The introduction of Smartwater, a vapor-distilled bottled water, in the Chinese market for the first time by Coca-Cola China has further heated up competition in the high-end water business.

Launched in July, Smartwater has been available exclusively at Sam's Club — the premium membership store under Walmart. Coca-Cola China said the launch of its high-end water product has taken three years of preparations in an effort to drive more growth for its hydration business in China.

Smartwater is currently produced in Nanjing, Jiangsu province, targeting urban white-collar workers aged 25-34 for on-the-go, fitness, at-home and social occasions, said Coca-Cola China. The beverage maker said the local market response to this water product has been very positive and has met its expectations.

During the second quarter of this year, sales of bottled water, sports drinks, coffee and tea grew by 7 percent year-on-year, according to this year's second-quarter fiscal report from Coca-Cola. For its 2021 fiscal year report, bottled water sales grew by 11 percent for the quarter and 5 percent for the year, with growth across all geographic operating segments.

Peng Yuanjun, a food and drink analyst with consultancy Mintel Group, said despite the fact that there is still no clear definition of high-end water in the Chinese market so far, the sector is mostly categorized by price and occasionally by the water's origin.

Peng said the rising popularity of premium water or hydration products among Chinese consumers is the result of the pursuit for better living quality and growing worries over environmental pollution.

"Healthier and purer water origins, such as glacier water, are the most preferred water products," said Peng.

Mintel has forecast, in the high-end water sector, consumers will be more interested in high-quality water products, or those targeting a specific beverage segment such as water for tea or formula milk, or particular age groups such as water for babies or the elderly.

Competition in the bottled water market is fierce, escalated by the growing presence of foreign players including Danone, Nestle, PepsiCo and Coca-Cola, as well as domestic brands like Nongfu Spring and Genki Forest. The bottled water market has grown to reach 200 billion yuan ($27.87 billion) in 2021 from 123.7 billion yuan in 2014 and is forecast to exceed 300 billion yuan by 2025, according to the Zhongyan Industry Research Institute.

Zhu Danpeng, an independent food and beverage analyst in Guangzhou, Guangdong province, said the high-end bottled water market has been far from saturated, adding that the key to standing out from the competition is the origin of the water.

In China, the Changbai Mountain in Jilin province, and Bama Yao autonomous county, Guangxi Zhuang autonomous region are top origins for high-end domestic bottled water, attracting investment from many major players in the country.

Middle-income groups have more preferences for drinking healthier water.

Christina Wang, a mother of a five-year-old, has renovated her home water system with purifiers and also buys bottled water frequently. For instance, bottled water to brew tea and to make powdered milk is part of regular purchases. "Higher-priced water tastes better and serves specific purposes," said Wang. "I personally like sparkling water that tastes refreshing and is also healthier after working out at the gym."

Meanwhile, drinking premium water provides a more trendy vibe for social occasions, said Zhu. "A unique design on the water bottle on the dining table offers pleasure and joy for consumers," Zhu said.

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