Upstart bottled water makers thirst for differentiation in $40B industry

Waiakea, bottled water, volcano
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In 2020, Matt Levine would pedal his bike around Brooklyn with a backpack full of water hoping to make some green. 

But, during the early months of the pandemic, the former restaurant owner’s goal was more than just making money. Levine wanted to pique the interest of businesses to carry his unusual liquid: mountain spring water mixed with liquid chlorophyll and essential vitamins.

“Honestly, when we first launched, I was really worried,” he said.

Initially, Levine sold the water to local yoga studios. Before long, health and wellness retailers started carrying the product – though they typically placed the water in a corner.

Now, two years later, Chlorophyll Water, which gets its color from the green pigment extracted from alfalfa, is growing rapidly. Retail giants, such as Sprouts and Whole Foods, are displaying the brand prominently in some of their grab-and-go coolers. 

Levine said shoppers who try the water are coming back, with more than two-thirds of first-time customers purchasing Chlorophyll Water buying it again.

“There has been a massive education over the past year or two about the benefits of chlorophyll,” said Levine, who now uses his water in place of iced coffee for his morning energy boost.

Playing the role of a disruptor

Upstart brands such as Chlorophyll Water looking to carve out their own niche in the hyper-competitive water category are increasingly touting a differentiated product and sustainability attributes that help them stand out.

Even a small slice of the large water market can mean big business. Global Industry Analysts, a marketing research firm, estimated the bottled water market in the U.S. this year at $39 billion.

Bottled water, the largest beverage category by volume in the U.S., sold a record 15.7 billion gallons in 2021, according to data from the Beverage Marketing Corp. 

Consumption rose 4.7% last year from 2020 as each American drank 47 gallons of bottled water, drawn in by its value and better-for-you mantra as consumers moved away from sugar and artificial ingredients.

Analysts and former beverage executives who follow the water sector said the category is saturated by large mainstream brands that dominate through economies of scale and efficient distribution networks that allow them to keep prices lower. It would be nearly impossible for an ordinary bottle of water to enter the space and disrupt entrenched players such as Coca-Cola’s Dasani, Danone’s Evian or PepsiCo’s Aquafina.

Waiakea, bottled water, volcano

Optional Caption

Christopher Doering/Food Dive

Gary Hemphill, managing director of research at the Beverage Marketing Corporation, said for newer companies to have an opportunity to make inroads in the category, they need to offer something unique — like a health or functional benefit — that differentiates their product and gives consumers a reason to buy it.

“It’s not like the world is begging for a new traditional water brand necessarily. But it’s different if you can enter the category and bring some unique product proposition to it,” Hemphill said. “Water has proven to be a great platform for innovation because you can do a lot of different things with it.”

Hank Cardello, a food industry expert at Georgetown University’s McDonough School of Business and former beverage executive, said for upstart brands able to gain a foothold in the market with sales of at least $10 million to $15 million, they could be an attractive acquisition target or business to invest in for a large CPG.  

“Functional waters have a big future. It’s a wide-open, growing category,” Cardello said. “The big companies aren’t going to do a ton of innovation there. They are probably more likely to pick up something that’s out there, that they can invest in relatively inexpensively.”

‘The perfect precipice of this inflection point’

While much of the bottled water comes from underground springs or even the tap, some entrepreneurs are turning to much more unorthodox sources. 

In Hawaii, Waiākea’s water originates on the Mauna Loa Volcano as rain and snowmelt before flowing 14,000 feet through porous, volcanic rock. The natural filtration system purifies the liquid, leaving behind an alkalized water loaded with essential minerals, such as potassium, calcium, magnesium and silica, as well as electrolytes, when it emerges at the base of the volcano, according to the company. 

A large part of Waiākea’s branding message centers on sustainability, including its use of post-consumer recycled plastic and refillable aluminum bottles. The volcano also filters roughly 393 million gallons of water each day, with Waiākea claiming to bottle fewer than 12,000 gallons of that total — further minimizing the company’s footprint.

“It’s not like the world is begging for a new traditional water brand necessarily. But it’s different if you can enter the category and bring some unique product proposition to it.”

Gary Hemphill

Managing director of research, Beverage Marketing Corporation

Sean Lowden, director of sales for Waiākea, said the company’s ties to the volcano and the fact that it’s not a purified or enhanced water, helps the brand stand out on store shelves. Currently, the water, which is posting “high double-digit growth,” is carried by retailers including 7-Eleven, Walmart, Kroger, Whole Foods and Fresh Markets.

“Water is very competitive,” Lowden said, calling his brand “a disruptor.” He added: “We do stand out as consumers become more and more educated and people are drawn to premium options.”

Lowden is not the only business owner that has adopted the disruptor mantra.

Adam Lazar, founder and CEO of Asarasi Sparkling Tree Water, stumbled into his business 14 years ago while visiting a Vermont maple farm with his daughter. 

Lazar watched as thousands of gallons of sugar-free maple sap were being discarded. He soon learned from the farmer that only 3% of the sap collected is used to make syrup and other products. Asarasi estimated about 1 billion gallons of water are extracted from maple trees each year.

”I said, ‘Time out. Would you sell it to me?’ ” Lazar recalled asking the farmer. “He looked at me like I was crazy.”

Today, Asarasi is purchasing thousands of gallons of sugarless maple sap annually from more than 100 family farmers, many of whom have been able to double their income with no additional labor. 

The company’s water brand has been an attractive option for retailers, Lazar said. Stores such as Kroger, Costco and Walmart that sell his product can use it to help offset their water footprint.

Asarasi Sparkling Tree Water, bottled water

Optional Caption

Christopher Doering/Food Dive

Asarasi’s water is priced at about $1.40 a bottle, about 20 cents higher than a traditional offering. But Lazar said his product’s benefits — including its reduced impact on the environment and support for family farmers — have proven to be more than enough to attract consumers.

He also pointed to the ongoing drought in the western U.S. where water sources are being depleted, as well as the discovery of contaminants in water, as tailwinds for brands like his. 

In recent years, bottled water’s purity and quality have been questioned, with separate investigations finding contaminants such as arsenic and microplastic particles in private and major branded products.

“Millions of people hear about these issues and they’re and they become more water-wise,” Lazar said. “We’re on the perfect precipice of this inflection point, of awareness, of consumer trial, of adoption, because they know that, ‘Hey, I can relax in my hammock in my backyard and drink an Asarasi at noon that I’m making a difference just by that simple act of consumption. ’ ”

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About the Author

Jervie David Montejar
A food lover who wants to try every delicious dishes around him and spread the news to everyone to try it as well. Finding the latest trends about food and restaurants around Cebu and the rest of the world :) "Life is uncertain. Eat dessert first." -Ernestine Ulmer
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