Plain bottled water continues its popularity among consumers, but new flavors and features will bring opportunities to both bottled water and sports drinks in 2021.

“Bottled water is dominated by the big brands from the major companies,” said Gary Hemphill, managing director of research at Beverage Marketing Corp. “They have the infrastructure and the economies of scale required to succeed in this category, which is often driven by price.”

Beverage Marketing Corp. reported the bottled water segment grew for the fifth straight year, increasing 5{066dbc63777e5ed549f406789d72fdeebd77a32711d57f7b38ff2b35c4ba2a42} from 2019 to 2020, to a total of 14.95 million gallons sold across channels.

“The bottled water category experienced healthy growth in 2020,” Hemphill said. “It’s one of the rare beverage categories that actually got a boost from the pandemic with more people staying at home. Single-serve still water continues to dominate, accounting for about two-thirds of the category’s volume.”

Still, data from market research firm Nielsen indicated that, at c-stores specifically, dollar sales of bottled water fell by 5.8{066dbc63777e5ed549f406789d72fdeebd77a32711d57f7b38ff2b35c4ba2a42}, while sports drinks increased 10.1{066dbc63777e5ed549f406789d72fdeebd77a32711d57f7b38ff2b35c4ba2a42} for the 52 weeks ending Dec. 26, 2020.

But not all c-stores experienced a dip in bottled water dollar sales.

“Taking out March and April, the category performed above expectations; however, the product mix was different,” said Samantha Overmole, category manager at West Des Moines, Iowa-based Kum & Go, which operates more than 400 c-stores in 11 states. “Take-home packages within water, tea and juice drove the growth within those categories. Our most established brand, Gatorade, greatly exceeded expectations.”

Functionality Gains Traction

In 2021, products with added benefits will challenge water for the top spot.

“Whether that’s water with zinc or vitamins or sports drinks with caffeine, consumers are looking for something extra for their money,” Overmole said. “The two newest trends in water are products with functional benefits and caffeine. Treo (an organic fruit and birch water drink) and Voss (bottled water) plus vitamin D are a couple items that I think will do well in 2021.”

Hemphill agreed, saying there is more innovation in value-added waters and sports drinks than in traditional bottled water. Those that innovate with healthy options are expected to succeed.

“The pandemic essentially put an exclamation mark on health and wellness as a consumer need,” Hemphill said. “The products with the greatest health and wellness attributes are seeing the greatest growth.”

And because customers are willing to try different flavors if they can’t find their favorite, the category will continue to be popular.

“Customers are shopping by their needs,” Overmole said. “Products like Alo (an aloe vera line that includes coconut and infused water among its lineup) and Sparkling Ice +Caffeine are blurring the lines between categories within the cold vault.”