Water continues to briskly flow into and out of convenience stores. The key for retailers is to cut through the clutter and put together the most profitable set possible.
Bottled water volume overall grew a little over 4% in 2011, according to preliminary tracking figures from the Beverage Marking Corp. (BMC). The single-serve retail PET segment, which is comprised of domestic brands of non-sparkling water in 1.5 liter and smaller plastic bottles, rose 5.4%.
“The single-serve segment of this category accounts for more than 60% of the total bottled water category volume,” said Gary Hemphill, managing director of New York-based beverage tracking firm. “And we are projecting sold growth in 2012 at roughly the same rate as 2011.”
Numbers at Chevron’s ExtraMile stores bear out BMC’s optimistic outlook.
“Water sales showed modest growth for 2011, which was a significant improvement over 2010,” said Theresa Webb, the beverage category manager for Chevron.
However, Butch Fulton, beverage category manager for Portland, Ore.-based Plaid Pantry, expressed concern over the fact that supermarkets are selling 24-packs of single-serve bottled water at a deeply discounted price. “Their prices are so cheap that we can’t possibly afford to compete with them,” he said. “Our biggest concern is what this could do to sales longer term as customers get more conditioned to buying in bulk.”
On the other hand, premium-priced Fiji water—in a single-serve size—sells well at Plaid Pantry.
BMC’s preliminary figures show that the volume of value-added waters—flavored and vitamin—and mineral-enhanced varieties , dropped 1.6% last year.
“In many cases, consumers may have gotten a sour taste in their mouths when they read the labels and realized that some of these waters contain as many calories as a bottle of soda pop,” Fulton said, adding that the zero calorie varieties of flavored and enhanced waters, led by Glaceau’s Smartwater, have really taken off.
BMC and retailers agreed that the Gatorade- and Powerade-dominated isotonics or sports beverage (as they are classified by BMC) segments are continuing to heat up the cold vault. The organization’s preliminary figures show a very strong rise of 8.5% in sales of these beverages last year.
Chevron’s Webb reported healthy sales in both the enhanced water and isotonic category subsets.
“After a soft performance, particularly in sports drinks, in 2009 and part of 2010, both enhanced water and sports drinks began recovering in the second half of 2010 and had very strong performance throughout 2011,” Webb said.
“Both were strong contributors [to our overall beverage sales growth] and outperformed segments such as carbonated soft drinks.”
The strongest segment in the category, in terms of growth, has been enhanced water, led by the Smartwater brand, Webb added. Both Webb and Paul Casadont, Chevron Americas merchandising manager, predicted that the entire water and isotonics category will continue trending upward through 2012 and, most likely, beyond.
Driving Business with Beverages
In an effort to help ease the pain at the gas pump, VERC Enterprises, a convenience store and Mobil/Gulf gasoline operator with 23 locations throughout Massachusetts and New Hampshire, ran a highly successful promotion last summer that gave away free bottles of Nestlé Pure Life water to gasoline customers. The promotion succeeded in driving sales both at the pumps and in the company’s convenience stores.
“We recognize the impact the price of gas has on many of our customers, so we decided to provide a small premium to help cool people down,” said Leo Vercollone, president of VERC Enterprises. “Times have been tough so we wanted to do our small part in keeping our gas customers hydrated during their busy day.”