Fortified with vitamins, minerals and other added ingredients, new products are literally enhancing the bottled water category -- and retailers are scoring impressive sales.
Enhanced water is the fastest growing part of the water market, generating $250 million in wholesale sales in 2002, up from about $20 million in 2000, according to Beverage Marketing Corp., New York.
Gatorade's Propel Fitness Water from PepsiCo/Quaker is the market leader, followed by Glaceau from Energy Brands, according to Beverage Marketing. Other players include Aquafina Essentials from Pepsi, Dasani NutriWater from Coca-Cola, VeryFine Fruit20 from Veryfine Products and Dannon Fluoride to Go from Danone Waters of North America.
Retailers polled by SN concur that Propel is the category leader. Introduced nationally last year, the brand generated $67.9 million in dollar sales in the food, drug and mass channels (excluding Wal-Mart Stores) for the 52 weeks ended March 23, 2003.
It is the leading drink in the category at Blue Goose Super Markets, St. Charles, Ill. Due to strong consumer demand, Blue Goose ensures that it has a variety of other brands in stock as well, according to Dale Instefjord, general manager.
"Manufacturers have done a great job marketing these products, so there's a lot of demand for them," Instefjord told SN. "If we don't carry the best brands and flavors, we're in trouble."
The plethora of brands has turned enhanced water into a category of its own, said Tom Pirko, president, Bevmark, Santa Barbara, Calif., a beverage consultancy.
Pirko attributed strong demand to the "super-size" mentality of today's consumers.
"Consumers don't just want something with a pretty label. They want something with added benefits," he said.
Strong consumer demand has led some retailers to give the enhanced waters their own section. That's the case at Blue Goose, which designated 4 feet in its 23,000-square-foot store.
Prior to getting their own section, brands were integrated within the New Age beverage category. The new section is located next to New Age, and around the corner from bottled water.
"We made the move [to separate] when Propel came out because we knew that it would be a good introduction," Instefjord said.
Demand is so strong at Blue Goose that the retailer may include enhanced water in its weekly outdoor "cookouts," an annual promotional event that begins in April and typically runs through October. The cookouts are set up outside the store under a tent between 11 a.m. and 2 p.m. on weekends. The purpose is to market and sell products in a picnic-style environment. Consumers can buy meats, sandwiches and other products.
To meet consumer demand in the upcoming warmer months, Blue Goose plans to increase the number of off-shelf locations, as well as double the amount of cooler space for enhanced water. That expansion will come at the expense of carbonated soft drinks, according to Instefjord.
"When weather gets warm, many consumers will grab [enhanced water] instead of regular bottled water or Gatorade," he said. "We need to be prepared for that."
Strong consumer demand has led Green Hills Farms, a single-store operator in Syracuse, N.Y., to mull creating a private label, according to John Mahar, director of operations.
Though no decision has been made, Mahar said the retailer has considered vitamin-enhanced and flavored water under the Green Hills label.
If the retailer goes ahead with the idea, the beverage most likely would contain Splenda, a no-calorie sweetener. The reason for this is that Green Hills wants the water to be low in calories.
"We're not looking to make it a sugared drink," he said.
Enhanced water is currently merchandised in the New Age section at Green Hills, but under a remerchandising plan, it may be placed next to regular bottled water within six months, according to Mahar.
Such placement decisions are a big challenge to the enhanced water category. Retailers say they need to be careful where they put the beverages. While frequently positioned as a health beverage, some have up to 120 calories per serving.
"Some are as caloric as a soda," noted Paul Weiner, natural food buyer, Fairway Market, New York, a three-store operator.
For this reason, Fairway merchandises only certain brands in its natural food section, said Weiner.
Much of Fairway's assortment in the natural/organic section is dominated by Energy Brand's Glaceau line of enhanced waters, which include SmartWater, VitaminWater and FruitWater.
"Glaceau waters are very strong items in our store," said Weiner, adding that other brands, like Coca-Cola's Dasani NutriWater, didn't fare as well.
VitaminWater was featured as part of Fairway's anniversary sale this month. A 20-ounce bottle was advertised for 99 cents, down from $1.25.
"VitaminWater has an appeal that's different from the other Glaceau brands," said Weiner. "It tastes good and it's clean, plus it doesn't have any calories."
Fairway typically sells 30 to 50 cases of SmartWater a week, and 50 to 75 cases of VitaminWater and FruitWater a week, especially in the warmer months.
Fairway's careful consideration of which brands can get shelf space in the natural section demonstrates one of the challenges to the enhanced water market. Pirko of Bevmark said the category needs to be sorted out in terms of which brands actually qualify as a water beverage.
Some contain so many nutrients/vitamins and herbs that they're practically a nutritional supplement, while others contain enough sugar and flavorings to qualify as a soft drink, Pirko said.