Functional & sparking bottled water sales are “very hot in the US,” analyst says

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By Elizabeth Crawford

- Last updated on GMT

Related tags Bottled water Carbonation

Once considered boring by many Americans, water is becoming a go-to beverage of choice thanks to innovative manufacturers that are adding to it carbonation, fruit flavors and functional ingredients that consumers want, according to market research.

“People want to drink more water because health professionals constantly say to drink more glasses of water a day, but water so far has kind of been viewed as more of a plain, boring beverage,”​ especially when compared to soda, juice and other flavorful, ready-to-drink bottled beverages, said Virginia Lee, senior beverage analyst at Euromontior International.

However, new bottled waters that are flavored, fizzy or include functional ingredients are helping reshape how consumers view the beverage, Lee said, noting now “in the ready-to-drink space, functional and sparkling bottled waters are very hot in the US.”

She added that functional and sparkling bottled water also are gaining popularity because increasingly “consumers want beverages that offer more than pure hydration.”

To meet this demand, Lee pointed to innovative bottled water manufacturers that are adding functional ingredients to their products, including probiotics, such as in Suja’s line of Pressed Probiotic Waters, and protein, such as in Protein2o.

As for sparkling water, it is getting a bump in part by people who are trying to avoid an afternoon slump, Lee said.

“For people who are feeling the afternoon slump or just want a fizzy drink, these sparkling bottled waters offer fizz and flavor in a zero- or low-calorie format”​ with less sugar and artificial sweeteners than soda, she said.

With these innovations picking up steam, Lee predicts that US sales of functional bottled water will increase 31.5% from $2.19 billion in 2015 to a projected $2.88 billion by 2020. Likewise, sales of carbonated water are projected to surge 27.5% to $1.1 billion in 2020 compared to $797 million in 2015, according to Euromonitor data.

But sales of functional and fizzy water are not stopping Americans from also reaching for still water. Lee noted still bottled water, such as Dasani and Aquafina, already are popular choices that brought in $15.87 billion in sales in 2015. These sales likely will stay strong going forward, she added, noting US sales of still bottled water are projected to reach $20.4 billion by 2020.

Standing out in the crowd

New brands hoping to tap into that growth by entering the bottled water category will face an uphill battle, given how crowded the segment already is, Lee said.

“The bottled water aisle is quite crowded. I mean, there are a lot of functional waters, sparkling waters or coconut and other plant-based waters, and many retailers are putting everything in,”​ Lee said.

The result is consumer confusion and a high bar for new bottled water brands to clear to obtain shelf space, she said.

“One way around that is if you have a strong presence on social media then it can be possible to use e-commerce to build your brand”​ either through single sales or subscriptions, she recommended.

“If as a bottled water company you can use social media and e-commerce to begin sales, then you can go to a supermarket chain and say, ‘I have a million followers on Instagram and another million on Facebook, and my online sales on my website are X,’”​ and the buyer might be more likely to stock the product, she explained.

Manufacturers also are cutting through the clutter with innovative packaging, Lee said.

While many bottled water brands use clear, plastic bottles or glass bottles, some manufacturers are turning to paper cartons to stand out. For example, Just Water​ sets itself apart by using a paper-based carton that requires less natural resources. 

Other firms, like Green Sheep Water, La Croix and Perrier, are using aluminum cans to set their products apart from the competitors.

Lee has also noticed water packages are incorporating more color and style, which she expects will continue based on her observation that reusable bottled water companies are focusing more on style.

“If carrying water is going to be fashionable, I think that will only translate into the packaged water space,”​ Lee said. 

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