Flavoured water is a luxurious concept for the Indian market, but at the same time it is not limited to luxury but is a matter of choice for good health. The phenomenon of flavoured water is likely to take the Indian beverage industry by storm. It serves as a refreshing alternative to sodas, colas, juices, and other sweetened beverages.
The concept
Flavoured water is delicious, fruity, and refreshing—the perfect cooler on a hot day! In fact, the flavouring water category is experiencing almost twice as much growth as the plain water category, with flavouring water sales still up.
So why is flavoured water so popular globally? Calorie-counting and health trends are on the agenda, and consumers are becoming increasingly aware of the impact of their diet on their health. So with consumers seeking healthier options, low-calorie flavourings in waters seem like an obvious alternative to their more sugary counterparts.
With the demand for low-calorie drinks booming, it’s no surprise that in many countries, water sales have overtaken cola sales. These trends are beginning to emerge as more people seek healthier alternatives to traditional sugary fizzy drinks. Cutting out the fizz with low-sugar flavoured water is a great way to stay hydrated and refreshed without worrying about the calories.
In recent years, sugar has been brought front and centre when it comes to choosing a soft drink. Since the announcement of the sugar levy, soft drink companies have made a conscious effort to reduce the sugar in their drinks.
So much so that the soft drink industry would have been impacted, as flavoured water is the perfect low-sugar substitute when you’re looking for a drink to satisfy your sweet tooth.
Some of the demand for healthier alternatives is being driven by millennials turning to low-calorie options. With millennials being named the most health-conscious generation to date, it’s no surprise to see more low- and zero-calorie drink brands popping up in the market.
In spite of the move towards healthier drinks, healthy does not mean tasteless! With new flavours making regular appearances in the drinks market, our taste buds are being treated like never before. And with both berry and citrus flavours in demand, there is demand for summer fruits and lemon and lime-flavoured waters for a low-calorie option bursting with flavour.
Flavoured water drift is catching up
The flavoured water infuses various fruit flavours and artificial sweeteners into the packaged mineral water. Flavoured waters can be delicious and hydrating without contributing to undesirable weight gain, depending on the variety. Plant extracts and fruit juices are used in some kinds of foods, which provide valuable antioxidants. Natural or synthetic flavourings can be used to flavour water.
Carbonated flavouring and still flavouring are the two most common types of water flavouring. Carbonated water is flavoured water that has been pressure-infused with carbon dioxide gas. Flavoured water is available in different types of flavours such as blueberry, watermelon, cola, coconut, citrus, and unflavoured.
These products are distributed in stores, supermarkets, hypermarkets, and convenience stores. Flavoured water products are packed in bottles, cans, boxes, and pouches. The flavoured waters are applied in different industries, such as the beverage industry, the brewery industry, the health and wellness industry, and other industries.
Market Size
The global flavoured water market is expected to grow 9.2% per year, from $25.59 billion in 2022 to $27.93 billion in 2023. The Russia-Ukraine war disrupted the chances of global economic recovery from the COVID-19 pandemic, at least in the short term. The war between these two countries led to economic sanctions on multiple countries, a surge in commodity prices, and supply chain disruptions, causing inflation across goods and services and affecting many markets across the globe. The flavouring water market is expected to grow at a 9.3% CAGR to $39.86 billion by 2027.
The rising consumer orientation towards a healthy lifestyle is expected to propel the growth of the flavoured water market. People who are turning towards a healthy lifestyle are trying to incorporate liquid diets into their food habits because a clear liquid diet like water, juices, and other beverages is quickly digested and leaves no undigested residue in the intestine.
Fruit-infused water or flavoured water contains all the hydration of a cool glass of water and the bright, sweet, and tangy flavours of your chosen ingredients. By infusing tasty flavours, many people tend to drink more water. Infusing flavours into water can thus improve its appeal and even add nutrients to the beverage.
In 2020, 54% of all consumers, including 63% of those aged 50 and older, will be more concerned about the nutritional benefits of their food and beverage choices than they were in 2010, while 74% of people will aim to restrict their sugar intake, down from 80% in 2019. As a result, the growing consumer preference for a healthy lifestyle drives the growth of flavouring water.
Strategic collaborations between companies are a key trend gaining popularity in the flavoured water market. Companies manufacturing flavoured water products are partnering and collaborating to develop new technologies and products. For instance, in January 2022, Phocus, a US-based flavoured water manufacturing company, partnered with Kroger, an American retail company that operates supermarkets and multi-department stores throughout the United States. The agreement with Kroger enables Phocus to sell its products in 185 additional stores.
Similarly, in February 2020, BLNCD Naturals, a US-based company that manufactures and distributes high-quality CBD and hemp-derived products, and Big Watt Coffee, a US-based producer of caffeinated sparkling water, entered into a partnership to launch a new line of CBD-infused sparkling water. These new beverages are available in three flavours: blueberry lemon, pink grapefruit, and berry acai, each with its own set of benefits. The CBD concentration in each of the three products is the same: 20 mg per 12-ounce can.
In May 2020, Coca-Cola acquired Topo Chico for $220 million. As a result of the acquisition, Coca-Cola has invested in a popular brand in a market that is still growing. Coca-Cola’s other sparkling water offerings, such as sparkling Smartwater and Dasani, have now been joined by the Mexican brand. Coca-Cola Company, The Kraft Heinz Company, Balance Water Company, Cargill, Hangzhou Wahaha Group, Red Bull, DS Group, XALTA, Daily Drinks, Mondelez International, Spindrift, Aha, Perrier, Polar Seltzer, and SoBe are all part of Topo Chico, a Mexican-based flavoured beverage manufacturing company.
Flavoured water trend in India
The bottled water industry, colloquially called the “mineral water industry,” is a symbol of a new lifestyle and health consciousness emerging in India. While a large portion of the population struggles to obtain safe drinking water, a new generation, particularly in urban areas, is becoming accustomed to paying exorbitant prices for bottled water.
Flavored water is a trend that is sweeping the Indian beverage industry. The addition of flavourings to the bottled water industry is intended to diversify the business while also meeting growing consumer demands by adding value to drinking water.
It is expected to serve as a refreshing alternative to sodas, colas, juices, and other sweetened beverages. The concept is not new. There is historical evidence that Indian Maharajas drank water with Indian herbs to stay healthy and fit.Water processing plants are now looking into ways to incorporate as many Indian herbs as possible into our daily dose of drinking water, not only to diversify their business but also to add value to the struggling bottled water industry.
Flavoring water may promote a healthy lifestyle by encouraging people to drink more water, which will make them healthier.
India has a rich herbal treasure, which means consumers get a variety of flavours to choose from. A demand-supply scenario suggests that the flavoured water industry has great potential for investment.
The bottled water industry in India has been growing steadily and is dominated by certain brands on the market. The packaged water segment is extremely competitive, with players ramping up their packaging styles to attract a large base of consumers in order to account for a larger share of the market.
With rising consumer concerns over health and increasing shelf spaces in institutional channels, flavoured water comes as a blessing in disguise. It is the much-needed diversification that water processing units are eagerly waiting for. It is the ready-to-grab option that they can explore and prosper. Water flavouring was introduced in 2004, but it is still in its infancy. There has not been a coordinated effort from processing units, distributors, and other retailers.
It is a welcome addition to quench the thirst of every Indian consumer. By nature, humans prefer sweet-tasting liquids. So, we are naturally inclined to drink something that tastes better than tasteless water.
We can tell from experience that flavoured water has a sizable market in India. When packaged well and offered at the right price, this is sure to explode.
Despite the steep increase in consumption and demand, the purified water industry is not growing as quickly as it potentially could. Water processing units had to manage mounting operational costs, unprecedented competition from unauthorized players, stiff competition from purification gadgets, and pressing regulatory constraints.
Flavoured water comes as a blessing in disguise. It is the much-needed diversification that water processing units are eagerly waiting for. It is the ready-to-grab option that they can explore and prosper. Many units have realized that producing flavoured water makes complete business and economic sense because they have very limited scope for growth and prosperity in their existing packaged drinking water businesses.
This is supported by the growing number of water processing units in India that are producing flavouring water. The rapidly growing packaged drinking water market accounts for 90% of the total market, with natural mineral water accounting for 10%, leaving just enough room for new entrants to launch new flavours of drinking water.
Some commercial companies that produce flavoured waters are:
• Index flavoured water is a refreshing drink with a hint of flavor. There is no sugar or artificial sweetener. There are also drinks for children called Hint Kids Water.
• Metromint is a byproduct of the delicious water known as mint water.
• Waters is a beverage company called “Y beverages” that produces water flavoring.
• FlavorSplash Aquafina is water-filtered with natural fruit flavours and sucralose. It has zero calories, no sugar, and no carbohydrates.
• Dasani flavoured water comes in two varieties: Dasani Lemon and Dasani Raspberry, which are sweetened with Splenda and have no calories or carbohydrates.
• Obtain branded water from DS Groups.
• Coca-Cola has Aha sparkling water with different flavour combinations and colourful packaging.
• PepsiCo’s Soulboost is an enhanced sparkling water beverage made with real juice and functional ingredients.
•Bisleri International Pvt. Ltd.
• NourishCo Beverages, which offers Himalayan Orchard Pure, and Tata Global Beverages have two offerings: a nutrient water called Water Plus and the glucose-based variant called Gluco Plus.
• G7 Beverages’ Alkalen Alkaline Water
• Infuze (part of Shreeyam Foods),
Deep dive
Nowadays, bottled water is widely regarded as a necessity, so it’s important to ensure that one is adequately hydrated at all times. Bottled water companies are now creating tremendous opportunities and new challenges.
The bottled water industry in India has been growing steadily and is dominated by certain brands on the market. The packaged water segment is extremely competitive, with players ramping up their packaging styles to attract a large base of consumers in order to account for a larger share of the market.Flavoured mineral water is becoming increasingly popular in India.
Flavoured mineral water is more popular than ordinary bottled water among consumers. Because it contains fruit essence and artificial sweeteners, flavoured water frequently replaces conventional water bottles. They’re also seen as a healthy alternative to sugary soft drinks, which is helping to fuel their appeal. The mineral water sector in India will be able to broaden their product offerings and extend their consumer base as a result of this transition.
Indian flavours are currently gaining popularity and acceptance around the world. For example, Maaza and Frooti, which use Indian mango flavours, received worldwide acceptance for their taste and flavour. We also get pizza, burgers, pickles, papads, and chips served with Indian spices and flavours. Even many multinational companies have started using Indian flavours in their products. Without much debate, we can conclude that in India, with Indian flavours, flavoured water will certainly be widely accepted.
More flavours will give consumers more options, which will open up a new market for water processing units and shop owners, resulting in increased business and profits and, eventually, widespread consumer acceptance and satisfaction.
Additionally, flavoured water will make consumers consume more water. Drinking more water will naturally improve their health. There is a very good scope for this product, and it is the right time for new entrepreneurs to venture into this field.
But within the umbrella of bottled and packaged water, functional or flavoured water is an evolving segment, albeit a niche one. Consumers opting for functional water are perhaps looking to supplement a healthy lifestyle, yet they are not opting for a complete shift to the category.
Between 2013 and 2020, about 15% of bottled water launches in India stated they had added vitamins or minerals. In the same period, 28% of those launches were flavoured. Largely, flavoured water is infused with fruits or herbs whereas functional or fortified water tends to offer alkalinity or added nutrients.
Like G7 Beverages’ Alkalen alkaline water, it largely targets 25- to 40-year-olds but is seeing traction among 40–50-year-olds as well, especially the ones prone to acidity or lethargy. Online is the primary sales channel, accounting for 60% of sales for the brand. Within this, Amazon is the biggest channel, contributing 35–40%, with the rest divided between its own website and other online retail platforms.
Now consider NourishCo Beverages, which offers Himalayan Orchard Pure as its flavoured mineral water, available at Starbucks outlets and online. According to NourishCo Beverages, packaged water is growing at a rate of 8–10% per year, while soft drinks are growing at a rate of 4–5%. Its Tata Gluco Plus (TGP) contains glucose, electrolytes, and a “fruit juice formulation.” Both products have unique wellness propositions that are driving growth. TGP’s great value equation is driving growth.
Infuze (part of Shreeyam Foods), which is a much smaller player in the flavoured water space, sponsors events such as marathons, corporate tournaments, and college events. The brand sees 5–10% conversions after products have been sampled at events. Priced at Rs. 20 (for 500 ml) and Rs. 10 (for 200 ml), it is aimed at the mass market.
For this category, traction can come from institutional sales, and in the initial stages, tie-ups and institutional channels will work best for functional water offerings rather than retail and modern trade channels.
Also on the premium end, there is UAE-based Malaki, which retails the Malaki Alkaline Water for Rs. 60 (500 ml) and the Malaki Gold 24K Luxury Water for `599 (375 ml). HoReCa (hotels, restaurants, and cafés) plays an important role in raising awareness and encouraging first purchases in this category.
The same is true for Malaki as well, where, apart from direct consumption, it is also used as a mixer for alcoholic beverages. While western markets have a proclivity to spend on health and wellness, this is a niche for health-conscious and affluent people in India. We have seen early adoption by sportspeople, celebrities, and HNIs for alkaline water, along with adoption from hospitals for cancer patients.
In India, there are a few brands that are paving the way for the concept. Veen, bottled in Bhutan, has taken over restaurant tables in recent months, priced at Rs. 77 for 330 ml and Rs. 110 for 660 ml. Himalayan Mineral Water, by NourishCo (a joint venture between Tata Global Beverages and PepsiCo India), is sourced from the eponymous mountain range and starts at about Rs 60 a liter. There is also Evocus by the Gujarat-based A.V. Organics LLP, whose ‘black water’ gets its colour from its electrolytes and high alkaline content (priced at Rs 100 per litre).
Narang Group now has O’Cean back in the market. Coca-Cola went the premium route by bringing Glaceau Smartwater to India, and now AHA. To get volumes at a mass scale, aggressive consumer adoption is required, which is essentially a habit change. Luxury waters are derived from sources that are untouched by humans, while mineral water is sourced from aquifers, artesian wells, and underground reservoirs. Unlike regular drinking water, natural mineral water does not undergo chemical processing. From a health perspective, nutrients like magnesium, calcium, potassium, and others are extremely beneficial in regulating your blood flow, nerve function, and strengthening bones.
A byproduct of these attributes is a heightened dining experience. When it comes to fine dining, these nutrients harmoniously blend with the food and open up the flavours. Furthermore, luxury waters avoid using toxic plastic bottles in flavour of environmentally friendly glass packaging.
And now, within the next two years, the Indian F&B space will see water menus and tastings. And it is important to create awareness and educate people on the differences between regular bottled water and natural mineral water. Subsequently, this would move into the tasting of different types of natural mineral waters based on their unique characteristics and pairing with cuisines.
Conclusion
In India, where paying for any type of water—let alone the expensive kind—is generally scoffed at, the pandemic has offered local beverage companies the chance to acquire a foothold in the Indian market. New flavour and water labels have been launched, while existing ones have reported a jump in sales, primarily owing to a renewed focus on health.
Initially, it was difficult to convince people about the advantages of flavoured water, but with doctors emphasizing the importance of vitamin C, we have seen a surge in demand.
While it may be imprudent to pass this off as just a health fad, it is worth noting that health experts are still divided over the superior properties of these waters.
Most nutritionists agree that if your diet lacks certain nutrients, flavouring and alkaline water can provide the necessary electrolytes and minerals, but many are skeptical of their long-term benefits.
Even so, water connoisseurs seem optimistic about their prospects.
In the US, the segment is worth $18.9 billion, and globally, the premium bottled water market is expected to expand at a CAGR of 5.8 percent during the forecast period of 2020–2026, according to market research consultancy DataIntelo.
In India, the bottled water segment has been growing at 18 to 19 percent year-on-year, according to research firm Euromonitor.
And while there are no figures for the premium category, industry insiders say that the trend is not just restricted to the hotel and restaurant space but is also seeing an uptick among retail buyers. In five years, more people will prefer to flavour their water. And that’s how it will become more affordable as well. Low awareness costs mean low pricing