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America's new favorite beverage: bottled water? (+video)

2016 could be the year that bottled water outsells soda for the first time, despite environmental opposition. Bottled water sales increased 7.9 percent in 2015, hitting an all-time high. 

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    Walter Pugh, 83, of Belzoni, Miss., loads a case of his bottled water into his shopping cart in Jackson, Miss. (March 5, 2013). As sugary drinks come under fire for fueling obesity rates, people are increasingly reaching for bottled water as a healthier, relatively affordable alternative. Already, bottled water has surged past juice, milk and beer in terms of per capita consumption. The result is that bottled water is slowly closing the gap for the No. 1 spot.
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What’s America’s new favorite beverage?

It’s definitely not soda. According to data from Beverage Marketing Inc., Americans are renewing their affections for bottled water. Sales of bottled water increased by 7.9 percent in 2015. The marketing firm projects that sales could continue to accelerate into this year, ultimately overtaking soda sometime in 2016.

Demand for bottled water has skyrocketed in the past decade, despite environmental concerns. Only 82 percent of the 42.6 billion plastic bottles purchased every year are recycled, which means an estimated 18 percent, or 7.7 billion, are thrown in the trash.

Bottled water's opponents also argue that tap water is cleaner and safer. The latter undergoes multiple daily tests by the EPA, while bottled water only has to undergo weekly tests.

But the inexpensiveness and convenience of bottled water, along with its lack of calories, has led to a massive surge in popularity, especially against soda and other soft drinks. Consumers are also drinking less soda overall, from 53.7 gallons per person in 2000 down to 38.9 gallons per person in 2015.

Beverage Marketing Inc.’s data show that soda isn’t just losing volume and market share against bottled water. It’s also losing ground against beverages like ready-to-drink coffee and energy drinks. Soda sales fell by 1.5 percent overall last year.

Coca-Cola’s first-quarter sales performance bears that out. Soda sales in the US continue to decline, but sales of Coke-owned still beverage brands like Dasani and Minute Maid jumped by 7 percent. Coca-Cola is addressing the challenge by diversifying its product portfolio with smaller soda containers and emphasizing its healthier choices. The company is also focusing on rising soda consumption in other areas of its global market share, especially in Asia, where sales are growing. On Tuesday, Coca-Cola announced that it would be consolidating its product line under the “One Brand” umbrella, a suite of beverage logos for its four core soda products that can be easily identified in any market.

PepsiCo also no longer relies as heavily on its namesake product. The company said on Monday that less than 25 percent of its sales come from soda. Increasingly, consumers are choosing Pepsi’s “everyday nutrition” products instead, like Naked juice and bottled water.

Like Coke, Pepsi is responding to changing consumer attitudes by diversifying its brands apart from soda. In January Pepsi ventured into the restaurant business when it launched the Kola House restaurant in New York. Since then, Pepsi has also introduced several craft sodas in a bid to attract Millennials’ diverse beverage tastes, including the 1893 premium soda label and Caleb’s Kola. Both labels hearken back to Pepsi’s early history -- the brand was founded in 1893 by Caleb Bradham, a pharmacist -- and use edgy packaging and advertising to appeal to those who might not be inclined to reach for a soda first in the cooler.

Early reactions to Pepsi's craft soda brands have been mixed, but on the bottled water front, the shift seems to be working. Brands Dasani and Aquafina, which are owned by Coca-Cola and Pepsi, respectively, now account for 11 percent of domestic bottled water sales.

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