The Ultimate Guide to Low and No Alcohol - in association with Mr Fitz Aqua Spritz

Can you make a profit on water?

By Nicholas Robinson contact

- Last updated on GMT

Water everywhere: how to make a killing on water sales
Water everywhere: how to make a killing on water sales
Water can be a hard sell as customers often reject branded bottled or filtered water – but here’s how you can win.

Two little words can do more than any others to knock a few quid off profits: “Tap please.”

The ready availability of free tap water has done much to improve social responsibility of the on-trade, but chips away at the revenue strand offered by branded, bottled water.

That the category has been relatively innovation-free for many years hasn’t helped, but that is slowly changing.

Life Water, for example, offers a fully recyclable, canned packaging format that gives operators the opportunity to cut down on single-use plastic.

Brewfitt’s Aqua Spritz front-of-bar dispense systems offer a contrasting solution to packaging’s impact on the environment, supplying filtered, chilled still or sparkling water through a premium-look font, with branded, reusable, sharing bottles that look good on the dining table.

Some water brands return to the source for their premium USPs. Fiji water, for example, is bottled on the Fijian island of Viti Levu, where tropical rain filters through volcanic rock.

Other innovations simply offer a little bit more than just water, such as added fruit flavours, creating the category that Britvic, in its Soft Drinks Report calls “water plus”.

The company’s own canned Aqua Libra Infused range is one such example.

The report puts the value of water plus at £77m in the licensed sector with annual growth of 13.2% in 2018 (CGA).

While flavoured waters may be a relatively easy sell, plain water is more problematic. Value sales in the licensed sector fell 9.7% last year, but with revenue of £245m it still accounts for the lion’s share of the total water market in pubs.

Plain water is the fifth biggest soft drink sub-division in licensed, but third in the foodservice sector, arguably showing the importance of dining in driving water sales.

Mark Fenton, head of brand for Aqua Spritz at Brewfitt, says its draught dispense system allows operators to offer on-the-table refill bottles of water at lower prices than big bottled brands while maintaining a high GP.

“If it’s positioned correctly, sites have no problem at all charging for water,” he says.

Aqua Spritz is intended to provide water to combine with a range of flavoured cordials but Fenton says: “We do have many sites that use it for water dispense and also charge.

“It tends to be dining venues,’ he adds. “We have a site near Doncaster that charges £1.65 for a 45.4cl bottle or £2.65 for a 75cl bottle. Whiting & Hammond in Kent charges £3.50 for a 75cl bottle.

“Another site currently charges £4.60 for a branded bottled water but is going to put in Aqua Spritz at £3-3.50 and send a clear message to customers that it’s an environmental saving.

“We have sites that generate up to £10,000 profit a year from water sales alone.

“There are massive revenue opportunities – it’s basically 100% GP per serve – with benefits such as no stockholding of water in bottles, no bottle chilling, no waste removal labour or charges.”

Fenton suggests the system provides quality benefits too.

“We’ve got a pretty high-tech filtration system,” he adds. “There are two filters working for the font that gives it a very pure taste on both still and sparkling water.”

Fenton believes consumer and trade buy-in to the concept will come from the added value they see over tap water.

“Operators wonder if they can charge for water and the answer is ‘yes, but you’ve got to position it correctly’.

“People will accept they have to pay if some value has been added. And if someone does complain, a venue can say ‘have it on us’ and it’s cost them practically nothing.”

For bottled water brands, the challenge is providing extra value in a populated market.

The Britvic report suggests some are finding it easier than others. Strathmore was the number one branded, packaged water in the licensed sector in 2018 – and the 10th best-selling soft drink overall – but saw its value sales fall 19.4% to £52m. To give that some context, number one soft drink brand Coca-Cola outsold it by a factor of 21 in value terms.

Harrogate water fared much better, especially in foodservice where its sales grew by 9.3% to £53m, making it the sixth best-seller in soft drinks.

Harrogate marketing executive Nicky Cain says: “Strong brand identity, providing reassurance of quality and provenance, is a strong influence on consumer choice. Our history, heritage and provenance are important.

“The fact that Harrogate is outstripping the market underlines the strength of the brand and how strong branding can succeed in a crowded market.

“Even when tap water is freely available, sales of Harrogate remain in growth.”

Harrogate has also been attempting to address issues about the environmental impact of bottled water use.

“Demand for bottled water is still showing strong growth but our trajectory is three times that of the market and we are now the leading out-of-home bottled water brand,” says sales and marketing director Rob Pickering.

“We switched to using more than 50% UK-sourced recycled content in PET bottles in 2018 and our commitment to sustainability in the environment has been key.”

Related topics: Soft & Hot Drinks

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