Solving the Bottled Water Dilemma: Premiumization

It appears the bottled water industry faces criticism matched with its rising demand. Fortune announced bottled water has surpassed soda as the most consumed beverage in America. The Toronto Star then issued a rallying cry to wean Canadians off bottled water. It seems nefarious consumers pay for something that’s available for free. While many feel the solution is educating the merits of tap water, co-existence with bottled water is necessary. Consumers must be equally aware on bottled water’s benefits to make an informed decision. Some say this is already happening, as marketers combat criticism by touting their bottled water’s differentiation with premium, added benefits. These new items and many others are finding success as consumers search out benefits beyond hydration. So how can retailers position themselves to capitalize on the growing popularity of premium bottled water?

One key step is improving in-store visibility. An undeniable truth is bottled water of all types are increasing ad support. Premium segments – be it sparkling, plant-based, or enhanced – are commercializing new items and growing their share of voice to keep pace. AdWeek reported that soda companies are investing more advertising for premium water brands in favour of soft drinks. I also wrote about SodaStream’s resurgence by their shifting focus to sparkling water. All this activity elevates purchase intent for premium, and invites build margin- and basket-building opportunities. After all, flat water is inexpensive and many units must be sold to equate the profit premium bottled water generates. Expanding premium’s in-store visibility outside the aisle converts purchase intent to more profitable sales given the added exposure. And with hot weather returning, now is the time to stock premium bottled water in fridges near checkout to attract impulse trade-up.

Another element is shopper navigation down the aisle. With numerous water options, shopper education on premium benefits becomes critical. Carbonated, plant-based, and functional waters are all emerging segments lack appropriate shopper education. At-shelf communication can help shoppers distinguish the benefit they need, or confirm their choice for flat water. Shelf organization is equally important to navigation. Group products by benefit (ie sports recovery) or segment (ie functional water) to guide the shopper at the purchase point. Anchoring the aisle with premium bottled water gives the retailer every opportunity to maximize profit. On one hand, the premium segments encourage exploration and require product education. On the other hand, flat water is a routine purchase and shelving this segment at the center drives foot traffic down the aisle to avoid congestion at the beginning of the aisle.

The scrutiny between flat and tap water will persist, and premium bottled water could be caught in the crosshairs. However, premium bottled water serve a purpose as consumers migrate to healthier options and demand for functional products grows. After all, waters that increase cell regeneration, neutralize stomach acidity, or improve alertness have found success in the market, and are distinct from flat and tap water. They also serve at the gateway to category premiumization. Manufacturers are doing their part to grow the segment’s share of voice. The onus rests on retailers to configure their store environments to take advantage of this opportunity.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: