What’s the future for bottled water when customers are tightening their belts? Well, it’s brighter than you think, says Ben Canaider
“No thanks, we’ll just have tap water…” If this is the new GFC mantra of your customers, well, try not to feel too down about it. Bottled water has enjoyed some good on-premise sales and growth over the last decade, and restaurants in particular have enjoyed the mark-ups and profit margins from glass-bottled, imported waters—the cost of which to customers could often rival the wine bill—but all good things must end. Apparently. Or should they? Is there a silver lining to the on-premise bottled water market?
Yes. At least, it’s silver-ish.
To begin with, it’s important to understand that Australia is still a very immature bottled water market. Part of that is down to our good fortune in having a very safe and mostly reliable piped water supply. We drink about 25 litres per capita of bottled water, and when you compare that consumption to other countries you can see how much scope there might be for more bottled water sales. The US consumes 42 litres per capita, and Europe in general is around 120 litres. Italy is king, of course, with a consumption of 180 litres per man, woman and bambino per year. But that’s down to tradition—and to old water pipes that deliver otherwise fresh water in a debilitated state.
Back here, according to the Australian Bottled Water Institute’s Tony Gentile, the bottled water market has been growing by about 10 to 11 per cent over the last decade; but crucially, that growth has slowed to about two to three per cent over the last year. “We have no on-premise data, but the tougher economic times will impact on bottled water,” Gentile says. “The slowed growth is probably a result of the global recession.”
The ABWI doesn’t think bottled water is going to go backwards, however. Gentile sees consumers switching from expensive, fashionable bottled water brands to less expensive, local brands. “Generally this is what happens in a recession: everyone is looking for the specials.”
Gentile also likes to think of bottled water being an “affordable luxury”. He thinks consumers will not change their basic habits with regard to bottled water, but that they will be looking for cheaper brands. In this respect the ABWI thinks that imported bottled water—which has always been a very small percentage of the total bottled water market and yet very big in restaurants—might suffer. It will now be local, glass-bottled water’s opportunity to take more of the market share.
One such brand looking to expand in this way is Springfield, from Tasmania. Bottled from 100 per cent spring water at an aquifer in the north-east of the Apple Isle, Springfield is owned by a wine company—Tamar Ridge. The company’s national sales and marketing manager, Patrick Dowling, points out what anyone in the Australian bottled water market is uniquely aware of—bottled water does its best in Sydney, where the bottled water market is clearly the strongest, on-premise. Dowling does admit that it is now harder on-premise to sell what he calls “added-value” bottled water; that is, bottled water with good profit margins. “More and more people are asking for tap water in restaurants, too,” he adds. “Then again, when some bottled waters were getting to $10 and beyond—and when there was that brief craze among waiters and restaurant operators to automatically put bottled water on the table for you—well, it did get a bit out of control, didn’t it…?”
One angle for Australian bottled water is the environmental factor. Dowling thinks that we should be promoting Australian bottled water with regard to its carbon footprint. “It hasn’t come 17,000 kilometres, like so much Italian water has.”
For Springfield, this angle has already worked, with one major hotel group in Australia, keen to align itself and its goods and services to a more environmentally friendly image.
Springfield also presents itself in high-quality, designer glass—“and 100 per cent recycled glass”, Dowling adds. The emphasis is on a very clean, clear image and effect.
“Tasmania is well-situated to trade on its water purity. Tassie has some of the highest rates of both air and water purity in the world, and we are keen to emphasise that.”
The good news for any F&B operation is that bottled water clearly has a home. Add to its environmental appeal the fact that locally bottled waters might have a personal health angle, and the message is only stronger. To many customers, water consumption is seen as a God-given right; such customers want some sort of choice when it comes to the water they can buy in bottle. If you can offer them a good-value, locally bottled water in an up-market glass package, there’s a good chance they’ll order a bottle of shiraz as well. Once again, when it comes to beverages, stay ahead of the curve, offer your customers what they don’t actually realise they want just yet, and you’ll still be in business next week. And there’ll be water, water, everywhere.