Water-based drinks category proves resilient to inflationary trends: IRI data

By Oliver Morrison contact

- Last updated on GMT

Image: Getty/Dougal Waters
Image: Getty/Dougal Waters

Related tags: Water, Bottled water, Soft drink

Inflation and sustained demand drove 8.9% value sales growth of water-based drinks in Europe in the last year (full year ended August 2022) to €35.6bn, reveals analysis from IRI data from actual sales of FMCG products across Europe.

Value sales in water-based drinks (excluding tea, coffee, juices & nectars and water additives) in Europe – has grown around 9% in 2022 on inflationary trends, according to the data. IRI added it is also evident that price increases across more than half of all water drinks products hasn’t reduced demand, with volume sales growth of 3.4%, another 1.7 bn ­​units.

Average volume sales (% change calculated on average volume price in €/litres) also reveal that sports and energy drinks have seen a 9.7% average volume sales growth in the last year (to end August 2022). Carbonates have seen a 0.6% average volume sales growth and Water 4.2%. Flavoured water though has experienced a 2.7% decelerating MAT, 2.0% year to date.

Water has contributed to 81% of volume growth with 11% coming from Sports & Energy Drinks – a hugely significant driver. In the year to date, the contribution of carbonates has grown to 7% vs 4% in 2021.

“Water-based drinks category is largely resilient to inflationary trends,”​ said Ananda Roy, Global SVP, Strategic Growth Insights, IRI, “We can see this is the case across key European markets despite 55% of ranges being at higher prices. Despite the growth in volumes, the IRI data indicates that consumers are not uniform in their choices, implying strategic decisions are being made.

“As sales of fruit juice and nectar products continue to decline, it seems that consumers are looking to manage costs as well as make healthier choices. Ensuring there are a range of healthy options coupled with new product innovation and the right distribution strategy is going to be critical, particularly in Germany, France and the UK where consumers are having to trade down and reassess what’s affordable to them.”

Consumer demand

The availability of high quality, accessible tap water sources influences water product sales. In countries where consumers don’t trust their local water, sales of bottled water are an essential. In other markets, where there are trusted drinking water supplies supply – such as The Nordics, Netherlands, Switzerland, Austria and the UK - product innovation and premiumisation will be essential for growth, noted IRI.  

The growth opportunities for the water category are significant. Since the category is resilient, even with uneven demand, being able to predict pricing across the region in a way that considers differences in regulation, bans and price caps is critical.

“Brands and suppliers should refresh target and execution plans to commercialise strategic segments,”​ said Roy. “They must also acknowledge that consumers are in crisis and get to grips with how they’re downtrading and look out for new shopper trends, consumption occasions and review their ability to mitigate price rises, volume loss or to command a premium.”

Sustainability issues will increasingly impact the water-based drinks category. “Consumers are not willing to swallow the environmental impact of drink packaging, fossil fuel, water and greenhouse gas use,” continued Roy. “As they become more aware of the carbon footprint and transportation, water miles, packaging weight and use, this will influence their purchase decisions.”

Brands and suppliers, he said, must “address their sustainability position as the definition has broadened to include social and ethical behaviours and perhaps even consider whether sustainability could even become a trial and choice driver. Detailed analytics can provide clear support to drive this market even further forward.”

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