FLAVORED WATERS ARE COMING

ATLANTA (Reuters) – Since the 1990s, bottled water has become a fixture in American health clubs, offices and sports stadiums, emerging as one of the most popular and fast-growing drinks on the market. Now, Coca-Cola Co., PepsiCo Inc. and Nestle are betting that flavored water will find a sweet spot among U.S. consumers who find the plain variety a bit boring.

Lemon and raspberry versions of Coke’s Dasani water brand will begin arriving in U.S. stores in the first quarter of 2005, according to officials with the world’s largest soft drinks maker.

“This would appeal to people who don’t want to drink the same water all the time,” said Ray Crockett, a spokesman for Coke’s Dasani brand. “We have research that indicates consumers like flavored waters.”

PepsiCo, Coca-Cola’s main rival, also has announced that it will launch a new Aquafina water drink called FlavorSplash next year. The product will come in raspberry, wild berry and citrus flavors.

Swiss-based food giant Nestle, which already markets Perrier, Poland Spring and other water brands in North America, is joining the fray with lemon, orange, strawberry and raspberry flavored Nestle Pure Life Splash.

The companies’ new waters contain no calories.

Flavored waters, or enhanced waters as they are often called, account for about 4 percent of U.S. water sales measured by volume and about 10 percent measured in dollars. Their growth rate eclipses that of the overall water category.

“That segment is just beginning to emerge, and it’s unclear how it will do,” said John Sicher, editor of Beverage Digest, which was first to report the companies’ plans to market the flavored waters in the United States.

“I would estimate that it will gain some traction next year,” Sicher said.

Coca-Cola and PepsiCo, for their part, are keen to pick up a larger share of this burgeoning market to help offset slower sales of soft drinks, the traditional foundation of their profits.

They entered the U.S. bottled water market in the 1990s to tap into growing consumer interest in healthier beverages. PepsiCo’s Aquafina now ranks as the top-selling U.S. water brand, while Coca-Cola’s Dasani is second.

With massive distribution systems and experience branding new products, Coca-Cola, PepsiCo and Nestle could hold an advantage when they launch their flavored waters. The U.S. giants, however, may be haunted by past setbacks.

Vitamin-enhanced versions of Dasani and Aquafina flopped several years ago and were pulled off the market.

Despite the prospect of more companies entering the market, enhanced waters remain an attractive category partly because they tend to sell at a higher price than bottled waters.

By Paul Simao
******************
Great! Just what we need- water that costs even more!
(RJR)