An unlikely beverage is going premium and edging out soda
@smartwater on InstagramSoda companies are increasingly betting on water.As Americans cut down on soda consumption, companies like Coke and Pepsi are eager to add low-calorie, nutritious options to their repertoire.
That means, in 2016, you can expect bottled water to be an unlikely hero in the stereotypically sugary beverage industry.
Water is currently one of the hottest beverages in the nonalcoholic drink market, with major brands like Nestle's Poland Spring, Coca-Cola's Dasani, and PepsiCo's Aquafina's volumes growing from 7 to 9% in 2014. For comparison, Coke and Pepsi's volumes both fell close to 3% in the same time period.
When it comes to nutrition, nothing has a better reputation. If anything, water has a healthier reputation than is warranted: rumors of water's positive impact have reached mythical levels that the drink itself cannot reach.
That flawless image fits perfectly into PepsiCo and Coca-Cola's hopes for a reputation makeover in 2016, after sugar-related concerns drove soda sales down and negative headlines up in 2015.
In the coming year, Pepsi and Coke will be all about debuting new healthy beverages - or at least brands perceived as healthier. However, while bottled water costs as much as 2,000 times as much as tap water, the beverage yields surprisingly low profit margins for companies. So, beverage giants are investing not only in simple bottled tap water, but also in new, pricier takes on classic H2O.
In 2016, Pepsi is debuting new sparkling Aquafina flavored waters, while customers can expect the continued rollout of sparking Smartwater from Coca-Cola. Plus, there are more general healthy beverage innovations, like organic Gatorade, new flavors of ZICO coconut water, and sparkling Minute Maid juices.
Bottled water is a $13 billion dollar business that Coca-Cola and PepsiCo currently only have a 13% volume share of in the US (Nestle is far and away the leader, with almost half of the market). There is major room for growth in this area - especially as companies best known for soda try to showcase a healthier and more diverse array of beverages.