Bottled-Up Demand

Bottled water has become the No. 2 beverage category

By Brendan McNulty, Special to R&I -- Restaurants & Institutions, 6/1/2004

Abigail Stoneman Inn in Newport, R.I., has only five guest rooms, but its proprietors know how to pamper guests. A menu of 20 different pillow choices is presented on check-in and its Bathing Experience Menu lists more than 30 soaps and spa products.

The 2-year-old inn, occupying a mansion built in 1866, has no restaurant, but offers a two-person tearoom and a water bar, the James Finch Pub, that stocks 20 different imported and domestic still and sparkling bottled waters. Any water also can be brought to a guest’s room.

“Of all the amenities, waters are the most popular,” says Win Baker, president of Legendary Inns of Newport, a collection of three properties, including Abigail Stoneman. It is not uncommon for guests to sample eight to 10 different waters during a stay. “We’re always looking for new waters to add,” he says.

Per-capita U.S. consumption of bottled water has nearly doubled since 1994.

Bottled water has evolved from an indulgence available primarily at fine-dining restaurants to an integral part of consumers’ increasingly health-conscious diets that is offered—and sells well—in quick-service and all other foodservice segments. Bottled water now ranks second to soft drinks in consumption among all beverages in the United States, according to data recently released by New York City-based Beverage Marketing Corp.

The product’s ascension continues a long-term trend, sats Stephen Kay, spokesman for the International Bottled Water Association (IBWA), an Alexandria, Va.-based trade organization. Domestic bottled water consumption has increased 7% to 10% annually for the last two decades.

“People look for alternative drinks and are tyring to avoid ingredients that other bottled drinks contain, such as additives and food coloring,” he says.

“And now bottled water is available virtually anyplace other drinks are sold.”

The Look of Refreshment
“We sell bottled water because everybody else sells it,” says Joe Corey, co-owner of Faccia Luna, a four-unit chain of upscale pizzerias based in Washington, D.C. “You have to sell it to stay competitive.”

Bottled water sales experienced a 9.1% compound annual growth rate between 1998 and 2003.

Faccia Luna has offered a variety of sparkling, still and flavored waters since opening in 1989. Demand has risen steadily since then, Corey says. One Norwegian water served at Faccia Luna is marketed as being very low in sodium, minerals or other components that could leave an aftertaste. And while customers are interested in purity and may read ingredient information on labels, Corey says packaging is central to why one brand may be chosen over another.

He selected one brand based on the stylish design of bottle and label, since that is essentially what his customers are buying.

“It looks like a vodka bottle; it’s very slick,” he says. “The water sells itself.”

Baker notes that the most popular water at Abigail Stoneman Inn is an import packaged in a striking clear-glass cylindrical bottle.

According to Jane Lazgin, spokeswoman for one of the country’s largest supplier of bottled waters, the rise in sales is a function of availability increasing to meet demand.

“People have always enjoyed water,” she says. “It just wasn’t available in convenient settings and packages until now.”

Lazgin says that consumers want to quench their thirsts whether pool-side, at the movies or in a stadium, and they prefer doing it with something natural.

“People have begun to lead more active lifestyles that can increase water consumption,” she adds.

Liquid Diet
The same health consciousness that has caused diners to seek more fresh foods, including organic produce and antibiotic-free meat, has pushed the demand for bottled water and resulted in wider availability in all segments.

“As obesity rates for children and adults soar, people are growing more conscious of water’s importance in their diet,” says IBWA’s Kay. “It’s essential for fitness, hydration, and nutrition.”

Responding to interest in more-healthful meal options, Oak Brook, Ill.-based McDonald’s announced in April that bottled water is available in its new Go Active! Happy Meal for adults. The meal includes one of four McDonald’s Premium Salads plus bottled water or other drink. In place of the toy included with the chain’s children’s Happy Meals, the Go Active! Meal includes a pedometer.

When it comes to the question of bottled versus tap when ordering at a restaurant, however, IBWA’s Kay concedes that actual health and taste differences between the two are debatable at best.

“But tap water is not the competition,” he says, stating that drinkers who request bottled water would most likely opt for a soft drink otherwise.

Soft-drink sales aren’t showing signs of slippage, but neither does Kay expect to see bottled water’s popularity ebb. “Consumers have gradually come to rely on the consistent quality, good taste, and convenience of bottled water,” he says.

Still, Sparkling or Flavored?
While U.S. bottled-water sales have steadily risen over the past decade, Stephen Kay, spokesman for the International Bottled Water Association, notes that the United States ranks 11th among countries worldwide as far as overall consumption goes.

In Europe, where bottled water’s popularity always has been higher, sales continue to rise.

Still waters dominate the U.S. market. The 10 best-selling brands—accounting for 53.6% of total wholesale-dollar sales, according to Beverage Marketing Corp.—all are still. In Europe, sparkling and flavored water have larger market shares than they do here.

That doesn’t mean flavored waters aren’t popular where available, however. Reed Research Group/R&I 2003 Menu Census finds that operators who offer flavored water rate its popularity above that of sparking water.

Joe Corey, co-owner of the four Faccia Luna pizzerias based in Washington, D.C., believes that European bottlers have done a better job marketing flavored waters than do domestic producers.

In the early 1990s, as more consumers were reaching for bottled water, his restaurants began selling waters flavored with pear, raspberry and peach. But he says his customers still overwhelmingly prefer unflavored still or sparkling waters.

Brendan McNulty is a Chicago-based free-lance writer.
Executive Managing Editor Scott Hume also contributed to this story.