Wetting their whistles

Bottled water plays major role in growth of Packaged Beverages category

When considering the place that bottled water occupies in the retail realm of the convenience-store universe, it’s best to take a look at the Packaged Beverages (non-alcoholic) category as a whole, of which bottled water is an important and growing part.

Going back to 2001, the sales of packaged beverages had been on a steady rise, with sales volume increasing from $13.1 billion in 2001 to $16.1 billion in 2004. Then, in 2005, according to numbers provided by the National Association of Convenience Stores’ 2006 State of the Industry Report, that number leapt to $20.1 billion, an increase of nearly 25 percent from 2004.

And bottled water played no small part in that eye-opening increase. While carbonated soft drinks remain the unchallenged top dog in the Packaged Beverage category with their 2006 percentage of category sales just more than 50 percent, bottled water is making a strong push to move up to second in the category. In 2004, bottled water ranked third among packaged beverages while accounting for 10.35 percent of category sales. In 2005, that number rose to 12.53 percent and with juice/juice drinks sliding to 13.31 percent of sales in 2005 compared to 19.47 percent in 2004, it would not be surprising if either bottled water or alternative beverages (11.56 percent of sales in 2005) ascended to the No. 2 spot when NACS’ 2006 numbers are released later this spring.



More importantly than the sales percentages, average store sales for bottled water climbed to just more than $18,000 per store, an increase of nearly 50 percent from 2004’s $12,030. Industry total sales also went from $1.6 billion in 2004 to $2.5 billion in 2005.

Bottled water also played a significant role in the across-the-board increase in all gross margin categories for Packaged Beverages. The gross margin percentage went from 34.84 percent in 2004 to 35.13 percent in 2005; average gross margin per store climbed to $50,618 in 2005 for the category as a whole; the industry gross margin total eclipsed the $7 billion barrier; and gross margin contribution grew to 15.84 percent in 2005 from 14.48 percent the previous year.



With a solid base product now being aided by the introduction of more and more new flavored varieties, bottled water should be expected to continue to be a solid contributor to the retailer’s bottom line in the coming years.