Water Sales Make Waves

This has been a strange year in most respects, with many consumer behaviors upended. But during 2020, water sales have continued to rise—though in slightly different areas than prior to the pandemic.

As on-premise sales have fallen and consumers have stocked up their pantries, sales of multipacks of single-serve beverages have boomed because Americans still want convenience and something healthy.

Water’s popularity endures, says Shelley Balanko, SVP of business development for The Hartman Group in Bellevue, Wash., especially among younger consumers, who are interested in getting more functionality from water. “They want it to be clean and whole and real. Water’s not going anywhere and is probably going to get more dialed in about functionality,” she says.

At Chandler, Ariz.-based Bashas’, the water category is up 12%, with case packs and multipacks driving growth, up 14%. “Trips are down but basket size is up, accounting for the rise in case pack and multipack waters,” says Dave Vehon, category manager.

And at Geissler’s Supermarkets, East Windsor, Conn., multipacks of water “are one of the better grocery dollar drivers we have, and a 24-pack can be a cart-turner,” says Eric Nilsson, DSD buyer. Consumers, he says, “are not making as many little trips into the store but instead stock-up trips.”

The growth in multipacks is really due to convenience and human behavior. Consumers love the ease of just grabbing a cold drink; “it’s just so convenient, ” Nilsson says.

Single-serve bottles are the mainstay of the water category, says Gary Hemphill, managing director of research for Beverage Marketing Corp., New York, accounting for about 70% of the total volume of the bottled water category. “People like the convenience of the single-serve bottle and that’s been the go-to package,” he says.

A Category Bubbles Up

According to Nielsen, sales of sparkling water were up 21% for the year ending Oct. 3, and sales of seltzer water also increased, by 12%, while the category leader in growth was tonic water, with a sales increase of 29% in the same period, perhaps due to increased alcohol consumption.

Sparkling water is often viewed as a treat, says Balanko, especially for millennials and Gen Z consumers. “It’s often standing in for a CSD but is much better for you,” she says.

Sales of sparkling water at Bashas’ are up 27%, says Vehon, continuing its double-digit rise for the past five years “as consumers transition from soda but are still looking for a carbonated beverage.”

What’s driving this, he says, is customers moving away from soda and consuming more sparkling and enhanced waters. “Items like Bubly, La Croix and Sparkling Ice are up over 20% and continue to be supported by their manufacturers with ongoing promotional programs,” he says.

At Geissler’s, sparkling, enhanced and flavored waters are doing really well. “As enhanced waters grow, so do the sales for something alkaline or protein-enhanced,” Nilsson says. “Flavored definitely is where the growth is; these have become big dollar drivers in the grocery category.

“Basic waters are good but if you can add something, even better. Soda was always sold as an experience and now they’re selling water as an experience.”

“Sparkling water tends to be one of the star performers and that’s driven by consumers wanting healthier refreshment,” says Hemphill. “A lot of people see CSDs as not healthy and there have been some high profile launches such as LaCroix, Pepsi’s Bubly, Coca-Cola’s Aha and Nestle’s launch of flavored sparkling versions of its regional brands.”

Brand Power

The water category is dominated by the big companies of Nestle and Coca-Cola, but that doesn’t mean new companies aren’t constantly launching new products.

Smaller companies entering the water market “have to offer something different,” says Hemphill. There’s Protein2o, for example, or Sol Water, a canned electrolyte water, or Boxed Water, which offers sustainability. “They have to offer something different and unique because they can’t compete with the big companies on price,” he adds.

At Basha’s, however, private label drives the water category with 78% of the case pack volume. And 68% of the bulk water in gallon jugs is private label. Premium water is driven by Smartwater, Lifewtr and Fiji, says Vehon.

Merchandising Models

Before the pandemic, Geissler’s sold a lot of bottled water from its prepared food areas, but with those closed down, sales have moved, and “the aisle is definitely the clear king right now,” Nilsson says.

Geissler’s has also reset a couple of stores in the past year to enlarge its water sections since sales are good and “the list of manufacturers that want into the set is endless,” he says.

To make room, the retailer eliminated some detergents and cleaning products because “we weren’t getting the turns out of them we used to because we have Walmart and Target nearby.” It also trimmed down its soda offerings and tightened up juice too, as well as powdered soft drinks and powdered tea. Nilsson moved the rest of tea to a different aisle, leading to about a half-aisle gain for water. 

Sales are mostly in the aisle and off-shelf displays such as endcaps, lobby displays and pallet drop displays for Bashas’. “Especially when featured in ads, these items don’t have enough inventory on shelf to handle the sales demands, so we display elsewhere so we don’t disappoint our customers,” Vehon says, adding that business continues to be brisk for best-selling single serve bottles from in-aisle and checkout refrigerators.

To boost water sales even more, Bashas’ features case pack water in weekly ads and sometimes in bundles with soda items on key holiday weeks. And in combination with manufacturer promotions, it features shelf displays. “This creates excitement in our stores and rewards customers when vendor-supported products are purchased,” Vehon says.

Great merchandising is key to getting Protein2o into consumers’ hands. “We have a team of merchandisers who work with local store managers to build displays when we have promos,” says President Andy Horrow. “The display opportunity is so important to driving our business. We’re still a nascent brand so getting it in front of people is essential.”

When he creates a display, sales increase three to five times. Protein2o also does regular temporary price reductions. “Every discount drives more purchases but it’s really the way the yellow tag jumps out at the consumer to catch the eye,” Horrow says. He does four to six of these annually, with offerings such as two for $4 or three for $5 (regular prices run $1.99 to $2.49). “When we do a deep discount, we get a display and our baseline always increases as a result,” he says. Horrow also spends a lot of money on Ibotta (a cash-back app), which he says is “great for advertising.

Sales of water are likely to continue to be strong, says Hemphill. “Water is built around health and wellness so when you’re in the middle of a pandemic, that’s a really good place to be.