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Bottled Water - UK - October 2009

  • There is a close relationship between consumer confidence and bottled water penetration and sales. Both fell dramatically in 2007 but have shown signs of recovery in 2009. It is likely that economic caution led consumers to switch to tap water.
  • Volume sales of bottled water declined by 11% between 2006 and 2008. However, the decline has slowed to 1% in 2009. This means the market is now selling 2.3 bn litres of water at a value of £1.9bn, with both volume and value sales forecast to grow steadily from 2011 onwards.
  • Even bottled water drinkers are sceptical about its value. Only 2.1m of the UK online population think of it as value for money compared to 8.1m who think it is a “bit of a con”.
  • However, consumers also see a number of benefits in bottled water. There are 5.3m online users who think that without buying bottled they would not drink enough water. And 4.5m that it is healthier for them because it stops them drinking sugary soft drinks and caffeine.
  • The bottled water market is currently more price- than brand-led with 11.9m online bottled water drinkers motivated to buy whichever brand is cheapest. Only 5.2m are motivated to buy a brand they trust, but 7m drinkers are influenced by “an easy-to-carry” bottle.
  • Glacéau Vitamin Water (Coca-Cola) is a flavoured water drink fortified with vitamins such as B and C. It entered into the UK market in 2008 having grown its sales by over 450% in the US market between 2005 and 2008.

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Table of contents

  1. Issues in the Market

      • Key themes
        • Definition
          • Abbreviations
          • Future Opportunities

            • Cleaning up its image
              • Functional means differentiation…
                • … but functionality also risks throwing purity out with the bathwater
                • Market in Brief

                  • Consumption linked to consumer confidence
                    • Bottled water drinkers seriously question its value…
                      • … despite evidence of clear differentiating advantages
                        • Overall, the market is retaining its user base
                          • British brands see short-term spike
                          • Internal Market Environment

                            • Key points
                              • The bottled water backlash
                                • Bottled water as anti-environment
                                  • Re-framing the debate away from being compared to tap water
                                    • Demand for bottled water is closely tied to consumer confidence
                                      • Figure 1: Relationship between usage of bottled water and consumer confidence, by quarter, 2004-09
                                    • At the mercy of the British weather
                                      • Figure 2: Trends in the quality of UK summers, compared to volume sales of bottled water, 2003-09
                                    • Health benefits currently less of a consumer concern than calories
                                      • Figure 3: Trends in selected statements about healthy lifestyles, 2005-09
                                  • Broader Market Environment

                                    • Key points
                                      • Disposable income declines in the wake of the recession
                                        • A generation lost to bottled water
                                          • Figure 4: Total population, by age, 2004-14
                                          • Figure 5: Attitudes towards bottled water amongst over-54s compared to all adults, June 2009
                                        • Bottled water losing appeal amongst burgeoning middle class
                                          • Figure 6: Changes in UK adult population, by socio-economic group, 2004-14
                                          • Figure 7: Attitudes towards bottled water among ABs compared to all adults, June 2009
                                      • Competitive Context

                                        • Key points
                                          • An increasingly competitive marketplace even before the credit crunch
                                              • Figure 8: Trends in consumption of non-alcoholic drinks, by type, 2004-08
                                            • Non-alcoholic drinks steal share from alcoholic
                                              • Figure 9: Comparison of total UK value sales for alcoholic and non-alcoholic drinks, 1998-2008
                                          • Strengths and Weaknesses in the Market

                                            • Strengths
                                              • Weaknesses
                                              • Who’s Innovating?

                                                • Key points
                                                  • The trend for functionality in soft drinks leads to vitamin-enhanced water
                                                    • A healthier product – but what about the added sugar?
                                                      • A wide range of health claims
                                                        • Is enhanced water the future or a dead end?
                                                          • The introduction of slimming water
                                                            • Vitamin Waters put their faith in wisdom of the crowd
                                                              • Using scent to sell
                                                              • Market Size and Forecast

                                                                • Key points
                                                                  • Market is closely aligned to consumer confidence
                                                                    • Figure 10: Relationship between usage of bottled water, consumer confidence and GDP, by quarter, 2007-09
                                                                  • Expect the market to grow again, but only modestly
                                                                    • Figure 11: Forecast of volume and value sales of total bottled water market (includes plain water, enhanced water and water coolers), 2004-14
                                                                  • Plain water is victim of commoditisation
                                                                    • Enhanced water has the most growth potential
                                                                      • Figure 12: Forecast of volume and value sales of plain bottled water (including water coolers), 2004-14
                                                                      • Figure 13: Forecast of volume and value sales of enhanced bottled water (either flavoured or fortified with vitamins/supplements), 2004-14
                                                                      • Figure 14: Forecast of proportion of total water value sales made up by plain and enhanced water (water coolers are included in plain figures), 2004-14
                                                                    • Factors used in the forecast
                                                                    • Market Segmentation

                                                                      • Key points
                                                                        • A shift away from on-premise consumption
                                                                          • Figure 15: Forecast of volume and value sales of total bottled water (incl. plain water, flavoured water and water coolers), by channel 2004-09
                                                                        • Plain carbonated unable to grow its share
                                                                          • Figure 16: Volume sales of plain water, by type, 2004-09
                                                                        • Sales growth of new flavoured functional segment defies recession
                                                                          • Figure 17: Forecast of volume sales of flavoured water, by type, 2004-09
                                                                      • Market Share

                                                                        • Key points
                                                                          • A good time to be British
                                                                            • Figure 18: Manufacturers shares in UK take-home value sales of bottled water, 2007-09
                                                                            • Figure 19: Manufacturers’ estimated shares in take-home value sales of bottled water, 2009
                                                                        • Companies and Products

                                                                          • Key point
                                                                            • Britvic Soft Drinks
                                                                              • Coca-Cola
                                                                                • Danone Waters
                                                                                  • Greencore
                                                                                    • Highland Spring
                                                                                      • Nestlé
                                                                                      • Brand Elements

                                                                                        • Key points
                                                                                          • Brand map
                                                                                              • Figure 20: Attitudes towards and usage of bottled water brands, April 2009
                                                                                            • Brand qualities of bottled water brands
                                                                                              • Evian healthiest, Highland Spring natural, but Drench has youthful cool
                                                                                                • Figure 21: Personalities of various bottled water brands, April 2009
                                                                                              • Experience of bottled water brands
                                                                                                • Heavy competition, but Danone slightly ahead
                                                                                                  • Figure 22: Consumer usage of various bottled water brands, April 2009
                                                                                                • Brand intentions for bottled water brands
                                                                                                  • Loyalty low, competition tight
                                                                                                    • Figure 23: Consideration of various bottled water brands, April 2009
                                                                                                  • Brand satisfaction for bottled water brands
                                                                                                    • Satisfaction average for most, but Perrier lacking
                                                                                                      • Figure 24: Satisfaction with various bottled water brands, April 2009
                                                                                                    • Brand commitment to bottled water brands
                                                                                                      • Drench has highest loyalty
                                                                                                        • Figure 25: Commitment to various bottled water brands, April 2009
                                                                                                      • Perrier
                                                                                                        • What the consumer thinks
                                                                                                          • Figure 26: attitudes towards the Perrier brand, April 2009
                                                                                                        • Drench
                                                                                                          • What the consumer thinks
                                                                                                            • Figure 27: Attitudes towards the Drench brand, April 2009
                                                                                                          • Evian
                                                                                                            • What the consumer thinks
                                                                                                              • Figure 28: Attitudes towards the Evian brand, April 2009
                                                                                                          • Brand Communication and Promotion

                                                                                                            • Key points
                                                                                                              • Advertising spend remains steady
                                                                                                                • Figure 29: Main monitored media advertising spend on bottled water, compared to volume sales, 2005-09
                                                                                                                • Figure 30: Main monitored media advertising spend on bottled water, % by media channel, 2006-08
                                                                                                              • Britvic increases its investment
                                                                                                                • Figure 31: Above-the-line advertising spend, by brands, 2006-08
                                                                                                              • The rise of ethical branding
                                                                                                                • 2009 sees the return of the Evian babies
                                                                                                                • Channels to Market

                                                                                                                  • Key points
                                                                                                                    • Market plays into the hands of the supermarkets
                                                                                                                      • Figure 32: Estimated volume sales of plain bottled water (incl. water coolers), by outlet type, 2007-09
                                                                                                                    • Challenging on-premise conditions
                                                                                                                    • Consumer Usage

                                                                                                                      • Key points
                                                                                                                        • 2007 sees beginning of the decline
                                                                                                                          • Figure 33: Trends in frequency of drinking bottled water, 2005-09
                                                                                                                        • Young, and getting younger
                                                                                                                          • Blue-collar hydration
                                                                                                                            • Regional rewards
                                                                                                                              • Still water leaves sparkling behind
                                                                                                                                • Figure 34: Trends in types of bottled water drunk most often, 2005-09
                                                                                                                              • Increased demand for smaller bottles
                                                                                                                                • Figure 35: Trends in size of bottled water formats drunk most often, 2005-09
                                                                                                                              • Kids market parallels the adult
                                                                                                                                • Figure 36: Trends in penetration of bottled water among kids and where drunk, 2006-09
                                                                                                                            • How Has Consumption Changed Over the Past Two Years?

                                                                                                                              • Key points
                                                                                                                                  • Figure 37: Changes in consumption of bottled water in the past two years, June 2009
                                                                                                                                • What are the drivers of change?
                                                                                                                                  • Figure 38: Net difference* in attitudes towards bottled water amongst those consuming more bottled water and those consuming less in the past two years, June 2009
                                                                                                                                • Those who drink less (15% of the population)
                                                                                                                                  • Those who drink more (14% of the population)
                                                                                                                                  • Consumer Attitudes Towards Bottled Water

                                                                                                                                    • Key points
                                                                                                                                        • Figure 39: Attitudes towards bottled water, either still, fizzy or flavoured, June 2009
                                                                                                                                      • Bottled water scores low on value for money
                                                                                                                                        • Purity gives bottled water the edge over tap water
                                                                                                                                          • No calories proves a major selling point
                                                                                                                                            • Practical benefits offer a route into attracting the huge 55+ market
                                                                                                                                              • Environmental concerns have limited effect on consumption habits
                                                                                                                                                • Price dominates motivation to purchase
                                                                                                                                                    • Figure 40: Most important things driving purchase of bottled water, June 2009
                                                                                                                                                  • Fuelling an on-the-go youth lifestyle
                                                                                                                                                  • Targeting Opportunities

                                                                                                                                                    • Key point
                                                                                                                                                      • Figure 41: Marketing groups for bottled water based on attitudes, June 2009
                                                                                                                                                    • Seeking Enhancement (15% of bottled water drinkers)
                                                                                                                                                      • Needing Reassurance (26% of bottled water drinkers)
                                                                                                                                                        • On The Go (26% of bottled water drinkers)
                                                                                                                                                          • Unconvinced (33% of bottled water drinkers)
                                                                                                                                                          • Appendix

                                                                                                                                                            • Consumer research
                                                                                                                                                              • ACORN
                                                                                                                                                                • Advertising data
                                                                                                                                                                • Appendix – Broader Market Environment

                                                                                                                                                                    • Figure 42: Trends in PDI and consumer expenditure, 2004-14
                                                                                                                                                                • Appendix – Brand Communication

                                                                                                                                                                    • Figure 43: Above-the-line advertising spend on bottled water, by media type, 2006-08
                                                                                                                                                                    • Figure 44: Main monitored media advertising expenditure on bottled water, by top 10 companies, 2006-08
                                                                                                                                                                • Appendix – Consumer Usage

                                                                                                                                                                    • Figure 45: Trend in volume importance index for bottled water drinkers, 2005-09
                                                                                                                                                                • Appendix – How Has Consumption Changed in the Past Two Years?

                                                                                                                                                                    • Figure 46: Attitudes towards bottled water, either still, fizzy or flavoured, by changes in consumption of bottled water either still, fizzy or flavoured in past two years, June 2009
                                                                                                                                                                    • Figure 47: Most important things in buying bottled water, by changes in consumption of bottled water either still, fizzy or flavoured in past two years, June 2009
                                                                                                                                                                    • Figure 48: Changes in consumption of bottled water either still, fizzy or flavoured in past two years by demographics, June 2009
                                                                                                                                                                • Appendix – Consumer Attitudes Towards Bottled Water

                                                                                                                                                                    • Figure 49: Attitudes towards bottled water, either still, fizzy or flavoured, by demographics, June 2009
                                                                                                                                                                    • Figure 50: Attitudes towards bottled water, either still, fizzy or flavoured, by demographics, June 2009 (continued)
                                                                                                                                                                    • Figure 51: Most popular things in buying bottled water, by demographics, June 2009
                                                                                                                                                                    • Figure 52: Most popular things in buying bottled water, by demographics, June 2009 (continued)
                                                                                                                                                                    • Figure 53: Attitudes towards bottled water, either still, fizzy or flavoured, by changes in consumption of bottled water either still, fizzy or flavoured in past two years, June 2009
                                                                                                                                                                    • Figure 54: Most important things in buying bottled water, by changes in consumption of bottled water either still, fizzy or flavoured in past two years, June 2009
                                                                                                                                                                • Appendix – Targeting Opportunities

                                                                                                                                                                    • Figure 55: The five most important things in buying bottled water, by target groups, June 2009
                                                                                                                                                                    • Figure 56: Target groups, by demographics, June 2009
                                                                                                                                                                    • Figure 57: Changes in consumption of bottled water in the past two years, by target groups, June 2009
                                                                                                                                                                    • Figure 58: Attitudes towards bottled water, either still, fizzy or flavoured, by target groups, June 2009

                                                                                                                                                                Companies Covered

                                                                                                                                                                • Absolut Spirits Company (USA)
                                                                                                                                                                • Advertising Standards Authority
                                                                                                                                                                • AG Barr
                                                                                                                                                                • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                                                • Amazon.co.uk
                                                                                                                                                                • American Heart Association, Inc.
                                                                                                                                                                • Asda Group Ltd
                                                                                                                                                                • Badoit
                                                                                                                                                                • Barclays Bank plc
                                                                                                                                                                • Bio-synergy
                                                                                                                                                                • Brita Water Filter Systems Ltd.
                                                                                                                                                                • British Market Research Bureau (BMRB)
                                                                                                                                                                • British Nutrition Foundation
                                                                                                                                                                • British Sky Broadcasting Group plc (BSkyB)
                                                                                                                                                                • Britvic Soft Drinks
                                                                                                                                                                • Cadbury Schweppes Plc
                                                                                                                                                                • Co-operative Group
                                                                                                                                                                • Coca-Cola Enterprises Ltd
                                                                                                                                                                • Coca-Cola GB
                                                                                                                                                                • Danone UK Ltd
                                                                                                                                                                • Facebook, Inc.
                                                                                                                                                                • Fiji Water
                                                                                                                                                                • Food Standards Agency
                                                                                                                                                                • Freeview
                                                                                                                                                                • Gfk NOP
                                                                                                                                                                • Glastonbury Festivals Ltd
                                                                                                                                                                • Government Actuary's Department (GAD)
                                                                                                                                                                • Greencore Group plc
                                                                                                                                                                • Groupe Danone
                                                                                                                                                                • Highland Spring
                                                                                                                                                                • J. Sainsbury
                                                                                                                                                                • Lidl (UK)
                                                                                                                                                                • Lindt & Sprüngli (UK)
                                                                                                                                                                • Marks & Spencer
                                                                                                                                                                • Muji (UK)
                                                                                                                                                                • Nestlé UK Ltd
                                                                                                                                                                • Nestlé Waters
                                                                                                                                                                • Netto Foodstores Ltd
                                                                                                                                                                • Office for National Statistics
                                                                                                                                                                • Outdoor Advertising Association of Great Britain
                                                                                                                                                                • Pepsi-Cola UK
                                                                                                                                                                • Perrier Vittel UK Ltd
                                                                                                                                                                • Professional Golfers Association
                                                                                                                                                                • Silver Spring Mineral Water Co Ltd
                                                                                                                                                                • Tesco Plc
                                                                                                                                                                • Thames Water
                                                                                                                                                                • Twitter, Inc.
                                                                                                                                                                • Virgin Media Ltd
                                                                                                                                                                • Waitrose
                                                                                                                                                                • Walkers Snack Foods Limited
                                                                                                                                                                • WaterAid
                                                                                                                                                                • Wm Morrison Supermarkets
                                                                                                                                                                • YouTube, Inc.

                                                                                                                                                                Bottled Water - UK - October 2009

                                                                                                                                                                £1,995.00 (Excl.Tax)