A top trend driving change in the food and beverage space is consumers' growing demand for products that support health and wellness. Research from Archer Daniels Midland (ADM) indicates that 77% of consumers want to do more to stay healthy in the future, and savvy companies are working quickly to give customers what they want. With consumers choosing healthier options for both food and drink, the sales of alkaline waters, those with a pH between 7.0 and 10.0, are jumping. Only a few years ago, retail sales for alkaline waters were under $95 million. Today, Beverage Marketing Corp. projects retail sales in the category to reach $1.3 billion by 2023, representing 20% of the entire value-added water category. Several factors are contributing to the forecasted 42.6% compound annual growth rate, a CAGR that The Alkaline Water Company Inc. (NASDAQ: WTER) (CSE: WTER) (Profile), the largest independent alkaline water company in the United States, is ideally positioned to benefit from. Other big-name companies, including Safeway Inc. (NYSE: SWY), CVS Health Corporation (NYSE: CVS), Rite Aid Corporation (NYSE: RAD) and Amazon.com Inc. (NASDAQ: AMZN), also appear to be in strong positions as consumers choose health and wellness.
-- Promising retail opportunities are opening post pandemic as some channels explode with demand and others are recovering.
-- WTER was ranked eighth in the broader functional water category over the past month according to Nielsen Total US Food Data for the four weeks ending Sept. 11, 2021.
-- The company has goals to reach 90,000 to 110,000 retail locations by the end of fiscal 2022.
-- The Alkaline Water Company has reported 33 consecutive months of year-over-year revenue growth.
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Growing Stronger in the Alkaline Space
Alkaline water is becoming increasingly popular as consumers around the world become more aware of the health benefits its enthusiasts claim to experience. While not all such benefits are substantiated by clinical research, alkaline water proponents insist the specialized water option has abilities to stabilize the body's natural pH level and facilitate faster body rehydration post workout, among other things.
Today's consumers are paying more attention to health and wellness, and these types of benefits aren't going unnoticed. In addition, post-COVID-19 customers are also purchasing in different ways, with certain sales channels such as e-commerce, big box and warehouse clubs posting numbers higher than ever before. Smart companies are recognize the opportunities for growth and are making strategic moves in these channels. In addition, some markets that took a hit during the pandemic, including hospitality, food services and travel, are rebounding, offering more opportunities for companies to expand distribution and sales.
The Alkaline Water Company Inc. (NASDAQ: WTER)(CSE: WTER) is making impressive headway in these sectors. Already a dominant player in the market, WTER is strategically growing its flagship Alkaline88(R) portfolio through new targeted distribution points. The company has added key personnel, expanded infrastructure and developed new products designed specifically for emerging markets.
This deliberate growth and commitment to health and wellness should strengthen Alkaline88's position in the broad value-added water market and alkaline water subcategory. The brand has already outpaced sales at the next closest independent peer by fivefold and has been ranked as the 10th-largest brand of any type of value-added water over the last year. In addition, Nielsen data reports that Alkaline88 outperformed the whole value-added water market during the 52 weeks ending Sept. 11, 2021, by 12.8% and 17.5% in dollar and unit volume respectively.
Of note is that that success came prior to the company's announcement and advertising of its new brand ambassador, basketball legend Shaq O'Neil. The advertising campaign, designed for both TV and mobile devices, should only increase those numbers.
Planning for Future Success
The numbers don't end there. With the success of its Alkaline88 line and additions to its product offering, WTER has posted an impressive 52% compound annual growth rate (CAGR) over the last six years, including 33 straight months of double-digit, year-over-year growth. Another big win? WTER became the eighth-largest enhanced water company in the country for the four weeks ending Sept. 11, 2021, according to Nielsen Total US Food data. On its way to reach that number-eight status, Alkaline88 passed LifeWTR, the premium enhanced water product offered by big-name beverage player PepsiCo.
Currently, Alkaline88 can be found on the shelves of more than 75,000 stores throughout the country, but WTER isn't content to stop there. The company has goals to reach 90,000 to 110,000 retail locations by the end of fiscal 2022. WTER's flagship products is already in leading grocers locations such as Kroger, HEB, Aldi, Meijer and Publix as well as in large retail chains such as Rite Aid; the product is also recognized as a Prime offering on Amazon.com. Now WTER is planning to add high-growth channels, big box, club and specialty retail, hospitality and foodservice to the mix.
The future looks to be bright for the alkaline leader as indicated by Alkaline88's relatively low all commodities value (% ACV) of 46%. % ACV is an industry metric that measures a store's total sales of all products compared to the sales of all relevant retailors in the same territory. That means that physical store size or number of products doesn't matter. Rather % ACV instead focuses on how much product is actually sold. That 46% ACV means WTER has plenty of important retail locations still available. Understanding % ACV provides key information for companies to prioritize regions and sales points that can immediately have a positive effect on sales.
Targeting -- and Reaching -- Growth Opportunities
Earlier this month, The Alkaline Water Company reached a major milestone in the club channel when it announced a retail distribution agreement with warehouse club juggernaut Sam's Club. Based on the agreement, WTER's Deliciously Smooth(TM) Alkaline88 one-liters in a convenient 12-pack will be available to millions of Sam's Club members across all 587 of its U.S. locations
The Sam's Club deal is the first of what the company hopes will be other wholesale club agreement. But that's not the only growth opportunity the company is targeting -- and reaching. Last month, WTER announced that Alkaline88 would soon be available in nine major U.S. airports including JFK, La Guardia, Chicago O'Hare, Orlando International and others serving hundreds of millions of passengers every year. WTER also partnered this summer with Premier Distribution Services, which will put Alkaline88 in more than 800 gyms, fitness centers, and spas nationwide.
WTER Team Grows with Pitman, Shaq
Product distribution isn't the only good news for The Alkaline Water Company. This year the company has added two big names to the WTER team. Chris Pitman was named WTER's director of e-commerce, and as one of his first big successes, he facilitated a new partnership between The Alkaline Water Company and an unnamed turnkey e-commerce agency. Previously director of e-commerce and digital merchandising with Essentia, a leading premium functional water brand acquired by Nestle in March, Pitman played a key role in growing the brand's overall e-commerce channel sales performance by more than 160% in only three years.
And Pitman isn't the only new face at The Alkaline Water Company. Basketball Hall of Famer, actor, musician and TV personality Shaquille O'Neal joined WTER as a member of the board of directors and brand ambassador earlier this year. Shaq is renowned for his careful and deliberate business associations and endorsements and has been quoted as saying he must genuinely like a product before he attaches his name to it. WTER is in the process of unveiling an omni-channel traditional marketing campaign featuring Shaq endorsing Alkaline88.
Water, Wellness Spark Growth
As more companies jump on the health and wellness bandwagon, both in the water sector as well as in other key spaces, companies already in position may see the most success as they capitalize on their expertise and commitment.
Safeway Inc. (NYSE: SWY) operates as a banner of Albertsons Companies, one of the largest food and drug retailers in the United States. In 2016, the company launched Soleil by Signature SELECT(TM) sparkling water, which quickly became a multimillion-dollar brand and a customer favorite. Earlier this year the company announced big changes to the brand, including four delicious new flavors, brand new packaging with world-class artwork, and a fun #siptothebeat summer promotion with Spotify. "Shoppers are gravitating toward drinks that have functional elements, like a jolt of caffeine," said senior marketing manager Shea Friesen. "They also want healthy, low-sugar or sugar-free offerings. Sparkling water ticks a lot of those boxes, and shoppers are buying more of it."
Earlier this year, CVS Health Corporation (NYSE: CVS) released a 2021 CVS Health Study that found people are taking greater control of their health as a result of the pandemic. The report also highlights the resilience of patients, providers and the health-care system, and growing interest in novel ways to engage with health care to achieve a more individualized experience. "Over the past year and a half, we have witnessed a dramatic shift in consumer health-care preferences and needs," stated CVS Health president and CEO Karen S. Lynch. "Going forward, we have an opportunity to take what we've learned and continue to foster an integrated health model that is centered around the needs of the individual."
Rite Aid Corporation (NYSE: RAD) has officially launched a refreshed brand designed to demonstrate the company's commitment to provide the perfect fusion of traditional medicine and alternative remedies to help people not just get healthy, but get thriving. The brand refresh also includes a new brand identity, or logo, that is rolling out across the chain; whole health merchandise; a refreshed digital experience; and its new store-of-the-future store prototype currently piloting in select markets. The integrated rebranding effort is part of Rite Aid's RxEvolution strategy to transform the company into the leading whole-health destination that treats mind, body and spirit.
Amazon.com Inc. (NASDAQ: AMZN) and Amazon Web Services (AWS) are committed to the ideal that individual health outcomes should not depend on socioeconomic status, race, ethnicity, or neighborhood. With that in mind, AWS announced a new global program to support organizations working to enhance health outcomes for underserved or underrepresented communities. The company is providing AWS credits and technical expertise and committing $40 million over three years to help organizations develop solutions to improve health outcomes. This program is open to organizations around the world that want increase access to health services for underserved communities, address social determinants of health, and leverage data to promote more equitable and inclusive systems of care.
The burgeoning trends around health and wellness that are shaping numerous industries, including food and beverage, provide key insight into future potential and possibilities. A company's ability to capitalize on these trends may lead to significant growth and success moving forward.
For more information about The Alkaline Water Company, please visit The Alkaline Water Company.
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