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Bottled Water - China - March 2015

Published By :

Mintel

Published Date : Mar 2015

Category :

Bottled Water

No. of Pages : 127 Pages


Despite bottled water being a drink suitable for on-the-go occasions, at-home usage could be the next growth engine for the largely saturated market, in particular when it comes to premium bottled water.

In addition, when it comes to out-of-home occasions, targeting young female consumers aged 20-24 by highlighting the relaxing out-of-home occasion tends to offer brands the highest level of CLV. More importantly, the spill-over effect from female consumers to their male counterparts highlights the urgency for brands to maintain a solid user base among young female consumers.
Table of Content

Introduction

Definition
Methodology
Abbreviations

Executive Summary

A polarised market poses uncertainties
Figure 1: Best- and worst-case forecast of China retail sales of bottled water, by value, 2009-19
Figure 2: Best- and worst-case forecast of China retail sales of bottled water, by volume, 2009-19
Market drivers
The overhaul of the existing regulatory system
The development of high-quality water sources
The quality scandal and its impact
Luxury, necessity or both?
Reduced cost of packaging provides breathing space for many brands
The consumer
Still, unflavoured water dominates the market
Figure 3: Penetration of different types of bottled water products, November 2014
Health concerns over the added flavour pose the main barrier
Figure 4: Reasons for not drinking flavoured water, November 2014
Consumers are more likely to trade up for out-of-home occasions
Figure 5: Change in bottled water consumption behaviour – in home and out of home, November 2014
At home is the least popular occasion for drinking bottled water
Figure 6: Bottled water drinking occasions, November 2014
Environmentally friendly claims gaining momentum in the premium segment
Figure 7: Attributes associated with premium bottled water, November 2014
Bottled water maintains its unique competitive advantages
Figure 8: Correspondence analysis, November 2014
What we think

Issues and Insights

Are at-home occasions the growth engine for bottled water in the future?
Facts
Implications
How to appeal to young female consumers aged 20-24?
Facts
Implications
Figure 9: Percentage point differences of the penetration of bottled water when relaxing out of home, by age, November 2014
Figure 10: Penetration of flavoured still water, by age and gender, November 2014
Figure 11: Selected attributes associated with bottled water, by age, November 2014
Is it still too early to premiumise bottled water products using ethical claims?
Facts
Implications

Trend Applications

Factory Fear
Figure 12: Label of Triple-X vitamin drink from Coca-Cola, Q4 2014
Slow It All Down
Figure 13: Aromatic sparkling water launched by Pokka Sapporo in Japan, Q2 2014
Objectify
Figure 14: Water Air bottles water product, February 2015

Market Drivers

Key points
The overhaul of the existing regulatory system
The development of high-quality water sources
The quality scandal and its impact
Luxury, necessity or both?
Figure 15: Urban households’ disposable income, 2005-13
Reduced cost of packaging provides breathing space for many brands
Figure 16: Crude oil monthly average prices in RMB, January 2010-November 2014

Market Size and Forecast

Key points
Polarised market poses uncertainties
Figure 17: Value and volume retail sales for bottled water in China, 2009-19
Figure 18: Best- and worst-case forecast of China retail sales of bottled water, by value, 2009-19
Figure 19: Best- and worst-case forecast of China retail sales of bottled water, by volume, 2009-19
Forecast Methodology

Market Share

Key points
Figure 20: Market share of bottled water market in China, by value, 2012-14
Figure 21: Market share of bottled water market in China, by volume, 2012-14

Who’s Innovating?

Key points
Lung-cleansing drinks in the PM2.5 era
Figure 22: Loquat drinks launched in China, 2014
Figure 23: Mung bean water launched by Youyang in China, Q4 2013
Juice, but lighter; water but sweeter
Natural claims reaching their roof
Figure 24: The ingredient claims of new product launches in China, 2012-14
Figure 25: Bamboo charcoal water launched by Jingshantang in China, Q3 2014
Bottled water with fortified vitamins is on the rise…
Figure 26: Product claims of new product launches in the bottled water market in China, 2012-14
Figure 27: Glacéau Vitaminwater product launched by Coca-Cola, Q3 2014
Figure 28: Suntory Life Partner launched in Japan, Q1 2014
…ethical claims show slow but steady growth
Figure 29: Lemon and clear water included in Japan, Q2 2014
Glass is the rising star in packaging material
Figure 30: Packaging material used in new products, 2010-14
Making online the sole retail channel

Brands and Companies

Master Kong
Wahaha Group
Challenges in 2014
New products
Nongfu Spring Co. Ltd
China Resources Enterprise
Jiangxi Runtian Beverage Co. Ltd.

The Consumer – Penetration of Different Types of Bottled Water

Key points
Still, unflavoured water dominates the market
Figure 31: Penetration of different types of bottled water, November 2014
Figure 32: Penetration of different types of bottled water products, November 2014
Consumers from tier one cities are trading up
Figure 33: Penetration of selected types of bottled water, by city tier, November 2014
Residents in Chengdu enjoy flavoured water more than others
Figure 34: Penetration of flavoured bottled water in Chengdu, November 2014
Cross-selling sparkling water with premium still products shows potential
Figure 35: Penetration of bottled water products, by type of bottled water users, November 2014
Female consumers aged 20-24 are more likely to drink flavoured still water
Figure 36: Penetration of flavoured still water, by age and gender, November 2014
Sparkling water’s triumph of at-home occasions
Figure 37: Penetration of sparkling water, by occasions, November 2014

The Consumer – Reasons Not to Drink Flavoured Water

Key points
Health and efficacy of thirst-quenching pose the main barriers
Figure 38: Reasons for not drinking flavoured water, November 2014
Lighter flavoured water shows potential to attract more female consumers…
Figure 39: Agreement with the statement “I prefer drinking water that is not thirst-quenching”, by age and gender, November 2014
functionality is important to convert male non-drinkers
Figure 40: Agreement with the statement “It’s useless to add flavours only without other benefits”, by gender, November 2014
Figure 41: Triple-X Vitamin water launched by Coca-Cola, Q4 2014
The premiumisation route for flavoured water
Figure 42: Selected reasons for not drinking flavoured water, by usage of premium bottled water, November 2014
Figure 43: Sicilian Lemon & Crushed Mint Flavoured Water launched in Japan, Q3 2013

The Consumer – Change of Consumption Behaviour

Key points
Consumers are more likely trade up at out-of-home occasions
Figure 44: Change of bottled water consumption behaviour – in home and out of home, November 2014
Female consumers aged 20-24 are reducing their spending and drinking frequency in at-home occasions
Figure 45: Change of bottled water consumption behaviour, by age and gender, November 2014
Figure 46: Advert by Nestlé in 2014
Figure 47: The rose water flavoured bottled water product launched in China, Q4 2014
Figure 48: Daily-C Vitamin Water product launched by Lotte in South Korean, Q2 2013
Having children encourages consumption of bottled water at home
Figure 49: Change of bottled water consumption at home, by presence of children in the household, November 2014
Figure 50: Advert of the pure life bottled water product from Nestlé in China, 2014
Figure 51: Mom & Baby Premium Alkaline Water launched in South Korea, Q4 2013
Figure 52: Natural water for baby launched by Qomolangma Glacier in China, Q2 2014
Figure 53: Retail channels, by presence of children in household, December 2013*
Chengdu shows the potential to a key growth engine for at-home occasions
Figure 54: Bottled water consumption index, by selected cities, November 2014*
The alarming sign of shrinking demand from tier two and tier three cities
Figure 55: The change of drinking frequency when drinking bottled water out of home, by city tier, November 2014

The Consumer – Drinking Occasions

Key points
At home is the least popular occasion for drinking bottled water
Figure 56: Bottled water drinking occasions, November 2014
Figure 57: Bottled water drinking occasions, November 2014
Young women aged 20-24 enjoy bottled water when relaxing out of home
Figure 58: Consumption of bottled water when ‘relaxing out of home’, by gender and age, November 2014
Figure 59: Percentage point differences of consumption penetration of bottled water, by age, November 2014
Young consumers are more likely to drink bottled water when socialising with friends
Figure 60: Penetration index* of drinking bottled water when socialising with friends, by age, November 2014
Eating out occasion shows a skew towards lower tier cities
Figure 61: Penetration of bottled water when eating out, by city tier, November 2014
At home – the go-to occasion for premiumisation
Sparkling water drinkers enjoys higher penetration in at-home occasions
Figure 62: Penetration of drinking bottled water at home, by type of bottled water, November 2014
Consumers are more likely to drink premium bottled water at home
Figure 63: Drinking occasions, by types of bottled water, November 2014
Figure 64: The rose water flavoured bottled water product launched in China, Q4 2014

The Consumer – Attributes Associated with Premium Bottled Water

Key points
Purified water has limited potential in the high-end segment
Figure 65: Attributes associated with premium bottled water, November 2014
Environmentally friendly claims gaining momentum in the premium segment
Figure 66: Lemon and clear water included in Japan, Q2 2014
Using all-natural ingredients to give flavoured bottled water a premium image
Imported bottled water products give brands limited leverage
Figure 67: Imported bottled water section in a local supermarket, Shanghai China, February 2015
Men care more about the brand on the bottle
Figure 68: Selected attributes associated with premium bottled water, by gender, November 2014
Environmentally friendly products appeal to young female consumers aged 20-24
Figure 69: Agreement with environmentally friendly being an attribute of premium bottled water, by gender and age, November 2014
High-end packaging works better for young consumers aged 20-24
Figure 70: Agreement with high-end packaging being an attribute of premium bottled water, November 2014
Figure 71: Water Air bottles water product, February 2015

The Consumer – Attitudes towards Different Types of Non-Alcoholic Drinks

Key points
Bottled water maintains its unique competitive advantages
Figure 72: Correspondence analysis, November 2014
Figure 73: Attributes associated with different types of non-alcoholic drinks, November 2014
Consumers aged 20-24 are less likely to consider bottled water as premium and refreshing
Figure 74: Selected attributes associated with bottled water, by age, November 2014

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