recent study conducted by Technomic on the away-from-home beverage market concluded that consumers spent nearly $10 billion on bottled water in foodservice in 2007—more than 10 percent of total dollars spent on cold beverages. Over the previous three years, bottled water was the fastest-growing cold beverage, exceeding energy drinks, smoothies, and iced teas. And, while bottled water is experiencing strong demand in both full- and limited-service restaurants, the travel and leisure segment (which includes hotels) makes up a relatively large portion of sales—11 percent in 2006.

The size and growth of this category show the interest in, and popularity of, bottled water. When asked about attributes important to their beverage selection, consumers rated bottled water extremely high as a healthy drink and as something they should drink more of. The rise of functional and fortified water has further cemented this perception as a healthy alternative for consumers versus carbonated beverages and other cold beverages. As a single-serve beverage, bottled water also fits the grab ‘n’ go trend that is gaining importance.

While bottled water is not as profitable to the operator from a percentage basis, the fact that consumers are willing to pay as much or more for water as for dispensed carbonated soft drinks means the profit per bottle of water is very attractive to the operator’s bottom line.

At the same time, an undercurrent of dissent and backlash is being seen regarding bottled water. It turns out that the part of bottled water desired by consumers is the water, not the bottle. Certain municipalities are considering banning bottled water sales, or have already implemented higher taxes on bottled water, due to environmental concerns about plastic bottles. The fast-casual chain Big Bowl, owned by Levy Restaurants, has discontinued the sale of bottled water in an effort to promote environmentally friendly practices and, in doing so, will forgo an estimated $25,000 in annual profit from bottled water sales.

Other concerns have emerged over whether the water quality is any better than tap, given some admissions that bottled water is really nothing more than purified tap water. This suggests that bottled water may be losing steam as an “on-trend” drink choice for many consumers.

While these concerns may strike some as much ado about a little, small changes in consumer behavior could impact growth going forward. From an operator’s perspective, what should be done?

First, for most consumers, bottled water remains a popular and viable option, and operators should continue to offer a wide variety of bottled water products. It seems intuitive that the growth of bottled water will shift from basic “still water” to more “value-added” water, including flavored, enhanced, and sparkling. There are also more options for kids, and several restaurants have started offering smaller sizes of bottled water to appeal to children dining with their parents.

For operators with more environmentally aware consumers, bottled water may need to be de-emphasized, with greater focus on tap water. Of course, there are “eco-friendly” bottled water options that use less plastic. As environmental concerns rise, however, more operators may be faced with the decision about how to market bottled water products.

David Henkes is a senior principal at Technomic, a Chicago-based consultancy focused on away-from-home eating and drinking. For more information on beverage trends in foodservice or on other issues,