Health Concerns to Drive Flavored and Functional Water Market to US$36.7bn by 2019

As consumers increasingly become mindful of their calorie and fat intake, the global flavored and functional water market is expected to see a sharp rise. Transparency Market Research, a U.S.-based market intelligence firm predicts in its report that the global flavored and functional water market will be worth US $36.7 billion by 2019. The market, which was valued at $17.2 billion as of 2012, will register an 11.5% CAGR between 2013 and 2019.

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Factors driving the flavored and functional water market

More and more people worldwide are struggling to combat obesity and trying to maintain healthier food habits. This will lead them to make a shift from carbonated and aerated drinks to flavored and functional water. Moreover, the urban population worldwide is seen to have exacting demands pertaining to products that promote health and well-being; flavored and functional water fits these needs. The United Nations estimates that the number of people living in urban areas worldwide will grow from 3.4 billion in 2009 to 6.3 billion by 2050. A number of companies in this market have already started positioning flavored and functional water as the ideal component in the health and beauty regimes of urban dwellers.

Other reasons that will fuel growth in this market are a rising aging population and changes in consumers’ preferences. The prices of carbonated drinks are at par with functional and flavored water, which makes it easier for consumers to switch over from the former to the latter. However, despite these low switching costs, the functional and flavored water market does need to contend with a few challenges. These include: a threat from substitutes and a spiraling campaign against plastic packaging bottles worldwide.

Scope of the market with changes in consumer preference

Emerging countries are a potentially lucrative market for flavored and functional water because they are undergoing rapid urbanization and disposable income levels here are on the rise. This is a trend common to countries in Asia, Middle East and Latin America. With a growing level of urbanization, the awareness of consumers has grown as well – this has created an opportunity which companies in the functional and flavored water market can harness.

In countries such as China, where high pollution levels have resulted in contaminated water supplies, the demand for flavored and functional water has been particularly strong.

Segmentation of the global flavored and functional water market

This market can be broadly split into: flavored water and functional water. Flavored water is the larger among these segments and in 2012, it stood at US$ 11,653.8 million, growing 7.1% over 2011. The functional water segment is projected to register the fastest growth over the forecast period. Based on geographical demand, the top markets for functional and flavored water as of 2012 were: the United States, France, Germany, Japan, and Italy. However, Asia-Pacific is expected to register double digit growth in this market over the forecast period, making it the fastest-growing regions for flavored and functional water. Affluent consumers here no longer shy away from spending on premium flavored and functional water.

A number of brands from the food and beverage industry have ventured into the business of flavored and functional water as well. Companies that have a prominent presence in this market include Groupe Danone, PepsiCo, Nestle, The Coca-Cola Company, Balance Water Company, Hint Water, Kraft Foods, and Sunny Delight Beverages Company.