Rather surprisingly, bottled water did not benefit from a greater channel shift towards off-trade in 2020, despite significant declines through on-trade, with the category remaining fairly stagnant in off-trade volume terms. While the initial onset of COVID-19 brought about heightened levels of panic-buying through supermarkets, this appeared to level off relatively quickly, with sales through supermarkets exhibiting a double-digit percentage drop in sales through the first half of the year, presumably as New Zealanders became increasingly accustomed to drinking tap water at home.
Strong product development activity and increasing distribution capabilities helped to drive volume sales growth in flavoured bottled water over the review period. However, against the backdrop of COVID-19, which saw impulse and on-the-go purchases severely restricted for almost a quarter of the year, off-trade demand for flavoured bottled water marginally declined, despite the category being aligned with health and wellness trends.
Frucor Suntory retained its leadership of bottled water in 2020 through its H2GO, Mizone and NZ Natural brands. The company has continued to focus on seeking incremental growth in the category, despite the weakening demand for bottled water due to COVID-19 and the home seclusion trend.
Auckland experienced a severe water shortage in 2020, with catchment dams at 49% in mid-July – a time of the year when they would normally be at around 75% capacity or higher. This is leading to a number of initiatives being put in place aimed at reducing water consumption in New Zealand’s largest city.
While demand for bottled water is predicted to grow through both off-trade and on-trade channels from 2021 as consumers return to their daily routines and venture outside of the home environment more frequently, the economic outlook for New Zealand is highly uncertain and discretionary spending will be subdued over the forecast period. With low levels of product differentiation present, bottled water is likely to see increasing penetration from private label over the forecast period, thus helping to drive volume growth through supermarkets.
While demand for bottled water is likely to grow over the forecast period, concerns over the environmental impact of increasing bottled water consumption are expected to grow. While many bottled water companies now use recycled plastic when packaging their products, and encourage a “circular economy”, services providing refillable bottled water are likely to grow in New Zealand.
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