WATER WORKS 1996

RICHARD TURCSIK

LOS ANGELES -- Bottled water is filling the L.A. Basin.

"I see the gallon water [jugs] taking off like crazy, especially during the summertime," said John Cordero, director of purchasing for K.V. Mart Co., a Carson, Calif.-based operator of 15 supermarkets and warehouse stores under the Top Valu, Valu Mart and Valu Plus Food Warehouse banners.

Cordero said K.V. Mart sells two to three truckloads of gallon and 2.5 gallon jugs of water a week, and another half-truckload of the 1.5 liter bottles. In addition, Cordero likes to keep another truckload of water on hand in case of an earthquake.

"This area is known for earthquakes -- and if there is any disaster the water goes like crazy -- so we always try to have at least a little water on hand. When there is an earthquake people are afraid to drink the water because water mains break and during that period, bottled water is very effective," Cordero said.

A distrust of municipal water supplies, varying tastes of tap water, an influx of immigrants who physically can't handle the chemicals in American tap water, the need to keep bottled water on hand in the event of an earthquake and the never-ending California quest for a healthy and trendy lifestyle are all helping to pump bottled water sales in this market, and keep it the strongest in the nation.

For the 52 weeks ended Aug. 11, supermarket bottled water sales in the United States were $813.4 million, a 12.8% increase over the previous 52 weeks, according to Information Resources, Inc. During this same period, Los Angeles water sales were $110.6 million, a 7.7% jump. Also, almost 96 million units of bottled water were sold in Los Angeles-area supermarkets, accounting for over 13% of the total U.S. volume.

According to IRI, the top selling brands of bottled still water in Los Angeles are Arrowhead, private label, Sparkletts, Evian and Crystal Geyser. The supermarket growth comes despite the fact Arrowhead runs television commercials touting its home delivery service, and that a substantial amount of water is also sold through vending machines outside of every store.

Bottled water is a high priority at supermarkets here, SN found in store visits last month. Many stores stock several dozen brands and varieties and, in many cases, devote entire aisles to the category. Most supermarkets offer shoppers a choice of purified, well, spring and distilled water in national and regional brands, as well as private label.

During SN's visit, Albertson's devoted the entire front page of its Shoppers Guide to the Sparkletts brand of waters, offering a "buy-two-get-one-free" coupon on the 2.5 gallon size.

Ralphs Grocery Co., Compton, Calif., has made water a priority. Although company officials declined to comment about the water program, Ralphs stores visited by SN offer large sections of bottled water encompassing 30 feet and more. In many locations, the amount of selling space devoted to water is equal to that for soft drinks or shelf-stable juices.

Bottled water has proven to be a hit with Ralphs shoppers. In a North Hollywood unit visited at 9:30 p.m., more than 50 percent of the stock was depleted. In this store, as in its others, Ralphs helps to build sales via an Actmedia coupon dispenser that offers a 55-cent coupon to shoppers who buy a bottle of ReaLemon lemon juice and a 2.5-gallon jug of Hinkley & Schmitt brand of water.

One of Ralphs largest bottled water departments is in its Marina Del Ray store, which draws a good cross-section of local residents, commuters and beach goers. This unit stocks 18 brands of still waters in a variety of sizes, and devotes an entire 4-foot section on six shelves to Evian. Other brands stocked include Canadian Music glacier water, packaged in a 1-liter triangular plastic bottle that retails for $1.45; Hinkley & Schmitt Nursery drinking water for babies, $1.29 a gallon, and Paradise Gold water from Hawaii.

The Marina Del Ray unit also devotes about 12 feet to case sales of water. For example, a case of 24 half-liter bottles of Sparkletts water retails for $10.76, while a case of 12 1-liter bottles of Naya water retails for $12.36.

In addition, Ralphs also merchandises Aqua-Mate water dispensers over the coffin cases in the frozen-food aisle for $26.99.

Likewise, Lucky Stores, Dublin, Calif., also gives water a high profile. Some Lucky locations devote over 25 feet on several shelves to jug waters. In several locations during SN's visit, the chain's Lady Lee private-label waters were featured on endcaps at the special price of 59-cents a gallon. In some locations Lucky also has 5-gallon water cooler jugs bearing the Lucky label for sale.

At Vons Cos. stores bottled water is also making a splash. It's given at least 12 feet at most stores. Like Ralphs and Lucky, Vons stocks a host of brands in varying price ranges, and regularly features private label on sale.

In addition to stocking the typical national and private labels, an upscale North Hollywood Gelson's unit also features such exotics such as Ty Nant, which is imported from Wales and packaged in a 1.5 liter glass cobalt blue bottle that retails for $3.45, and the French import Vittel, which during SN's visit was featured at 99-cents a 1.5 liter bottle, a savings of 36-cents.

One unique aspect of Gelson's is that it devotes an entire aisle to cold beverages, including beer, wine, soda, and four feet of bottled water. In this area, as well as in the warm aisle, some space is devoted to single-serve bottles of Gelson's Finest, sourced from Oregon, which the retailer touts as "the finest natural spring water in the world."

The label reads, "Fed by the Cascade Mountain Range, Gelson's Finest Water follows nature's ancient course through huge volcanic lava flows -- some up to 300 million years old. It is the journey through the flows that naturally filters our special water, giving it great taste, purity and clarity."

Other retailers in California are also diving into the bottled water market. Bottled water is a common sight at drug stores, mass merchandisers, convenience stores and other retail outlets. Trader Joe's, a South Pasadena-based specialty food chain, features large floor-pallet displays of the Crystal Geyser brand of bottled water.

K.V. Mart's Cordero projects water sales to keep growing in the future, without necessarily hurting sales of soft drinks, juices and other beverages.

"At sporting events, and any other type of outdoor event, water is always available at a tremendously marked-up price, yet people buy it, so I don't see any end to the growth. People just want straight, cold water," he said.

Branded Water in L.A.

Selected Retail Price Comparison*

Arrowhead Private Label Evian

1 gallon 1 gallon 1.5 liter

Ralphs $ 0.89 $ 0.79 $ 1.39

Lucky $ 1.02 $ 0.59 $ 1.75

Gelson's $ 1.19 $ 0.95 $ 1.79

On sale through Sept. 24.

"Look at this new low price."

These price checks were conducted by Supermarket News on Thursday, Sept. 5, 1996, at the following stores in greater Los Angeles: Ralphs, 4311 Lincoln Blvd., Marina Del Ray; Lucky, Lincoln Center, Lincoln Blvd., Santa Monica; Gelson's, 4738 Laurel Canyon Blvd., North Hollywood.