Thirst for health
Heading into summer, the thirst for healthy water seems unquenchable. The category is estimated to grow about 10% from 2022 to 2028, according to a report from UnivDatos Markets Insights. By comparison, regular bottled water is expected to have a sales increase of just 2% in Canada for 2023. Consumers are looking for extra perks from their H2O, from vitamin hits to less sugar and clean ingredients. Players big and small have taken notice and raised the stakes with high-profile launches, innovative flavours and celebrity clout.
Wellness trends
Keurig Dr Pepper made ripples in the healthy water category in 2021 with the introduction of Bai Antioxidant Infusion in five flavours. With just 10 calories, one gram of sugar, vitamins C and E, plus a tea leaf extract, it struck a chord with consumers. Though still in its infancy as a brand, it was named Product of the Year 2023 within the enhanced water category, based on votes from Canadian consumers.
“When we first launched, we saw that consumers were most interested in natural ingredients and health benefits,” says Julissa Moran, brand manager, Keurig Dr Pepper. “They were striving for those better-for-you products, looking for things like minerals from their water. That’s where Bai came in, positioning itself as a naturally flavoured water beverage.”
It’s about offering an alternative to still water and keeping current with wellness trends, including a desire for plant-based hydration, she notes. “Consumers continue to seek functional benefits in every-day hydration, as well as botanical flavours and sustainable sourcing. These trends are driving the category forward.”
Moran says data shows 55% of Canadians are consuming beverages with added functional ingredients for added health benefits. Also, 52% of Canadians consider “free of artificial ingredients” to be an important claim—a key differentiator for Bai.
“The category is still in its beginning stage,” she says. “There are a ton of new entrants, so the enhanced flavoured water market is still developing. We see many emerging smaller players coming into it, ourselves being just one of them. Enhanced water will drive growth within the flat-water category.”
Flavour innovation
New flavours are also keeping sales flowing. Since the initial launch, Bai has introduced a Costa Rica Clementine SKU and a Zambia Bing Cherry one, which has already performed very well in the U.S. market where it has been sold for a decade.
With 67% of North Americans saying they consider themselves adventurous when it comes to trying new products, flavour innovation is crucial for giving consumers fresh reasons to buy enhanced waters.
Star power
And add to the mix, a bit of celebrity razzle dazzle to make brands stand out from the pack. Propel has Michael B. Jordan. Smartwater has partnered with Pete Davidson and Bai will add star power with Sydney Sweeney from HBO’s Euphoria for a summer promotion running from April to September.
Boost Visibility
To ride this wave of interest, c-store operators should ensure enhanced waters are visible to customers in key areas, says Moran. “They can amplify the buy by creating more secondary locations.” That means having a selection near areas where ready-to-eat meals are sold, as well as coolers at the checkout. While big players like Coke and Pepsi often own those coolers, some retailers, like Save-on-Foods, are allowing vendors to bid on the space, giving smaller companies a chance to gain visibility.
Timothy Dwyer, chief revenue officer of Flow Water, suggests that convenience channels allocate more space to better-for-you waters to take advantage of their attractive margins, as health-conscious consumers shift away from carbonated drinks.
Earlier this year, Flow Vitamin-Infused Spring Water launched in Canada, backed by consumer feedback and insight from Flow-led surveys. “The demand to provide a product that is a healthier alternative to similar products in the functional water category was there, making this an obvious next step for Flow,” he says. Three hero flavours—cherry, citrus and elderberry—kicked off its entry into the market. They have 120% of the recommended daily value of vitamin C and are an excellent source of zinc, plus minerals, electrolytes, high alkalinity, and zero sugar, calories or preservatives. They’re also made with organic certified ingredients.
The enhanced water category has broad appeal and consumers are willing to pay more for these types of products, notes Dwyer, and sustainability is top of mind. Flow products come in 100% recyclable Tetra Pak cartons, made with up to 75% renewable materials and have a plant-based cap.
To boot, they’re also responsibly sourced and designed to have a low carbon footprint. “Flow’s sustainability ethos hones in on the fact that the water consumers choose can make a positive impact for our planet and our communities,” he adds.
Looking ahead, expect to see the popularity of enhanced water to influence the soda market, incorporating functional benefits. Nova Scotia’s Cove Gut Healthy Soda launched in January and taps into gut health-boosting probiotics and prebiotics. The timing is right since soda sales have been down over the last couple of years. Being part of the good-for-you movement, alongside healthy waters, is sure to make a splash.
