Drink Giants Battle It Out in China's Water Market by Targeting Segmented Audiences
Lv Jinyu
/SOURCE : Yicai
Drink Giants Battle It Out in China's Water Market by Targeting Segmented Audiences

(Yicai Global) May 8 -- China's bottled water market is being segmented even further. Instead of dividing water with waterbody labels, like glacier water, purified water, mountain spring water and oxygen-enriched water as was previously the norm, water companies are now segmented their market and creating drinks such as 'nursery water' for kids and drinking water specifically for women.

Of the 593 new varieties of bottled water sold in China between 2012 and 2016, 9.3 percent were for children while 4.7 percent were for women, data from market research institute Mintel shows.

For companies, a well-targeted customer group means better profits. Regulations banning certain product names, such as distilled water and glacier water has led to firms needing to brand their products in a different way.

Occupying the Water for Kids Market

Products made especially for children need to meet stricter standards and are usually set at higher prices. Generally, the price of a bottle of water for kids is almost four times more than an ordinary bottle. Nongfu Spring's water for infants costs CNY7.8 (USD1.13) a liter, a large hike from the CNY1.5 it costs for normal drinking water.

International brands like Nestle SA [VTX:NESN] and Evian have also released their own waters for children. However, they are more focused on promoting through child-friendly packaging whereas Nongfu prefers to stress its water source.

"To produce water especially for kids involves getting them interested in drinking water, and developing drinking habits that their parents expect," David Saudan, chairman of Nestle in Greater China told Yicai Global.

Nestle Pure Life has teamed up with Walt Disney Co. to make eight kinds of water for children using images from Zootopia, an animated movie from Disney. The products went on sale at more than 8,000 brick-and-mortar stores in Shanghai in mid-March, including supermarkets, shopping malls and convenience stores.

Evian also started a run of limited edition kids' water with Disney in 2016. "We believe demand from mothers for high-quality water is rapidly increasing," the water company's head of public relations told Yicai Global.

The two foreign brands have clearly gone for different target markets with their water for youngsters', with Evian's water priced at CNY32.8 a liter online, almost six times that of Nestle.

Breaking Into the High-End Market

In 2015, the scale of the bottled water market in China surpassed that of soda, and maintain rapid growth of 15 to 20 percent a year. Two of the world's largest soda firms, Pepsi [NYSE:PEP] and The Coca-Cola Company [NYSE:KO], have both made moves into the water market.

Both companies price their water on par with other companies. However, the low profits available for averagely priced water and the indistinguishable taste has seen the high-end market become a battlefield for intense competition.

On April 20, Coca-Cola started Valser, its high-end bottled water. The product, which is made in Switzerland, sells for CNY20 to CNY64 a liter, complements the lower-priced Ice Dew and allows the company to target both high and low income customers. The Valser water is made from melted ice and snow in the Alpine mountains.

Pepsi has tapped into the low-end water market with Aquafina, but hasn't yet put out a high-end water.

Although the pair have not yet 'fought' on the bottled water market in China, Coca-Cola's deployment of a high-end product may see the market begin to rapidly expand.

Follow Yicai Global on
Keywords: Water , Beverage , Segment Market , High-End Market