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Bottled Water - China - February 2013

“In the future, bottled water companies that are able to do so need to look at entering the high-end market and finding their own water sources or acquiring small businesses with their own high-quality water source. Activity in this segment has been low-key and quiet to date, but as can be seen from the success of this segment in some foreign markets, the potential for growth should not be underestimated.”

– Gao Haiping – Research Manager

 

Report Introduction:

Packaged water has only been sold in China for a little over 30 years. The category has posted significant growth due to the market’s young age, with volume sales growing at a CAGR of 24.4% over the past five years. The category posted volume sales of 18,119 million litres in 2007, reaching nearly 47,890 million litres in 2011, and an expected 54,048 million litres in 2012. Over the next five years, volume sales CAGR is expected to slow but remain within double-digits at 13.5%.

Environmental pollution, both surface and groundwater, is encouraging people to consume more packaged water. Rapid urbanisation and economic development has led to more people being on the move or doing outdoors activities. Consumers also like that packaged water does not have anything added to it and is more affordable compared with other soft drinks.

The packaged water market today is highly fragmented and even more so for the water cooler market, with the top ten companies combined accounting for less than 60% of market share. National brands are generally weak, and there are numerous regional brands.

In the future, bottled water companies that are able to do so need to look at entering the high-end (eg mineral water) market and finding their own water sources or acquiring small businesses with their own high-quality water source. The market share of small bottled water is low and requires more investment from companies while the flavoured water segment has great potential. Activity in this segment has been low-key and quiet to date, but as can be seen from the success of this segment in some foreign markets, the potential for growth should not be underestimated.

 

Liqueurs - UK - January 2012

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Table of contents

  1. Introduction

        • Figure 1: Bottled water classification pyramid
      • Methodology
      • Executive Summary

          • The market
              • Figure 2: Volume sales of packaged water in China (million litres)
            • Companies and brands
              • Figure 3: Leading packaged water companies, by market share (%), 2011
            • The consumer
                • Figure 4: Reasons for drinking bottled water for each occasion, November 2012
              • Issues in the market
                • Packaged water is going high-end
                  • Marked scope for growth in flavoured water
                    • Convenience of consumption and purchase are important factors
                    • The Market

                        • Market size
                          • Figure 5: Growth trends in the bottled water market in China, 2007-12
                        • Issues in the market
                          • Differences in regional climate and precipitation
                            • Figure 6: Maps of mean annual temperature and precipitation in China
                          • Traditional Chinese concepts of health
                            • China faces an increasingly serious lack of freshwater resources
                              • Tap water is still not safe to drink from the tap
                                • Population mobility and outdoor activities on the rise
                                  • Packaged water is considered good value for money
                                    • Strengthening of regulations by the government
                                      • Other soft drinks contain additives
                                        • Market segmentation
                                          • Figure 7: Volume sales of packaged water in China, by retail and non-retail (mn litres), 2007-12
                                          • Figure 8: Value sales of packaged water in China (RMB bn), 2007-12
                                        • The forecast
                                          • Figure 9: Volume sales of packaged water in China (million litres)
                                          • Figure 10: Value sales of packaged water in China at retail, (RMB mn)
                                          • Figure 11: Volume sales of packaged water in China at retail, (million litres)
                                          • Figure 12: Volume sales of packaged water in China at non-retail, (mn litres)
                                      • Companies and Brands

                                        • A highly fragmented market with numerous brands
                                          • Competition in the bottled water market is, to a large extent, a competition for water sources
                                            • Figure 13: Leading packaged water companies, by market share (%), 2011
                                          • Companies
                                            • Master Kong
                                              • Wahaha
                                                • Nongfu Spring
                                                  • C’est Bon Food and Beverage (Shenzhen) Co. Ltd.
                                                    • Danone
                                                      • Coca-Cola
                                                        • Jiangxi Runtian Beverage Co. Ltd.
                                                          • Nestlé
                                                            • Sichuan Blue Sword
                                                              • Ganten
                                                                • Uni-President
                                                                  • Tibet 5100 Water Resources Holdings Ltd.
                                                                  • The Consumer

                                                                    • The core bottled water consumer
                                                                      • Frequency of drinking bottled water
                                                                          • Figure 14: Frequency of drinking each type of soft drink, November 2012
                                                                        • Bottled water sales channels
                                                                            • Figure 15: Channel of purchasing bottled water, November 2012
                                                                          • Occasions of drinking bottled water
                                                                            • Figure 16: Occasions of drinking bottled water, November 2012
                                                                          • Reasons for drinking bottled water
                                                                            • Figure 17: Reasons for drinking bottled water, November 2012
                                                                          • Attitudes towards and opinions regarding bottled water
                                                                            • Figure 18: Attitudes towards bottled water, November 2012
                                                                          • Consumer loyalty among the major brands
                                                                            • Master Kong
                                                                              • Figure 19: Tingshin Group (Master Kong) brand loyalty (%), November 2012
                                                                            • Wahaha
                                                                              • Figure 20: Wahaha brand loyalty (%), November 2012
                                                                            • Nongfu Spring
                                                                                • Figure 21: Nongfu Spring brand loyalty (%), November 2012
                                                                              • C’est Bon
                                                                                • Figure 22: C’est Bon brand loyalty (%), November 2012
                                                                              • Robust
                                                                                • Figure 23: Robust brand loyalty (%), November 2012
                                                                              • Coca-Cola
                                                                                • Figure 24: Coca-Cola brand loyalty (%), November 2012
                                                                              • Nestlé
                                                                                • Figure 25: Nestlé brand loyalty (%), November 2012
                                                                            • Growth Potential for Premium Bottled Water

                                                                              • Key points
                                                                                • High-end bottled water is becoming increasingly popular
                                                                                  • Growth driver in the high-end bottled water market
                                                                                    • Figure 26: Economic development, income rises and the expanding middle class
                                                                                    • Figure 27: Leisure activities of middle class consumers, April 2012
                                                                                    • Figure 28: Middle class attitudes towards shopping, April 2012
                                                                                    • Figure 29: Attitudes towards bottled water, November 2012
                                                                                  • Consumers are growing more health conscious
                                                                                    • Figure 30: Consumer attitudes towards bottled water, November 2012
                                                                                  • Competition from other soft drinks
                                                                                    • Figure 31: Frequency of drinking each type of soft drink, November 2012
                                                                                    • Figure 32: NPD activity in the soft drinks market, by category, 2008-12, China
                                                                                • Premiumisation Strategies in High-end Bottled Water

                                                                                  • Premiumisation of water source
                                                                                    • Premiumisation of function
                                                                                      • Figure 33: Product launches within the bottled water market in China, by functional claim, 2008-12, China
                                                                                    • Premiumisation of retail channels
                                                                                      • Companies can do more to meet the demand of special consumer groups
                                                                                        • What it means
                                                                                        • Flavoured Water Presents a Challenge and an Opportunity

                                                                                          • Key points
                                                                                            • Flavoured water: current market and product categories
                                                                                              • Figure 34: NPD activity in the bottled water market, by flavour, 2008-12, China
                                                                                            • Flavoured waters need to avoid being misinterpreted by consumers
                                                                                              • Misunderstanding 1: Flavoured water contains additives
                                                                                                • Figure 35: Attitudes towards bottled water, by demographics, November 2012
                                                                                                • Figure 36: Bottled water NPD in China, by ingredient, 2008-12
                                                                                                • Figure 37: Product launches within the bottled water market in China, by functional claim, 2008-12, China
                                                                                              • Misunderstanding 2: Flavoured bottled water is easily confused with juice, tea and energy sports drinks
                                                                                                • Figure 38: NPD activity in different soft drinks categories, by flavour, 2008-12, China
                                                                                              • What this means
                                                                                              • Convenience of Consumption and Purchase are Important Factors for Bottled Water

                                                                                                • Key points
                                                                                                  • Usage occasions and convenience
                                                                                                    • Outdoors is the main usage occasion for bottled water
                                                                                                      • Figure 39: Occasions for drinking bottled water, November 2012
                                                                                                    • Convenience is a major consideration for drinking bottled water
                                                                                                      • Figure 40: Reasons for drinking bottled water out of home, November 2012
                                                                                                      • Figure 41: Attitudes towards bottled water, by any agree, November 2012
                                                                                                    • A gap in the market for small bottled water
                                                                                                      • Figure 42: NPD activity in bottled water market in China, by bottle size, 2008-12
                                                                                                      • Figure 43: NPD activity in RTD tea, bottled water and carbonated soft drinks in China, 2008-12
                                                                                                    • Purchasing convenience
                                                                                                      • Figure 44: Bottled water, RTD tea and carbonated soft drinks purchasing, by channel, January-November 2012
                                                                                                    • The battle at the checkouts in supermarkets and hypermarkets
                                                                                                      • Figure 45: Reasons for drinking bottled water when out of home, November 2012
                                                                                                      • Figure 46: Attitudes towards bottled water, November 2012
                                                                                                    • There is considerable scope for growth in the on-trade
                                                                                                      • Figure 47: Channel of purchasing bottled water, by most popular occasions of drinking bottled water, November 2012
                                                                                                    • What it means
                                                                                                    • Appendix – Frequency of Drinking Soft Drinks

                                                                                                        • Figure 48: Frequency of drinking each type of soft drink, November 2012
                                                                                                        • Figure 49: Frequency of drinking each type of soft drink, November 2012
                                                                                                        • Figure 50: Most popular frequency of bottled water, by demographics, November 2012
                                                                                                        • Figure 51: Next most popular frequency of bottled water, by demographics, November 2012
                                                                                                        • Figure 52: Most popular frequency of carbonated soft drinks, by demographics, November 2012
                                                                                                        • Figure 53: Next most popular frequency of carbonated soft drinks, by demographics, November 2012
                                                                                                        • Figure 54: Most popular frequency of sports/Isotonic drinks, by demographics, November 2012
                                                                                                        • Figure 55: Next most popular frequency of sports/Isotonic drinks, by demographics, November 2012
                                                                                                        • Figure 56: Most popular frequency of energy drinks, by demographics, November 2012
                                                                                                        • Figure 57: Next most popular frequency of energy drinks, by demographics, November 2012
                                                                                                        • Figure 58: Most popular frequency of soya drinks, by demographics, November 2012
                                                                                                        • Figure 59: Next most popular frequency of soya drinks, by demographics, November 2012
                                                                                                        • Figure 60: Most popular frequency of fruit juices and juice drinks, by demographics, November 2012
                                                                                                        • Figure 61: Next most popular frequency of fruit juices and juice drinks, by demographics, November 2012
                                                                                                        • Figure 62: Most popular frequency of dairy drinks, by demographics, November 2012
                                                                                                        • Figure 63: Next most popular frequency of dairy drinks, by demographics, November 2012
                                                                                                        • Figure 64: Most popular frequency of ready to drink tea/Iced tea, by demographics, November 2012
                                                                                                        • Figure 65: Next most popular frequency of ready to drink tea/Iced tea, by demographics, November 2012
                                                                                                        • Figure 66: Most popular frequency of ready to drink coffee, by demographics, November 2012
                                                                                                        • Figure 67: Next most popular frequency of ready to drink coffee, by demographics, November 2012
                                                                                                        • Figure 68: Most popular frequency of other soft drinks, by demographics, November 2012
                                                                                                        • Figure 69: Next most popular frequency of other soft drinks, by demographics, November 2012
                                                                                                    • Appendix – Occasions for Drinking Bottled Water

                                                                                                        • Figure 70: Occasions for drinking bottled water, November 2012
                                                                                                        • Figure 71: Frequency of drinking bottled water, by most popular occasions for drinking bottled water, November 2012
                                                                                                        • Figure 72: Frequency of drinking bottled water, by next most popular occasions for drinking bottled water, November 2012
                                                                                                        • Figure 73: Most popular occasions for drinking bottled water, by demographics, November 2012
                                                                                                        • Figure 74: Next most popular occasions for drinking bottled water, by demographics, November 2012
                                                                                                    • Appendix – Reasons for Drinking Bottled Water by Occasion

                                                                                                        • Figure 75: Reasons for drinking bottled water at home, November 2012
                                                                                                        • Figure 76: Reasons for drinking bottled water at home, by most popular occasions for drinking bottled water, November 2012
                                                                                                        • Figure 77: Reasons for drinking bottled water at home, by next most popular occasions for drinking bottled water, November 2012
                                                                                                        • Figure 78: Reasons for drinking bottled water out of home, by most popular occasions for drinking bottled water, November 2012
                                                                                                        • Figure 79: Reasons for drinking bottled water out of home, by next most popular occasions for drinking bottled water, November 2012
                                                                                                        • Figure 80: Most popular reasons for drinking bottled water at home, by demographics, November 2012
                                                                                                        • Figure 81: Next most popular reasons for drinking bottled water at home, by demographics, November 2012
                                                                                                    • Appendix – Channels for Purchasing Bottled Water

                                                                                                        • Figure 82: Channels for purchasing bottled water, November 2012
                                                                                                        • Figure 83: Channels for purchasing bottled water, by most popular occasions for drinking bottled water, November 2012
                                                                                                        • Figure 84: Channels for purchasing bottled water, by next most popular occasions for drinking bottled water, November 2012
                                                                                                        • Figure 85: Most popular channels for purchasing bottled water, by demographics, November 2012
                                                                                                        • Figure 86: Next most popular channels for purchasing bottled water, by demographics, November 2012
                                                                                                    • Appendix – Purchase of Bottled Water Brands

                                                                                                        • Figure 87: Brands of bottled water purchased in Shanghai in the past 12 months, November 2012
                                                                                                        • Figure 88: Brands of bottled water purchased in Beijing in the past 12 months, November 2012
                                                                                                        • Figure 89: Brands of bottled water purchased in Guangzhou in the past 12 months, November 2012
                                                                                                        • Figure 90: Brands of bottled water purchased in Chengdu in the past 12 months, November 2012
                                                                                                        • Figure 91: Brands of bottled water purchased in Jinan in the past 12 months, November 2012
                                                                                                        • Figure 92: Brands of bottled water purchased in Hefei in the past 12 months, November 2012
                                                                                                        • Figure 93: Brands of bottled water purchased in Tangshan in the past 12 months, November 2012
                                                                                                        • Figure 94: Brands of bottled water purchased in Hengyang in the past 12 months, November 2012
                                                                                                        • Figure 95: Brands of bottled water purchased in Zhuhai in the past 12 months, November 2012
                                                                                                        • Figure 96: Brands of bottled water purchased in Taizhou in the past 12 months, November 2012
                                                                                                        • Figure 97: Most popular brands of bottled water purchased in the past 12 months in Shanghai, by demographics, November 2012
                                                                                                        • Figure 98: Next most popular brands of bottled water purchased in the past 12 months in Shanghai, by demographics, November 2012
                                                                                                        • Figure 99: Most popular brands of bottled water purchased in the past 12 months in Beijing, by demographics, November 2012
                                                                                                        • Figure 100: Next most popular brands of bottled water purchased in the past 12 months in Beijing, by demographics, November 2012
                                                                                                        • Figure 101: Most popular brands of bottled water purchased in the past 12 months in Guangzhou, by demographics, November 2012
                                                                                                        • Figure 102: Next most popular brands of bottled water purchased in the past 12 months in Guangzhou, by demographics, November 2012
                                                                                                        • Figure 103: Most popular brands of bottled water purchased in the past 12 months in Chengdu, by demographics, November 2012
                                                                                                        • Figure 104: Next most popular brands of bottled water purchased in the past 12 months in Chengdu, by demographics, November 2012
                                                                                                        • Figure 105: Most popular brands of bottled water purchased in the past 12 months in Jinan, by demographics, November 2012
                                                                                                        • Figure 106: Next most popular brands of bottled water purchased in the past 12 months in Jinan, by demographics, November 2012
                                                                                                        • Figure 107: Most popular brands of bottled water purchased in the past 12 months in Hefei, by demographics, November 2012
                                                                                                        • Figure 108: Next most popular brands of bottled water purchased in the past 12 months in Hefei, by demographics, November 2012
                                                                                                        • Figure 109: Most popular brands of bottled water purchased in the past 12 months in Tangshan, by demographics, November 2012
                                                                                                        • Figure 110: Next most popular brands of bottled water purchased in the past 12 months in Tangshan, by demographics, November 2012
                                                                                                        • Figure 111: Most popular brands of bottled water purchased in the past 12 months in Hengyang, by demographics, November 2012
                                                                                                        • Figure 112: Next most popular brands of bottled water purchased in the past 12 months in Hengyang, by demographics, November 2012
                                                                                                        • Figure 113: Most popular brands of bottled water purchased in the past 12 months in Zhuhai, by demographics, November 2012
                                                                                                        • Figure 114: Next most popular brands of bottled water purchased in the past 12 months in Zhuhai, by demographics, November 2012
                                                                                                        • Figure 115: Most popular brands of bottled water purchased in the past 12 months in Taizhou, by demographics, November 2012
                                                                                                        • Figure 116: Next most popular brands of bottled water purchased in the past 12 months in Taizhou, by demographics, November 2012
                                                                                                    • Appendix – Brands Purchased Most Often

                                                                                                        • Figure 117: Brands of bottled water purchased most often in Shanghai in the past 12 months, November 2012
                                                                                                        • Figure 118: Brands of bottled water purchased most often in Beijing in the past 12 months, November 2012
                                                                                                        • Figure 119: Brands of bottled water purchased most often in Guangzhou in the past 12 months, November 2012
                                                                                                        • Figure 120: Brands of bottled water purchased most often in Chengdu in the past 12 months, November 2012
                                                                                                        • Figure 121: Brands of bottled water purchased most often in Jinan in the past 12 months, November 2012
                                                                                                        • Figure 122: Brands of bottled water purchased most often in Hefei in the past 12 months, November 2012
                                                                                                        • Figure 123: Brands of bottled water purchased most often in Tangshan in the past 12 months, November 2012
                                                                                                        • Figure 124: Brands of bottled water purchased most often in Hengyang in the past 12 months, November 2012
                                                                                                        • Figure 125: Brands of bottled water purchased most often in Zhuhai in the past 12 months, November 2012
                                                                                                        • Figure 126: Brands of bottled water purchased most often in Taizhou in the past 12 months, November 2012
                                                                                                        • Figure 127: Most popular brands of bottled water s in Shanghai, by demographics, November 2012
                                                                                                        • Figure 128: Next most popular brands of bottled water in Shanghai, by demographics, November 2012
                                                                                                        • Figure 129: Most popular brands of bottled water in Beijing, by demographics, November 2012
                                                                                                        • Figure 130: Next most popular brands of bottled water purchased in Beijing, by demographics, November 2012
                                                                                                        • Figure 131: Most popular brands of bottled water purchased in Guangzhou, by demographics, November 2012
                                                                                                        • Figure 132: Next most popular brands of bottled water purchased in Guangzhou, by demographics, November 2012
                                                                                                        • Figure 133: Most popular brands of bottled water purchased in Chengdu, by demographics, November 2012
                                                                                                        • Figure 134: Next most popular brands of bottled water purchased in Chengdu, by demographics, November 2012
                                                                                                        • Figure 135: Most popular brands of bottled water purchased in Jinan, by demographics, November 2012
                                                                                                        • Figure 136: Next most popular brands of bottled water purchased in Jinan, by demographics, November 2012
                                                                                                        • Figure 137: Most popular brands of bottled water purchased in Hefei, by demographics, November 2012
                                                                                                        • Figure 138: Next most popular brands of bottled water purchased in Hefei, by demographics, November 2012
                                                                                                        • Figure 139: Most popular brands of bottled water purchased in Tangshan, by demographics, November 2012
                                                                                                        • Figure 140: Next most popular brands of bottled water purchased in Tangshan, by demographics, November 2012
                                                                                                        • Figure 141: Most popular brands of bottled water purchased in Hengyang, by demographics, November 2012
                                                                                                        • Figure 142: Next most popular brands of bottled water purchased in Hengyang, by demographics, November 2012
                                                                                                        • Figure 143: Most popular brands of bottled water purchased in Zhuhai, by demographics, November 2012
                                                                                                        • Figure 144: Next most popular brands of bottled water purchased in Zhuhai, by demographics, November 2012
                                                                                                        • Figure 145: Most popular brands of bottled water purchased in Taizhou, by demographics, November 2012
                                                                                                        • Figure 146: Next most popular brands of bottled water purchased in Taizhou, by demographics, November 2012
                                                                                                    • Appendix – Attitudes Towards Bottled Water

                                                                                                        • Figure 147: Attitudes towards bottled water, November 2012
                                                                                                        • Figure 148: Agreement with the statements ‘The health benefits of bottled water (free from sugar and hardly any ingredient added) make it worth paying for’ and ‘The convenience of bottled water make it worth paying for’, by demographics, November 2012
                                                                                                        • Figure 149: Agreement with the statements ‘Drinking bottled water with vitamins is healthier than drinking plain bottled water’ and ‘Price makes little difference to the quality of bottled water’, by demographics, November 2012
                                                                                                        • Figure 150: Agreement with the statements ‘Buying bottled water is an unnecessary expense in the current economic climate’ and ‘I trust the water quality of established brands more than less well-known brands’, by demographics, November 2012
                                                                                                        • Figure 151: Agreement with the statements ‘I would be willing to pay a premium price for a really premium bottled water to suit my social status and personal taste’ and ‘Buying bottled water in multipacks makes it more affordable’, by demographics, November 2012
                                                                                                        • Figure 152: Agreement with the statements ‘I prefer the convenience of smaller bottles to larger bottles’ and ‘Buying plastic bottled water is not a good thing for the environment as it’s not biodegradable’, by demographics, November 2012
                                                                                                        • Figure 153: Agreement with the statements ‘Mineral water is unnecessary as I can already get minerals through other types of food and drinks’ and ‘Bottled water companies have become more ethical in the past couple of years’, by demographics, November 2012
                                                                                                        • Figure 154: Agreement with the statement ‘It’s important to drink at least 1.5 litres of water per day’, by demographics, November 2012

                                                                                                    Companies Covered

                                                                                                    To learn more about the companies covered in this report please contact us.

                                                                                                    Bottled Water - China - February 2013

                                                                                                    £3,195.84 (Excl.Tax)