Healthy Hydration on the Rise Across Europe

A new report by Canadean shows flavoured and functional waters arrested a disappointing decline in 2014 and returned to growth across Europe in 2015, highlighting a growing shift in consumer buying behavior towards healthier hydration.  

West Europe flavoured and functional water consumption halted an annual decline of 5% to record a flat performance year-on-year in 2015, whilst East Europe saw further growth of approaching 4%. Consumer buying trends in most markets have undergone a behavioural shift away from products perceived as less healthy, to healthier hydration alternatives in tune with the current health and wellness trend.

 Flavoured water represents around 3% of the total soft drinks market in West Europe, with strong investment aiding growth. Market gains were recorded in countries such as, the UK, the Netherlands, and France, with consumers seeking perceived healthier alternatives to carbonates but still desiring the flavour that plain packaged water does not offer. The ‘sugar debate’ in the UK helped boost growth progress as soft drinks with higher sugar content were viewed more negatively. However, losses in Germany, due to competition from adult lemonades undermined the overall category growth. Nonetheless the flavoured water market still holds a significant 6% share of the German market, thanks primarily to the engrained position of schorle drinks. Schorle comes in a wide variety of fruit flavours, and Canadean analyst Andy Curran states that “this range is vital for category development, with more seasonal flavours and further marketing support also options for potential future growth.”

In the East European flavoured water market gains were registered in Croatia, Hungary, and Serbia, benefitting from the fact that flavoured water drinks in the region are often extensions of well-known packaged water brands. Zero sugar varieties of flavoured water were also launched in Slovenia to counter the negative press regarding sugar content in other beverages. Further growth is limited however; imported flavoured waters are expensive, and this hampers progress. In some countries the flavoured water category also has to adapt to a market limited by narrow distribution and low demand for products, such as Bulgaria, where consumers are hesitant in embracing products that do not offer the sweetness of carbonates.

The functional waters category remains low level in the majority of West Europe markets, and suffered a decline of nearly 1% in 2015. One of the most prominent brands on the market, Coca-Cola’s Glaceau Vitaminwater, was removed from circulation in France due to struggling sales, but remains the leading player in most markets. Its sister brand, Glaceau Smartwater was launched in the UK in 2014 and has been instrumental in driving category sales. Increases were also recorded for Italy, thanks to the weather and in Finland fuelled by the availability of a wider range of products.

Functional waters are not present in many East European markets. The high cost, along with consumer scepticism towards additives, limits the category’s potential. Russia, the second largest market for functional waters, recorded a loss of 21% as consumers are deterred by the high price point, in an environment of financial austerity. Polish consumers also demonstrated some aversion to the high cost of functional products, as growth slowed from 62% to 15% year-on-year.

Canadean analyst Andy Curran says that “while growth in the flavoured and functional waters sub-categories is unbalanced, there is potential for significant gains as the healthy hydration trend gathers momentum”.