Surf's up in the bottled water aisle.
Concerns about the poor quality of municipal water supplies and a desire by consumers to drink more all-natural, better-for-you beverages has caused sales of all types of bottled water to remain strong. But it's the development of single-serve polyethylene terephthalate bottles that has caused a virtual tidal wave of activity in the category, retailers report.
"Water is one of the best categories that we have, as far as profits and turns," said Tom Roesner, buyer of beverages at Seaway Food Town, Maumee, Ohio. "The margins are extremely good."
Ken Powers, category manager for Randalls Food Markets, Houston, attributes much of the category growth to published reports about the deterioration of the municipal water supplies. He noted that sales are strong not only in rural outlying areas, but also in urban and suburban locales.
"Because of concerns about the water supply, people have a good feeling about bottled water," he said.
"While our bulk sales are up substantially, there has also been a huge switch to PET bottles. I think it is a substitute to soft drinks and isotonics. The convenience is there and it is a satisfying beverage," he said.
"The trends appear to be sport-top bottles and six-pack, 1-liter bottles," said Brian McColgan, buyer for Bozzuto's, the Cheshire, Conn.-based wholesaler. McColgan attributes the growth to health concerns and the convenience of the lightweight, single-serve PET bottles.
Peter Dudis, category manager for Big Y Foods, Springfield, Mass., said that while the overall water category is doing well, "Growth in the gallon and 2.5-gallon bottles has leveled off. The entire growth is in the PET segment, particularly in the multipacks, i.e., six half-liter bottles."
The midpriced, personal-size items -- such as 20-ounce, 1- and 1.5-liter bottles -- are experiencing the greatest growth, Dudis said.
"We attribute much of the growth of the category to health-conscious consumers who are buying more water," said Gary Evey, a spokesman for Spartan Stores, the cooperative wholesaler based in Grand Rapids, Mich.
Health issues are also driving strong bottled water sales at Salisbury, N.C.-based Food Lion, according to Tawn Nahn, a spokeswoman for the company.
"We believe the growth of the category is attributable to the increasing health awareness of shoppers. Water is a healthy, zero-calorie alternative to sodas and other drinks," she said.
In the Pacific Northwest, bottled water sales are booming, posting sales increases in the "better than double digits," said Pat Redmond, buyer at Rosauers Supermarkets, Spokane, Wash.
"Whether it's the 5-gallon jugs or 1.5-liter bottles on down, they all are selling extremely well," Redmond said, noting that many of his stores do a strong business in various metric sizes because of crossover traffic from Canada.
Redmond said that although the region is known for the purity of its drinking water, bottled water is still selling strongly in every area where Rosauers operates stores.
"There are some areas where the water is a little hard, but we sell tons of water in Montana. It is an amazing thing," he said.
Indeed, bottled water sales are strong all across the country. According to Information Resources Inc., Chicago, bottled water is just a few drops away from becoming a billion dollar category. For the 52 weeks ended March 30, bottled water sales in supermarkets, drug stores and mass merchandisers reached $997.7 million, a 12.8% increase over the previous year.
The category is still highly fragmented among regional brands, with private label having the largest market share at 24.5%. Private-label dollar sales reached $244.3 million, an 11.6% increase. The upscale Evian brand was the leading branded water with sales of $93.8 million, a 1.3% increase over the previous year, and a 9.4% market share.
"In our Epicurean stores, the 1.5-liter bottle of Evian is our No. 1 selling water. But the gallon water is still doing extremely well, particularly in Houston," said Vern Buford, head buyer for Rice Food Markets, Houston.
Most retailers find any kind of bottled water will sell, regardless of the brand.
"Certain consumers are brand loyal," said Evey of Spartan Stores. "Then there is a consumer that shops only on price and will switch brands on merchandising. The biggest opportunity lies with the consumer in the midpriced section of the category."
Retailers said sales of bottled water have been so strong that it often doesn't even have to be advertised.
"Water sells well on its own, but it is still good business to advertise this category," said McColgan of Bozzuto's.
"We do advertise quite frequently," said Buford of Rice Markets. "In our Price Buster and Grocery World stores, we advertise, display and promote the gallon waters."
