As the hot summer quietly arrives, whether shopping, sightseeing, or hurrying along, cool and refreshing bottled mineral water has become the choice for more people. Today, the packaging designs of different brands of mineral water on the market are dazzling, marketing tactics are emerging one after another, and consumer demands and channels are increasingly segmented. Ms. Huang Qiong, Deputy Director of Nielsen's Beverage Market Analysis Department, was invited to attend the 13th Member Conference and Industry Technology Exchange Meeting of the Natural Mineral Water Branch of the China Beverage Industry Association, and delivered a speech titled "Drinking Health: Opportunities and Challenges in China's Mineral Water Market," analyzing the overall macro trends of FMCG and the opportunities in the packaged water market, to help packaged water raw material buyers grasp demand and seek breakthroughs. Nielsen Beverage Market Analysis Deputy Director Huang Qiong From the perspective of the overall economic environment. Although the 2018 GDP indicates a certain trend of steady slowdown in the overall economy, consumers have not stopped pursuing a quality life, and the FMCG market still shows an accelerating growth trend. As of December 2018, the overall FMCG growth rate accelerated compared to the same period last year. The acceleration of FMCG growth was mainly driven by non-food items, with food growing 5.4% year-on-year and non-food growing 7.3% year-on-year. Due to the lack of new growth drivers, the growth rate of beverages slowed, with a year-on-year increase of 4.7% in 2018. Compared to other beverage categories, packaged water has higher sales and faster growth, making it the main driver of growth. In the packaged water market, purified water still holds the largest share, but its growth has slowed, while mineral water has huge growth potential. Mineral water can be divided by price per liter: 0-2 yuan (low-end), 2-5 yuan (mid-range), 5-10 yuan (high-end), and above 10 yuan (ultra-high-end). Nielsen research shows that high-end products are the main body of market share, while the growth of ultra-high-end water is slowing. Another point worth our attention is that the market share of low-end products (0-2 yuan) is growing, because the demand for daily water is expanding, and large-packaged water such as 5L is driving the growth of mineral water share in this price segment. Nielsen research finds that consumer demands and channels are becoming more fragmented. As consumers' self-awareness increases, they tend to make their own decisions when choosing products. How to reach these consumers can be analyzed from two dimensions. First, from the perspective of promotion and marketing, in recent years, digital marketing platforms have been highly promoted. Now, the proportion of marketing and advertising investment on digital platforms has exceeded 50%, and Nielsen predicts it will reach 68% in 2019. ** Now the return on investment for digital platform advertising has fallen below 1. More efficient use of digital platforms and achieving diversification of marketing platforms are urgent issues to consider. From the analysis of channel distribution, e-commerce is developing rapidly at this stage. In FMCG channels, online maintains a high growth rate of 34.7%, and the trend of e-commerce fragmentation is also becoming more obvious. While the growth rate of monthly active users of traditional e-commerce remains at 22%, many non-traditional e-commerce platforms have emerged, with more intermediate brands. Choosing which e-commerce platform is also a question that needs consideration. Seizing Market Opportunities Affordable premiumization is the market development trend. Nielsen research shows that consumers are willing to pay a premium for efficacy and green design. In addition to the intrinsic quality of the product, consumers also pay attention to the packaging of the product. When making decisions in front of the shelf, consumers are influenced by the packaging. Although consumers will read the ingredient list more carefully, they do not fully understand what the ingredients represent, so the health concept needs to be reflected on the packaging. Products that show natural, healthy, organic certification, etc., have greater development space in the market. For different segmented groups, products should be provided according to their different health needs. Taking four groups as examples: Hot moms and dads are willing to spend money on their children and hope that the quality of mineral water is guaranteed. Self-disciplined fitness enthusiasts focus on products that help maintain body shape and health. White-collar workers care more about quality and face, and are willing to choose high-end packaged products. For urban playboys, novel flavors and tastes will attract them more. Nielsen research shows that the style and color of the outer packaging are closely related to the product positioning. For affordable products, bright-colored packaging attracts consumers more, but for expensive products, dark-colored packaging is more welcomed by consumers, and they are also willing to pay a premium for minimalist design. When designing products, packaging should be differentiated according to product positioning. Focusing on Potential Risks At present, the market share of hypermarkets is gradually being diluted by convenience stores, with convenience stores having the fastest increase in market share. Consumers' demand for convenience can make them sacrifice some price sensitivity. The number of convenience store outlets is increasing, and the variety of products sold is increasing. At the same time, output per store is improving, with more and more consumers entering convenience stores or small modern channels to buy beverages. The large foot traffic in convenience stores also leads to higher output per store. Online platforms will become important sales platforms, with online sales of packaged water increasing by 67% year-on-year in 2018. Nielsen research shows that 42% of respondents learn about packaged water information online, because offline information from products is limited, while web pages can provide richer information. When learning about product information, more consumers choose to browse online, and 51% of all consumers purchase after browsing. At the purchase stage, the proportion of offline purchases relatively increases, with some online viewers switching to offline purchases. Online platforms are not only sales platforms but also information dissemination platforms. When launching new products, online activities can be used to attract online traffic. Summary ▲ Opportunities: Affordable premiumization is the main driver of mineral water growth Promote the development of high-end mineral water through differentiated health positioning The appearance and design of packaging are important means to achieve premiumization ▲ Challenges: Fragmentation of marketing methods and channels is the main development challenge Convenience stores and grocery stores are important channels for mineral water growth Online activities help attract consumer traffic Source: Nielsen Once the tip is adopted, a reward of 400-2000 yuan will be paid China FMCG + Internet Professional New Media Committed to FMCG manufacturer transformation and upgrading and channel digital solutions