic Revive
A great way to get an invigorating lift, Volvic Revive is a soft energy drink that contains all the volcanicity of Volvic Mineral Water. It’s also the perfect solution for health conscious consumers looking to refresh and revitalize, as Volvic Revive comes with no added sugar and contains stimulating plant extracts such as ginseng and guarana. Refreshing Volvic Revive is available in Berry Blast flavour, on sale in a 50cl bottle with a convenient sports cap, making Volvic Revive great for those on the go.
V
Popular energy drink V is now available in a price marked pack format. The 99p recommended retail price will be clearly highlighted on a red background at the top of the 250ml green can design.
The price marked packs will stand out on shelf, driving awareness at the point of purchase.
Joao Maria, V brand manager, says: “The 99p price marked pack is aimed at driving trial among our core target audience. V has high repeat rates with its current consumers due to its unique taste and the 99p price marked pack is a great opportunity to expand the product to a wider audience whilst generating greater sales for retailers.
“On top of this the price marked packs will also help us to keep the momentum up following on from our six-month marketing campaign which has just recently finished, which included radio, TV and press.”
The number 1 selling energy drink in Australia, V is an invigorating carbonated energy drink with caffeine from coffee beans and caffeine-rich berries of the guarana plant and essential B-vitamins.
Making the most of the bottled water category
There are three key areas where retailers can really make a difference to the profits from their Bottled Water display.
Simply by focusing on the availability of water brands, especially during the hot summer months, retailers will notice a significant difference in their sales.
The second area to focus on is to stock the best selling brands and to support the key campaigns, such as Evian Detox or Volvic 1 for 10.
Finally – from research that Danone Waters have conducted, we know that clear and engaging communication (signage) in store delivers further incremental benefit of up to 4% for bottled water.
Steve Flanagan says: “Retailers need to be aware that bottled water is now seen as a soft drink and a drink of choice, and so it needs to be given the space in-store that it deserves.
“Brand names are increasingly becoming a factor in the consumers’ decision making process, so stocking the best selling brands is imperative.”
Talking to independent retailers
After successfully introducing a field sales force in 2007 to call on 9,000 independent retailers, Danone Waters will be extending this in 2008 to call on 14,000 independent retailers.
The sales force is flexible and aims to meet retailers’ needs.
The main priority for the sales force will be to drive distribution of Danone Waters brands in the independent channel – but also to address the space allocation to water, particularly in the summer months where this can really become an issue.
In tests in these stores, where water is traditionally under spaced, when the space was addressed to water, total soft drinks category sales grew by 8%.
Trends in the UK bottled water market
Continuing trends within the UK bottled water category:
Health/functionality: bottled water is viewed very much as a soft drink by consumers, driven by the health trend.
As water is sited alongside sugary fizzy drinks, Danone Waters has introduced the SportsCap format of both Evian and Volvic to satisfy the thirst of the health consumer
Convenience/on the go/time poor: while the majority of consumers purchase their bottled water in large formats from the multiples, it is important for retailers not to forget the consumers who are on the go, especially time poor office workers in the summer months and stock up with Evian and Volvic to meet their thirst demands.
Steve Flanagan comments: “There has also recently been an emergence of functional waters into the market, with a growing amount of water products now claiming additional benefits. This is in keeping with the growing consumer awareness of health, and delivering in a much more functional way.”
The effects of the poor Summer in 2007 on the bottled water segment
Steve Flanagan says: “The bottled water segment is much more seasonally reliant than other soft drinks categories and changes in the temperature can trigger a noticeable effect on water sales.
“In terms of immediate consumption, if the temperature rises from 14˚C to 25˚C, retailers will see a 75% increase in sales, and if the temperature rises to 30˚C, water sales will increase by 125%. Consequently, the bad summer in 2007 had a severe impact on bottled water.
However, if we strip out the summer months of May–July, then bottled water showed growth of 1.9%, versus last year, with plain still showing good growth of 4.1%.”
In 2008 we have three major initiatives to drive bottled water sales to ensure sales are not as affected as they were in 2007, specifically:
Evian Detox Campaign – now the 8th year of this hugely successful campaign which we know resonates with consumers – the Detox activity in 2007 was hugely successful at driving growth for Evian (13.6% v 2006), and also stimulating plain still water growth of 4.3% in the same period
The roll out of our biggest global initiative in Volvic 1 for 10, where for every one litre of Volvic sold in the UK, Danone Waters and World Vision will generate ten litres of clean and safe drinking water in communities across Africa through the provision of mechanised wells
Finally – this year we embark on our first year of a five year sponsorship deal with Wimbledon with Evian.
In addition to all the above, in 2008 Danone Waters will also increase our field sales force by 50% to ensure availability of bottled water at key time of the year
Taking the segment forward into 2008 and beyond
Over the next 12 months, there are two key focus areas for the industry:
1) We need to restore the momentum of the category. Last year’s poor summer weather meant that the category did not benefit from its typical surge in penetration. We need to get those consumers back into the category, and back into the habit of buying bottled water.
2) We need to ensure that consumers are fully informed about the choice that Natural Mineral and Spring Waters provide. They are, by law, naturally pure, and undergo no chemical treatment. In this respect, they offer consumers a very different proposition to tap waters. It’s now well understood that good hydration is essential to health and wellbeing. In on-the-go situations, bottled water is, of course, the accessible and convenient solution for those who are looking for pure and simple hydration.
Flanagan concludes: “These are important messages for us to continue to get across, both to restore category momentum, but also to counter the emotive environmental arguments about our industry that circulate in the media from time to time. We are committed to providing consumers with a quality product, and to ensuring that, in doing so, we apply the highest level of environmental responsibility.”
Is Danone Waters focused on sustainability, and what is it doing?
Steve Flanagan comments: “Sustainable development has been at the core of the Danone Group business philosophy and decision making for over 30 years.
“We are fully committed to continuing to achieve long term sustainability and our ongoing sustainable development programme has accomplished significant results.
“For example over the past 15 years we have achieved a 30% reduction in the weight of PET bottles and has increased the proportion of miles its products travel by train to 70% of the total distance.”
What is Danone Waters doing about its carbon footprint?
Danone has been working for the last two years to establish precise measurements of the carbon footprint of its water brands, Evian and Volvic.
These measurements have enabled Danone to set concrete new targets to reduce CO2 emissions, and the company expects to achieve a 5% reduction in 2008.
Trains, and particularly electric trains (as used in France) are a particularly environmentally friendly mode of transport, and are being used progressively more by Danone Waters. This increased use has been a major factor of the significant reduction in the carbon footprint of both Evian and Volvic.
Danone Waters is working to increase the proportion of miles travelled by its brands by train to 73% of the total distance right from the sources in France to their UK warehouse. This figure was 59% in 2005, and the Company is working hard to increase it further.
Flanagan comments: “We deliver over 50% of our products directly to our UK customers from our North European depots; this figure is up from 20% in 2005. We have worked hard to ensure this policy factors in a greater use of electric trains; which are far less polluting than other means of transport such as lorries and we are therefore further reducing our CO2 footprint.”
What are Danone Waters doing about reducing their packaging and ensuring it is recyclable?
Steve Flanagan comments: “Over the last 15 years Danone Waters has achieved a 30% reduction in the weight of PET bottles, and in the last three years alone we have reduced the average weight of Evian and Volvic bottles by 11%.
“From early 2008 we are phasing in Evian & Volvic bottles manufactured from recycled PET, and Volvic is launching a pilot project with a City Council to improve PET recovery and recycling in sring 2008.”
What effect does temperature have on bottled water sales?
Steve Flanagan comments: “Statistics show that the three months from June to August account for a massive 35% of annual water sales as the hotter temperatures increase consumer demand for chilled water.
“Merchandising bottled water correctly in this critical period can make a real difference to profit. Retailers can take full advantage of this opportunity by ensuring bottled water is given space in the chiller and by keeping their shelves fully stocked.”
Strategic placement of bottled water utilising bulk stacks and dump bins also plays an important role in driving incremental sales. Although displayed at ambient temperature, shopper research indicates that in hot weather and the absence of chilled water, shoppers will purchase ambient water in preference to other ambient soft drinks because of water’s ability to refresh, quench thirst and re-hydrate.
Steve Flanagan explains: “A change in the temperature can trigger a noticeable effect on water sales. In terms of immediate consumption, if the temperature rises to 25˚C, retailers will see a 75% increase in sales, and if the temperature rises to 30˚C, water sales will increase by 125%, making it imperative to be fully prepared with the water chiller correctly merchandised for the hot summer months. An easy way to keep on top of sales forecasting is simply to look at the weather report.”
What does Danone Waters do to help local communities?
Steve Flanagan says: “Danone Waters has different community initiatives, from local projects in Ealing where our head office is situated with the Ealing Foster Children Association and School Partner programme through to the Volvic 1 for 10 programme with World Vision happening this year that will provide safe, clean water to villages in Africa by digging wells and assuring their sustained maintenance. We also work with FareShare, the community food network, and will continue to assist in the emergency supply of bottled water in times of national crisis, such as the flash floods last summer.
“Danone Waters also supports its employees’ charity initiatives by matching their donations. For every pound our employees raise for a charitable organisation Danone will match another pound to their fund.”
Why do consumers choose bottled water over tap?
Steve Flanagan comments: “There are a number of reasons why consumers choose to drink bottled water over tap water. One of the main reasons is for convenience, as bottled water offers the perfect solution for those consumers who are out and about, on the go; especially any time poor office workers throughout the hot summer months.”
Why do consumers choose water over other drinks?
Steve Flanagan says: “The main reason for consumers choosing bottled water over any other type of drink in the hot summer months is that bottled water is more effective at quenching thirst than juice or a carbonate drink. Indeed, even if brands such as Evian or Volvic are displayed at ambient temperature, shopper research indicates that in hot weather and the absence of chilled water, shoppers would rather purchase ambient water in preference to other ambient soft drinks because of water’s ability to refresh, quench thirst and re-hydrate.”
