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Bottled Water - China - March 2014

“China’s bottled water market has enjoyed volume compound annual growth of 20.5% between 2008 and 2013. This rate is expected to slow in the next five years, but should still maintain double-digit annual gains. Value sales are expected to grow slightly ahead of volumes due to price increases and higher demand for value-added products. The bottled water market remains highly fragmented and is dominated by regional brands. In fact, only the top three companies have double-digit market share.

Pure sourcing is key to attracting bottled water consumers, which has created intense competition between manufacturers for acquiring water sources and has even led to merger and acquisition activity. Wide availability in both the on-trade and off-trade, as well as the introduction of smaller pack sizes, is encouraging impulse purchases and on-the-go consumption.”

– Eileen Ngieng, Senior Research Analyst

Some questions answered in this report include:

  • What is the current state of the bottled water market, and how is the market expected to develop in the near future? What are the key market drivers and restraints?
  • What influences consumer behaviour and attitudes towards bottled water, and what are the key factors affecting product choice and encouraging consumption?
  • What areas offer future potential for product development?

Bottled water entered the Chinese market in the 1990s and has posted significant growth since. Growth is expected to slow over the next five years, but will remain in double digits. The market has benefited from water’s naturalness, cheapness and its association with health. However, there are still many areas to improve on, including a lack of variety. Convenience, product innovation, functionality and better availability can all be explored further to improve prospects in the Chinese market.

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Table of contents

  1. Introduction

      • Report structure
        • Definition
          • Methodology
            • Abbreviations
            • Executive Summary

                • The market
                  • Figure 1: Volume sales of bottled water in China (bn litres), 2008-18
                • Companies and brands
                  • Figure 2: Leading bottled water companies, % market share, 2013
                • The consumer
                  • Frequency of drinking different types of packaged drinks
                    • Figure 3: Frequency of drinking each type of soft drink, December 2013
                    • Figure 4: Repertoire of frequency of drinking different types of packaged drinks, December 2013
                  • Different types of bottled water drunk
                    • Figure 5: Different types of bottled water drunk, December 2013
                  • Occasions for drinking bottled water
                    • Figure 6: Occasions for drinking bottled water, December 2013
                  • Locations for purchasing bottled water
                    • Top factors for purchasing bottled water
                      • Figure 7: Top factors for purchasing bottled water, December 2013
                    • Opinions and attitudes towards bottled water
                      • Key issues
                        • Water sourcing is key to attracting consumers
                          • Accessible products and smaller packs will attract impulsive, on-the-go consumers
                            • Heated bottles and food pairings can boost sales
                              • Health benefits of water can engage the health-conscious population
                                • What we think
                                • The Market

                                  • Key points
                                    • Market size
                                      • Figure 8: Growth trends in China’s bottled water market, volume (bn litres) and value (RMB bn), 2008-13
                                    • Bottled water leads volume sales, but is only third by value in soft drinks
                                      • Figure 9: Volume (bn litres) and value (RMB bn) retail sales of soft drinks, China, 2013
                                    • NPD activity declines compared to other soft drinks
                                      • Figure 10: NPD activity in the soft drinks market, by category, 2009-13, China
                                    • Market forecast
                                      • Figure 11: Value retail sales of bottled water in China (RMB bn), 2008-18
                                      • Figure 12: Total bottled water volumes in China (bn litres), 2008-18
                                      • Figure 13: Volume retail sales of bottled water in China (bn litres), 2008-18
                                      • Figure 14: Volume non-retail sales of bottled water in China (bn litres), 2008-18
                                    • Market segmentation
                                      • Non-retail sales outpace retail sector
                                        • Figure 15: Volume sales of bottled water in China, by retail and non-retail (bn litres), 2008-13
                                      • Market drivers
                                        • Demand for bottled water rises as safety of boiled tap water questioned
                                          • Plasticizer scandal causes shift to bottled water
                                            • Increasing outdoor activities lead to improved bottled water demand
                                              • Bottled water benefits from increasingly health-conscious population
                                                • Rising disposable incomes and discretionary spending encourages premiumisation
                                                  • Affordability keeps bottled water competitive
                                                    • Figure 16: Average price per litre, by beverage category, China, 2013
                                                  • Market barriers
                                                    • Competition with boiled tap water and home water purifiers
                                                      • A lack of variety turns off consumers
                                                        • Figure 17: Typical bottled display water in a supermarket
                                                      • Northern China sees weaker sales due to long cold season
                                                        • Lack of heated bottled waters lowers sales during winter
                                                        • Companies and Brands

                                                          • Key points
                                                            • Top five brands account for half of the market
                                                              • Figure 18: Leading bottled water companies, % market share, 2013
                                                            • Master Kong
                                                              • Wahaha
                                                                • Nongfu Spring
                                                                  • Figure 19: Nongfu bottled water products in various pack sizes under the advertising slogan “Nongfu Spring is a little sweet”.
                                                                • C’est Bon
                                                                  • Jiangxi Runtian Beverage Company Limited
                                                                      • Figure 20: Three brands of bottled water from Runtian, in varying sizes: Cuitianran mineral bottled water, Runtian purified bottled water and Shennongjia mineral bottled water
                                                                  • The Consumer – Frequency of Drinking Different Types of Packaged Drinks

                                                                    • Key points
                                                                      • Frequency of drinking different types of packaged drinks
                                                                        • Figure 21: Frequency of drinking different types of packaged drinks, December 2013
                                                                      • Bottled water is the most frequently consumed packaged drink
                                                                        • The core consumers of bottled water and other packaged drinks
                                                                          • Bottled water
                                                                            • Other packaged drinks
                                                                              • Repertoire of drinking different types of packaged drinks
                                                                                • Figure 22: Different types of packaged drinks drunk, by repertoire of packaged drinks drunk, December 2013
                                                                              • Rising incomes result in a broader repertoire of packaged drinks
                                                                              • The Consumer – Different Types of Bottled Water Drunk

                                                                                • Key points
                                                                                  • Different types of bottled water drunk in past 6 months
                                                                                    • Figure 23: Different types of bottled water drunk, December 2013
                                                                                  • Still and unflavoured waters dominate
                                                                                    • Sparkling and flavoured waters are considered more functional, indulgent and reviving
                                                                                      • Figure 24: Occasions for drinking bottled water, by different types of bottled water drunk, December 2013
                                                                                  • The Consumer – Occasions for Drinking Bottled Water

                                                                                    • Key points
                                                                                      • Occasions for drinking bottled water in past 6 months
                                                                                        • Figure 25: Occasions for drinking bottled water, December 2013
                                                                                      • Bottled water is drunk most often outdoors
                                                                                        • Bottled water is seen as a good thirst quencher
                                                                                          • Indoors consumption of bottled water is low
                                                                                          • The Consumer – Locations for Purchasing Bottled Water

                                                                                            • Key points
                                                                                              • Retail channels for purchasing drinking bottled water in past 6 months
                                                                                                • Figure 26: Locations for purchasing bottled water, December 2013
                                                                                              • Supermarkets are the most common outlet
                                                                                                • Retail channels benefit from wide presence and competitive prices
                                                                                                  • Different demographics embrace different retail channels
                                                                                                    • Food service has potential as Chinese increasingly eat out
                                                                                                      • Higher income consumers dominate foodservice purchases
                                                                                                        • Repertoire of bottled water purchase locations
                                                                                                          • Figure 27: Repertoire of locations for purchasing bottled water
                                                                                                        • Older consumers are more conservative shoppers, while the young are impulsive
                                                                                                        • The Consumer – Top Factors for Purchasing Bottled Water

                                                                                                          • Key points
                                                                                                            • Top factors for purchasing bottled water
                                                                                                              • Figure 28: Top factors for purchasing bottled water, December 2013
                                                                                                            • Good water standards are essential, but other factors can also attract consumers
                                                                                                              • Figure 29: Top factors for purchasing bottled water, by income, December 2013
                                                                                                              • Figure 30: Top factors for purchasing bottled water, by age, December 2013
                                                                                                          • The Consumer – Opinions and Attitudes Towards Bottled Water

                                                                                                            • Key points
                                                                                                              • Agreement towards statements regarding bottled water
                                                                                                                • Figure 31: Agreement with bottled water statements, December 2013
                                                                                                              • Tier one consumers more aware of health benefits
                                                                                                                • Four-in-five believe higher quality water is worth paying more for
                                                                                                                  • Channels and convenience
                                                                                                                    • Mixed opinions on water safety
                                                                                                                      • Trust in foreign brands shows the need for branding and quality control
                                                                                                                        • Occasion-positioned water could boost appeal
                                                                                                                        • Key Issue – Good Water Source is Key to Attracting Consumers

                                                                                                                          • Key points
                                                                                                                            • Water pollution raises safety fears for drinking boiled tap water
                                                                                                                              • Good water standards are top motivation when purchasing bottled water
                                                                                                                                • The core consumers for high water quality and good water source
                                                                                                                                  • Taiwan plasticizers scandal benefits bottled water
                                                                                                                                    • Core demographics believe bottled water is safer than other soft drinks
                                                                                                                                      • Emphasising quality will widen bottled water appeal
                                                                                                                                        • Core consumers willing to pay more for high quality bottled water
                                                                                                                                          • Brands compete for good water sources
                                                                                                                                            • Water quality and source drive premium bottled water sales
                                                                                                                                                • Figure 32: Chinese premium bottled water brands, 2011-12
                                                                                                                                                • Figure 33: Examples of top bottled water brands in China and their water sources
                                                                                                                                                • Figure 34: Nongfu and ganten sell bottled waters through water sources
                                                                                                                                              • What does it mean?
                                                                                                                                              • Key Issue – Product Accessibility and Smaller Packs Will Attract Impulse and On-the-go Consumers

                                                                                                                                                • Key points
                                                                                                                                                  • Convenience is key to attracting impulse and on-the-go consumers
                                                                                                                                                    • Core consumer groups for convenience
                                                                                                                                                      • Outdoors availability and an emphasis on product functionality could boost uptake
                                                                                                                                                        • Targeting top locations for on-the-go consumers
                                                                                                                                                          • Hot spots include travel hubs, tourist destinations, leisure places, offices, schools, eateries and exercise venues
                                                                                                                                                            • Bottled water has potential in premium clubs
                                                                                                                                                              • Smaller bottled waters will appeal to on-the-go consumers, particularly women
                                                                                                                                                                • Smaller pack sizes NPD is not enough
                                                                                                                                                                  • Figure 35: NPD activity in bottled water market in China, by 10 most popular bottle sizes, 2009-13
                                                                                                                                                                • Smaller bottled waters are increasing, but lag behind other soft drinks
                                                                                                                                                                  • Figure 36: NPD activity in fruit juice, RTD tea, bottled water and CSD in China, 2009-13
                                                                                                                                                                • What does it mean?
                                                                                                                                                                • Key Issue – Heated Bottled Water and Food Pairings Can Boost Sales

                                                                                                                                                                  • Key points
                                                                                                                                                                    • Consumers want bottled water at appropriate temperatures and in meal deals
                                                                                                                                                                      • Female, married, high earners desire meal deals and appropriate temperatures
                                                                                                                                                                        • Chilled and heated bottled waters could boost consumption
                                                                                                                                                                          • Improving existing ambient and chilled options in the market
                                                                                                                                                                            • Lack of heated bottled waters in the market
                                                                                                                                                                              • Figure 37: Heated display unit in a convenience store in Shanghai
                                                                                                                                                                              • Figure 38: Metal aluminium can and bottle in Portugal and Japan, 2013
                                                                                                                                                                            • Bottled water could explore indulgent food pairings
                                                                                                                                                                              • Fast food growth increases on-trade potential
                                                                                                                                                                                • Food pairings are lacking in the off-trade
                                                                                                                                                                                  • Healthier bottled water can pair with indulgent snacks
                                                                                                                                                                                    • What does it mean?
                                                                                                                                                                                    • Key Issue – Highlighting Health Benefits of Water can Penetrate Health-conscious Population

                                                                                                                                                                                      • Key points
                                                                                                                                                                                        • Healthy claims will appeal to increasingly health-conscious Chinese
                                                                                                                                                                                          • Bottled water can position itself as a tool against obesity
                                                                                                                                                                                            • Bottled water can better target exercise occasions
                                                                                                                                                                                              • Figure 39: Kang Ba Er’s Soda Water
                                                                                                                                                                                            • Bottled water claims are often overlooked
                                                                                                                                                                                              • Figure 40: Product launches in the Chinese bottled water market, % share by selected claims, 2009-13
                                                                                                                                                                                            • What does it mean?
                                                                                                                                                                                            • Appendix – The Consumer – Frequency of Drinking Different Types of Packaged Drinks

                                                                                                                                                                                                • Figure 41: Frequency of drinking different types of packaged drinks, December 2013
                                                                                                                                                                                                • Figure 42: Frequency of drinking different types of packaged drinks, December 2013 (continued)
                                                                                                                                                                                                • Figure 43: Most popular frequency of drinking different types of packaged drinks – Bottled water, by demographics, December 2013
                                                                                                                                                                                                • Figure 44: Next most popular frequency of drinking different types of packaged drinks – Bottled water, by demographics, December 2013
                                                                                                                                                                                                • Figure 45: Most popular frequency of drinking different types of packaged drinks – Carbonated soft drinks, by demographics, December 2013
                                                                                                                                                                                                • Figure 46: Next most popular frequency of drinking different types of packaged drinks – Carbonated soft drinks, by demographics, December 2013
                                                                                                                                                                                                • Figure 47: Most popular frequency of drinking different types of packaged drinks – Sports/energy drinks, by demographics, December 2013
                                                                                                                                                                                                • Figure 48: Next most popular frequency of drinking different types of packaged drinks – Sports/energy drinks, by demographics, December 2013
                                                                                                                                                                                                • Figure 49: Most popular frequency of drinking different types of packaged drinks – Ready-to-drink tea, by demographics, December 2013
                                                                                                                                                                                                • Figure 50: Next most popular frequency of drinking different types of packaged drinks – Ready-to-drink tea, by demographics, December 2013
                                                                                                                                                                                                • Figure 51: Most popular frequency of drinking different types of packaged drinks – Juice, by demographics, December 2013
                                                                                                                                                                                                • Figure 52: Next most popular frequency of drinking different types of packaged drinks – Juice, by demographics, December 2013
                                                                                                                                                                                                • Figure 53: Most popular frequency of drinking different types of packaged drinks – Ready-to-drink coffee, by demographics, December 2013
                                                                                                                                                                                                • Figure 54: Next most popular frequency of drinking different types of packaged drinks – Ready-to-drink coffee, by demographics, December 2013
                                                                                                                                                                                                • Figure 55: Most popular frequency of drinking different types of packaged drinks – Plant protein drinks, by demographics, December 2013
                                                                                                                                                                                                • Figure 56: Next most popular frequency of drinking different types of packaged drinks – Plant protein drinks, by demographics, December 2013
                                                                                                                                                                                              • Repertoire analysis
                                                                                                                                                                                                • Figure 57: Repertoire of frequency of drinking different types of packaged drinks, December 2013
                                                                                                                                                                                                • Figure 58: Repertoire of frequency of drinking different types of packaged drinks, by demographics, December 2013
                                                                                                                                                                                                • Figure 59: Frequency of drinking different types of packaged drinks, by repertoire, December 2013
                                                                                                                                                                                            • Appendix – The Consumer – Different Types of Bottled Water Drunk

                                                                                                                                                                                                • Figure 60: Different types of bottled water drunk, December 2013
                                                                                                                                                                                                • Figure 61: Different types of bottled water drunk, by demographics, December 2013
                                                                                                                                                                                                • Figure 62: Occasions of drinking bottled water, by different types of bottled water drunk, December 2013
                                                                                                                                                                                                • Figure 63: Top factors for purchasing bottled water, by different types of bottled water drunk, December 2013
                                                                                                                                                                                            • Appendix – The Consumer – Occasions for Drinking Bottled Water

                                                                                                                                                                                                • Figure 64: Occasions for drinking bottled water, December 2013
                                                                                                                                                                                                • Figure 65: Most popular occasions for drinking bottled water, by demographics, December 2013
                                                                                                                                                                                                • Figure 66: Next most popular occasions for drinking bottled water, by demographics, December 2013
                                                                                                                                                                                                • Figure 67: Other occasions for drinking bottled water, by demographics, December 2013
                                                                                                                                                                                                • Figure 68: Locations for purchasing bottled water, by most popular occasions for drinking bottled water, December 2013
                                                                                                                                                                                                • Figure 69: Locations for purchasing bottled water, by next most popular occasions for drinking bottled water, December 2013
                                                                                                                                                                                              • Repertoire analysis
                                                                                                                                                                                                • Figure 70: Repertoire of occasions for drinking bottled water, December 2013
                                                                                                                                                                                                • Figure 71: Repertoire of occasions for drinking bottled water, by demographics, December 2013
                                                                                                                                                                                                • Figure 72: Occasions of drinking bottled water, by repertoire of occasions of drinking bottled water, December 2013
                                                                                                                                                                                            • Appendix – The Consumer – Locations for Purchasing Bottled Water

                                                                                                                                                                                                • Figure 73: Locations for purchasing bottled water, December 2013
                                                                                                                                                                                                • Figure 74: Most popular locations for purchasing bottled water, by demographics, December 2013
                                                                                                                                                                                                • Figure 75: Next most popular locations for purchasing bottled water, by demographics, December 2013
                                                                                                                                                                                                • Figure 76: Other locations for purchasing bottled water, by demographics, December 2013
                                                                                                                                                                                                • Figure 77: Locations for purchasing bottled water, by different types of bottled water drunk, December 2013
                                                                                                                                                                                                • Figure 78: Locations for purchasing bottled water, by most popular factors for purchasing bottled water, December 2013
                                                                                                                                                                                                • Figure 79: Locations for purchasing bottled water, by next most popular factors for purchasing bottled water, December 2013
                                                                                                                                                                                              • Repertoire analysis
                                                                                                                                                                                                • Figure 80: Repertoire of locations for purchasing bottled water, December 2013
                                                                                                                                                                                                • Figure 81: Repertoire of locations for purchasing bottled water, by demographics, December 2013
                                                                                                                                                                                                • Figure 82: Locations of purchasing bottled water, by repertoire of locations of purchasing bottled water, December 2013
                                                                                                                                                                                            • Appendix – The Consumer – Top Factors for Purchasing Bottled Water

                                                                                                                                                                                                • Figure 83: Top factors for purchasing bottled water, December 2013
                                                                                                                                                                                                • Figure 84: Most popular factors for purchasing bottled water, by demographics, December 2013
                                                                                                                                                                                                • Figure 85: Next most popular factors for purchasing bottled water, by demographics, December 2013
                                                                                                                                                                                                • Figure 86: Top factors for purchasing bottled water, by most popular occasions for drinking bottled water, December 2013
                                                                                                                                                                                                • Figure 87: Top factors for purchasing bottled water, by next most popular occasions for drinking bottled water, December 2013
                                                                                                                                                                                            • Appendix – The Consumer – Opinions and Attitudes Towards Bottled Water

                                                                                                                                                                                                • Figure 88: Agreement with bottled water statements, December 2013
                                                                                                                                                                                                • Figure 89: Agreement with the statement ‘Bottled water of higher quality is worth paying more for’, by demographics, December 2013
                                                                                                                                                                                                • Figure 90: Agreement with the statement ‘Bottled water is a healthier alternative to soft drinks’, by demographics, December 2013
                                                                                                                                                                                                • Figure 91: Agreement with the statement ‘Bottled water with added ingredients provides more health benefits than standard bottled water’, by demographics, December 2013
                                                                                                                                                                                                • Figure 92: Agreement with the statement ‘Bottled water is more hydrating than other drinks’, by demographics, December 2013
                                                                                                                                                                                                • Figure 93: Agreement with the statement ‘The water quality of international bottled water brands are more reliable than Chinese brands’, by demographics, December 2013
                                                                                                                                                                                                • Figure 94: Agreement with the statement ‘Bottled water is safer to drink than soft drinks’, by demographics, December 2013
                                                                                                                                                                                                • Figure 95: Agreement with the statement ‘Boiled tap water is just as safe to drink as bottled water’, by demographics, December 2013
                                                                                                                                                                                                • Figure 96: Agreement with the statement ‘I am interested in buying bottled water as a part of a ‘meal deal’’, by demographics, December 2013
                                                                                                                                                                                                • Figure 97: Agreement with the statement ‘Bottled water served at an appropriate temperature would encourage me to buy more’, by demographics, December 2013
                                                                                                                                                                                                • Figure 98: Agreement with the statement ‘Places that are easier to reach should sell more bottled water’, by demographics, December 2013
                                                                                                                                                                                                • Figure 99: Agreement with the statement ‘I would like to see more bottled water designed for various occasions’, by demographics, December 2013
                                                                                                                                                                                                • Figure 100: Agreement with the statement ‘There is not a wide range of different pack sizes of bottled water for on-the-go occasions’, by demographics, December 2013
                                                                                                                                                                                                • Figure 101: Agreement with bottled water statements, by different types of bottled water drunk, December 2013
                                                                                                                                                                                                • Figure 102: Agreement with bottled water statements, by most popular occasions for drinking bottled water, December 2013
                                                                                                                                                                                                • Figure 103: Agreement with bottled water statements, by next most popular occasions for drinking bottled water, December 2013
                                                                                                                                                                                                • Figure 104: Agreement with bottled water statements, by most popular locations for purchasing bottled water, December 2013
                                                                                                                                                                                                • Figure 105: Agreement with bottled water statements, by next most popular locations for purchasing bottled water, December 2013
                                                                                                                                                                                                • Figure 106: Agreement with bottled water statements, by most popular factors for purchasing bottled water, December 2013
                                                                                                                                                                                                • Figure 107: Agreement with bottled water statements, by next most popular factors for purchasing bottled water, December 2013

                                                                                                                                                                                            Companies Covered

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                                                                                                                                                                                            Bottled Water - China - March 2014

                                                                                                                                                                                            £3,195.84 (Excl.Tax)