Bottled Water in Malaysia

2020 IMPACT

At-home consumers stock up on bulk packs

Due to the Malaysian government’s stay-at-home orders and social distancing measures in 2020 in response to the outbreak of COVID-19, consumers have been buying more bottled water in retail. When the Movement Control Order (MCO) was put in place from 18 March, there was a move to buying water in bulk quantities and in bigger packs.

Spritzer still the clear choice

There has been slight shift to cheaper brands in retail bottled water as consumers are tending to buy the products in larger quantities for home consumption rather than on-the-go purposes owing to the pandemic. The financial fallout from COVID-19 is also playing a role in the rising preference for lower-priced bottled water because disposable incomes are falling in the country.

Sales driven by still varieties

Still bottled water continues to dominate bottled water in 2020, and is recording the highest off-trade volume growth. This is attributable to its wide availability in both modern and traditional grocery retailers, as well as its affordable price point.

RECOVERY AND OPPORTUNITIES

Healthy outlook for sales

Bottled water in Malaysia has yet to reach maturity or saturation, with new products continuing to emerge. It is therefore likely that the considerable retail volume growth it has achieved in the last few years will continue as consumers opt for healthier beverages.

Greater exposure to and reliance on bottled water to fuel strong demand

Influenced by growing health-awareness and the media’s negative coverage of sugary drinks, bottled water will continue to register strong off-trade volume and current value growth in the forecast period, as consumers shift away from sugary drinks for daily hydration. The on-trade channel stands to benefit from growing product availability in foodservice outlets, as well as bundle deals with foodservice providers; for instance the Spritzer bundle deal with cinema operator GSC.

New 5% tax on bottled water unlikely to curb consumption

Despite an announcement the previous year that bottled water would be exempt from the new Sales and Service Tax (SST), a 5% tax was imposed starting in January 2019. Until 31 May 2018, bottled water was taxed at 6% under the previous GST tax system, so there was a tax-free period from June to December.