The global flavored and functional water market is fragmented in nature. The main focus of industry players is product differentiation through use of different ingredients and innovative packaging. This is because the possibility of product differentiation is low to medium, as most players offer the same products, states a new report by Transparency Market Research (TMR). The threat of new entrants is expected to be low. Leading players in the market include: Nestle SA, The Coca-Cola Company, Groupe Danone, PepsiCo, Hint Water, and New York Spring Water.

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Key players are partnering with other brands to combine innovation and renovation capabilities with product expertise. Case in point: Nestle signed an agreement with Yinlu Foods Group in China. This has helped Nestle to integrate its innovation capability with Yinlu’s entrepreneurship and consumer understanding, enabling the production of affordable products for the consumers in China.

Increasing Prevalence of Obesity Boosts Demand for Flavored and Functional Water

According to the WHO, the number of obese children below the age of five was 42 mn across the globe in 2013 and this figure is expected to rise to 70 mn by 2025. With growing concerns over obesity and diseases associated with obesity, the preference for low calorie drinks has risen considerably over past few years. As such, flavored and functional water provide a healthier option for the health conscious people.

Changes in lifestyle and urbanization of people have resulted in the population becoming more health conscious, thus propelling the demand for flavored and functional water. Manufacturers are also taking a conscious effort by aligning themselves with the demands of customers, and developing healthier beverages. Moreover, it has been found that the demand for flavored and functional water is particularly high among the geriatric population. All these factors are boosting the demand for these beverages across the globe.

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Companies Need to Worry about Campaigns against Plastic for Packaging

Various public campaigns against use of plastics in packaging are causing problems for the flavored and functional water market. Environmental groups feel threatened by the growth in the bottled water industry as it leads to high amount of PET bottle waste. Moreover, a growing segment of the urban society that possesses increased awareness regarding environmental conservation has started avoiding plastic bottles. This is expected to hamper the growth of the market.

The demand for flavored and functional water is threatened by the availability of low cost carbonated drinks. Additionally, the presence of high amount of sugar in some of the flavored and functional water products is negating the very purpose of consuming these products. Thus, the high sugar content is hampering the growth of the flavored and functional water market.

Emerging Markets Offer Opportunity for Manufacturers

Emerging economies in Asia Pacific, the Middle East, and Latin America are witnessing rapid urbanization and increasing disposable income. This is working in favor for the global flavored and functional water market. Urbanization and the rising disposable income have led to a heightened awareness among consumers regarding benefits of consuming products intended for their well-being. Thus, market players can focus on these emerging economies and grow in the market.

Healthy living has become one of the important objectives of a consumer, as there is a heightened consciousness regarding fitness and appearance. Banking on this, manufacturers are developing flavored and functional water products that are developed targeting the wellbeing market. These products include appetite suppressants and anti-aging beverages.

By geography, Asia Pacific is expected to lead and account for 44% of the global flavored and functional water market by 2019. By product, flavored water is expected to grow at a significant pace in the coming years. According to the report, the global flavored and functional water market was worth US$23.8 bn in 2015 and is expected to be worth US$36.7 bn by 2019.

This information is based on the findings of a report published by Transparency Market Research titled “Flavored and Functional Water Market - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2013 - 2019.”

The global flavored and functional water market is segmented as follows:

Geography
Europe
North America
Asia-Pacific
Rest of the World

Product
Flavored Water
Functional Water