Walk into most convenience stores for a bottle of water and you might be there a while perusing the options. A variety of sizes, shapes and styles of water occupy several rows—or even entire doors—in wall coolers, giving consumers many ways to consume the U.S. Department of Agriculture’s recommended 3.7 liters for men and 2.7 liters for women of H2O.

Overall, bottled water revenue in the United States is forecast to hit $94 billion this year, with an annual growth estimate of 6.35%, according to Statista Market Insights.

Water is seen by many as a better-for-you beverage choice, but even H2O can be improved upon, as the subcategories of enhanced water and non-alcoholic seltzer water prove. “Water’s ultimate health halo, along with increased interest in small personal indulgences, signals new opportunities for premium, functional, sustainable packaged water products that offer consumers a taste of luxury and water products that reflect consumers’ aspirations and personal values,” said Caleb Bryant, associate director of food and drink reports for market research firm Mintel.

For the convenience store sector, this represents an opportunity to boost sales by enticing customers to try these premium waters. NIQ data found all subcategories of packaged beverages rose from 2021 to 2022 in sales (except for juice/juice drinks). “NIQ data for the first quarter of this year is also showing all subcategories, including enhanced water and non-alcoholic seltzers, up in sales compared to the prior year,” said Jayme Gough, NACS research manager. “For retailers, water has been an essential part of their packaged beverage mix. Enhanced water and non-alcoholic seltzer provide a fun way to keep consumer interest in alternatives to plain water.”

Also called vitamin water, enhanced waters come in a variety of flavors. Top enhanced water brands include Alkaline88, Propel, Glaceau Vitaminwater, Smartwater alkaline and Soulboost.

Enhanced water was the smallest subcategory of packaged beverages last year, nabbing 2.8% of the category’s sales, according to the NACS State of the Industry Report of 2022 Data. Enhanced water averaged $1,057 sales per store in 2022, with a $501 gross profit per store, per month.

“Consumers are increasingly looking for flavor, functionality like immunity benefits and sustainable packaging when they pick up an enhanced water,” said Duane Stanford, editor and publisher of Beverage Digest. For example, Soulboost by PepsiCo added Panax ginseng to assist with mental stamina to its blueberry pomegranate and black cherry citrus flavor and L-theanine to help with relaxation to its blackberry passionfruit and strawberry rose flavors.

The Yesway Way

“Enhanced waters continue to grow year over year,” said Dana Renfro, category manager for packaged beverages at Yesway. Headquartered in Fort Worth, Texas, the chain, which includes Allsup’s, operates 439 stores across Iowa, Kansas, Missouri, New Mexico, Nebraska, Oklahoma, South Dakota, Texas and Wyoming. “We see more and more vendor partners launching waters with added nutrients to push the boundaries of the category.”

To capture even more customer dollars, Yesway debuted its own enhanced water brand, which has been performing well. “We have taken a good, better, best approach when it comes to our private label water category at Yesway and Allsup’s,” Renfro said. For example, Yesway’s enhanced offerings include two sizes of alkaline water and one size of vitamin-enhanced water. Starting this year, the company launched a 20-ounce sports bottle of store-branded enhanced waters with added vitamins in three flavors.

Enhanced waters can be merchandised as a better-for-you alternative to sports drinks. Mintel’s 2023 report on water consumption in the United States found that alkaline water’s health halo signals an opportunity for brands that add functionality to replace sports drinks for athletic recovery. Retailers who position enhanced waters near traditional sports drinks might see an uptick in sales as consumers try an enhanced water after a workout or sports game.

Enhanced waters can be merchandised as a better-for-you alternative to sports drinks.

Overall, Yesway will continue to support both its private label enhanced water and national brands at all its stores. “I don’t see an end in sight for enhanced waters,” Renfro said. “Health is trending in a big way for our society, and consumers are always searching out the next big thing that will help them on their health journey. What better way than to offer our customers enhanced water products to help?”

Rolling out its own brand in the space was a no-brainer. “We saw this as a big opportunity to help grow our Yesway brand,” Renfro said. “Enhanced waters are a trending category, and consumers continue to demand more options.”

“We also align with our top supplier partners to ensure we have the latest, most exciting varieties they offer to engage with consumers. Speed-to-market and a full assortment to meet consumer needs is critical,” Renfro said.

Yesway and Allsup’s product mix in enhanced water has changed to accommodate more shelf space as well as line extensions. “With fixed space across cooler vault doors, we always look to evolve and ensure we afford more space to trending beverages and categories that deserve more space,” Renfro said. “Our growth in private label beverages has also resulted in increased space and focus on our own brand portfolio of Allsup- and Yesway-branded beverages.”

Fizzy Water

While sparkling water continues to grow in popularity, non-alcoholic seltzers have carved out a niche in the crowded water category, gaining 7.2% of packaged beverage sales in 2022. This subcategory rose 5.7% in dollar sales from 2021 to 2022 and jumped 8.5% in the first quarter of 2023 compared with the same period in 2022, according to NIQ data. Popular brands of non-alcoholic seltzers include Hiyo, Polar, Pellegrino and Perrier.

Originality in this category has kept consumer interest high. For example, Aha by Coca-Cola added caffeine to its six flavors of Lime + Watermelon, Blueberry + Pomegranate, Orange + Grapefruit, Blackberry + Lemon, Pineapple + Passionfruit and Peach + Honey, encroaching on the energy drink market.

Smaller beverage companies have been driving innovation in the non-alcoholic seltzer category. “Brands like Liquid Death, while small, are growing fast and bringing new attention to a subcategory that was becoming commoditized,” Stanford said. “Differentiation and flavor innovation have become even more important to a seltzer category that runs the risk of being price-driven.”

Renfro pointed out that Yesway has instead been focusing its efforts on the sparkling water category, a close cousin to non-alcoholic seltzers. “It’s still a small base, but we continue to see growth in this premium category,” Renfro said.

Non-alcoholic seltzers have become one of the drinks of choice for those not wanting to consume liquor. “It’s hard to say if we’ve hit the top of the growth for non-alcoholic seltzers,” Gough said. “There’s so many on the market that the subcategory is pretty saturated. However, the trend of Gen Z not drinking as much as Millennials or older generations does leave the door open for craft seltzers or seltzers that make a good mix in a non-alcoholic cocktail.”

Non-alcoholic seltzers have carved out a niche in the crowded water category, gaining 7.2% of packaged beverage sales in 2022

Non-alcoholic options in general have been growing lately, driven by Gen Z reaching for alternatives to beer, wine and liquor. Overall, consumers are reimagining their relationship with liquor, providing opportunities for retailers to target alcohol-consumption occasions with non-alcoholic seltzer promotions. For example, Coca-Cola offers Aha seltzer mocktail recipes alongside cocktail ones on its brand website, both of which retailers could promote in-store with their non-alcoholic seltzer brands.

Suppliers are also featuring non-alcoholic seltzers in unique flavors with premium packaging to position the beverage as an appealing alternative to alcoholic beverages. Mintel sees premium and luxury water brands as retaining a robust segment of the total water market, which could translate into more non-alcoholic seltzer sales in the coming years.

A Watery Future

Consumers have long been quenching their thirst for bottled water at convenience stores, but many now want options beyond plain water. By adding enhanced water and non-alcoholic seltzers to the mix, retailers will provide another opportunity for consumers to drink H2O—and boost basket size with the higher-priced beverages.

Finding the right blend of enhanced water and non-alcoholic seltzers might take a little trial and error, but focusing on the right brands or even developing your own private label ones should provide a good road map to category success. “Convenience operators should be interested in waters and seltzers that bring added value for consumers, and therefore more premium pricing for retailers,” Stanford with Beverage Digest said. “That added value can be found in the liquid or in the badge appeal of the brand—or both.”

For Yesway, the foray into private label water will continue as the company looks to add more varieties to its portfolio. “I believe the future will remain positive for enhanced waters in convenience stores,” Renfro said. “As a society in general, we are searching for healthier options, and beverages tend to lead the way. Enhanced waters are the ideal way to connect with the on-the-go, wellness-seeking consumer with products that resonate.”