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As Americans turn away from soda, carbonated water becomes a multibillion-dollar industry

Carbonated water rising in popularity
Carbonated water rising to become multi-billion-dollar industry 04:30

Sales of seltzer, club soda and sparkling water are up by double digits as more Americans turn away from soda and other sugary drinks. The industry, totaling at least $2.2 billion a year, is booming for big beverage companies and startups alike.

Cases of Rambler Sparkling Water began rolling out of a canning plant in Austin, Texas, last April. It was the brainchild of three men, including James Moody and Dave Mead, who knew nothing about the beverage business.

"I got into the business because I was actually hooked on soda … I was a diet soda junkie. I was told to wean off of it, and I did, but I couldn't do it with flat water. I needed some sort of entertainment," Moody said. "Sparkling water was the way that I did it … I started to notice that a lot of America was kind of going through this weaning off of Coke at the refrigerator level at home."

Moody and Mead launched Rambler into stiff competition. Texas is Topo Chico country, a brand so beloved it was noticed by a company called Coca-Cola.

"Topo Chico is a phenomenon," said Coca-Cola's Brad Sprickert. "Outside of Texas, though, most people probably haven't heard of Topo Chico … but we see opportunities to expand that in a measured and appropriate way."

Coke already had sparkling water products, including their Dasani and Smartwater brands. Buying Topo is more evidence of just how hot the market is.

"I think this category is important to the Coca-Cola Company. Overall, the sparkling water category has grown double digits over the past several years," Sprickert said. 

Coca-Cola's sparkling water business was up 19 percent in 2018. Industry-wide, sales were up more than 13 percent.

All the sparkling water that's on the market is water of some sort with added CO2 for bubbles. But that's pretty much it. So what matters the most -- the water, the packaging, the market positioning?

Mead and Moody believe it's a little bit of all of those things.

"But we realized, when we started getting into it, that these waters taste completely different depending on the minerality in them. So the flavor of the water itself starts to get a little bit like wine, which I know sounds crazy, but you can taste the difference when you really get into it," Moody said.

But can people really tell the difference from one seltzer to another? In a very unscientific taste test we conducted at the University of Texas, we asked people to sample four different brands of unflavored sparkling water, and people were able to pick out a favorite from among them.

Sparkling waters vary in their intensity -- their carbonation and their bubble size. Added into that is the ever-expanding world of flavored waters. Pepsi just recently launched Bubly, joining behemoths like LaCroix. There's even hard-seltzer offerings now, for those who like their bubbles with a little booze.

Asked if there's room for so many brands in that space, Moody said, "Yes right now" but "no in the long term. There will have to be some sort of consolidation."

But as of right now, they haven't gotten a call from Pepsi or Coke.

"I'll check my phone after this," Moody said, "but I don't think they know we exist."

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