With new entrants and innovation making waves on a regular basis, and a health a wellness trend among consumers still going strong, functional waters are among the high growth areas in the consumer goods field, according to a recent study by IRI and Boston Consulting Group.
The global market is primed to reach a value of $18.24 billion by 2025, or a compound annual growth rate of 7.4% between 2018 and 2025, Fortune Business Insights predicted in a report last year.
The category was valued at $10.24 billion in 2017, according to the India-based market research firm. North America is expected to be leading region for functional water sales, Fortune Business Insights said, with sales of bottled water recently surpassing soft drinks sales in the U.S.
Sales of functional water are benefiting from the overarching trend toward better-for-you alternatives to unnatural and high-sugar drinks; however, high costs associated with the category could restrict growth, Fortune Business Insights noted.
What will fuel growth is retail distribution, with mass merchandisers, supermarkets and hypermarkets holding sway in the distribution channels for functional water sales. Convenience stores and online retail are also expected to see greater traction for functional water in the foreseeable future because of their penetration and personalized purchasing experiences, Fortune Business Insights said.
Evidence of this is a recent announcement by ShineWater that its physician-engineered flavored water, which contains vitamin D, electrolytes, antioxidants and zero sugar, will soon be available in all of Publix’s 1,270 stores. Another example is Alkaline Water Co., which recently expanded distribution of its flagship Alkaline88 premium bottled water via a deal with Lidl, the German discounter with U.S. stores concentrated across the East Coast. Alkaline88 is a purified ionized water that is enhanced with pink Himalayan rock salt and electrolytes.
According to Fortune Business Insights, consumers are gravitating toward exotic ingredients and bold flavors that not only appeal to their palates but are also functional in terms of the overall nutritional profile.
The research firm notes that new product development remains one of the most preferred strategies in the global market, with major companies such as The Coca-Cola Co. adding Smartwater Alkaline and Smartwater Antioxidant to its Smartwater brand in February 2019, as well as the strong emergence of private-label brands offering enhanced convenience and value.