Cadbury's Snapple testing out bottled water

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In its first product experiment under new ownership, Snapple Beverage Co. is testing an unsweetened, flavored water in Southern California. Snap2O was introduced earlier this month, packaged in half-liter bottles in flavors including lemon, lime and orange.

Snapple, now part of Cadbury Schweppes, is examining whether to take the product national. Until now, the company hasn't done nationwide marketing for a flavored water, one of the beverage industry's fastest-growing categories.

At the same, time, rivals have cut a wide swath with unflavored waters. Pepsi-Cola Co., which markets Aquafina, is ranked second behind stores' private-label brands, while Coca-Cola Co., which markets Dasani, is eighth. The movement comes as growth in the bottled water category outpaces that of soft drinks. According to Information Resources Inc., sales of non-carbonated bottled water jumped 22% for the 52 weeks ended Oct. 8; unit sales were up 10% during that period. Carbonated soft drinks, meanwhile, grew just 0.5% last year, according to Beverage Digest.

The single-serve bottled-water category is booming because of the convenience it offers active consumers far from the kitchen sink, said Gary Hemphill, senior VP at Beverage Marketing, a research and consulting company in New York. He said that over the past decade, single-serve waters have seen volume grow annually from the high 20% range to the low 30% range. He predicted that within 10 years, bottled waters would become the country's second-largest beverage category after carbonated soft drinks.

"There really is no other category that compares," he said. "Last year, it jumped over fruit beverages [in volume]."


A decade ago, waters were dominated by high-priced European imports, but cheaper domestic waters have become more prevalent, in part due to aggressive pricing. Mr. Hemphill speculated that Snapple tried a flavored water rather than a regular bottled water because the latter category is so crowded.

"It's gotten to the point where [the water category] is dominated by very large companies-the [Nestle-owned] Perrier group, and now Pepsi and Coke are in the business with big brands. It's difficult to compete on price if not on every other aspect as well," he said. "They probably decided that if they are going to get into the category, they have to get into it in a little bit different way."

Snapple executives declined comment on the new product. The agency for Snap2O, Deutsch, New York, referred queries to Snapple. Radio and outdoor ads are expected.


Snap2O was in the planning stages before Cadbury announced it would buy Snapple from Triarc Beverage Co. in September. Cadbury Schweppes, however, has been skeptical about the bottled-water market. As recently as last month, Cadbury CEO John Sunderland said he wasn't sure there was enough profit in the category and that he expected consolidation in the European water market to carry over to the U.S.

Contributing: Kate MacArthur

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