Bottom-Up Market Counting

A breakdown of how to calculate market potential for beverage companies using a bottom-up analysis approach, focusing on actual distribution channels and market size data.

Total US Bottled Water Market Size (2019)

• Total market: $20 billion
• Still water: ~$15 billion
• Sparkling water: $3.5 billion
• Remainder: Flavored and private label

Distribution Channel Breakdown

Convenience Stores

• Largest retail channel by number of doors
• Over 150,000 convenience stores in US
• Single chain example: Well-performing water brands can do $50M in sales just in 7-11

Grocery Stores

• Approximately 30,000 stores nationwide

Restaurants and Bars

• About 1 million locations in US

Market Leaders

• Tier 1 ($1B+ brands):

  • Aquafina (owned by Pepsi)
  • Dasani (owned by Coca-Cola)
  • Nestle Pure Life

• Tier 2 (~$500M brands):

  • Fiji
  • Evian

Margin Structure

• Lower margins than perceived
• Retailers demand highest margins on water vs other beverages
• Multiple layers eat into margins:
  • Retailer margin
  • Distributor margin
  • Results in lower supplier margins than other beverages (e.g., energy drinks)

This framework shows how to analyze market potential by:

1. Understanding total market size
2. Breaking down distribution channels
3. Studying competitor performance
4. Factoring in margin structures