With hydration and wellness in mind, consumers are seeking beverages that do more. The evolving water category reflects this shift, as suppliers rethink the everyday staple with new formats, functions and flavours designed to meet changing consumer needs.
Philippe Gallard, business executive officer for Nestlé Waters and Premium Beverages at Nestlé Canada, estimates the category is valued at $1.5 billion in Canada and is growing faster than overall grocery. “Canadians are increasingly looking for healthier beverage options, and water remains one of the few categories that continues to benefit from that long-term trend,” he says. “We’re also seeing growth shift beyond traditional still water into premium, sparkling and differentiated hydration offerings that deliver more than refreshment alone.”
Bottled water specifically has become a daily habit, accounting for about 22 per cent of total beverage sales, says Soula Kioussis, chief commercial officer for Coca-Cola Canada Bottling.
“The shift is mainly driven by the fact Canadians no longer drink water only to refresh, but increasingly expect it to deliver more, from daily vitamins to mental focus and recovery. Paired with busier, on-the-go lifestyles, that has made water one of the most resilient and strategically important categories in the basket.” She singles out brands such as vitamin water and smart-water alkaline with antioxidants as examples of how Coca-Cola is responding to market needs.
Sean Cauterman, marketing director of growth brands at PepsiCo Canada, says the company has seen “real growth” in the “water-plus” space, such as waters with added electrolytes.
“We’re seeing that the basket has really split into a few distinct occasions: basic thirst, premium source-driven hydration, food-pairing sparkling, and fun-flavoured sparkling. Retailers need to think about assortment and shelf space across all of them, not just one.”
What’s driving innovation
Younger consumers are redefining virtually every category in grocery. In water, Nestlé Canada’s Gallard says they’re looking at it “through a wellness lens and seeking beverages that support their health and well-being, fit their lifestyles and align with their values.”
As a result, he says they’re driving growth in premium, sparkling and functional hydration segments, pushing brands to innovate faster. “They’re also more willing to explore new products and emerging beverage spaces,” helping to expand the role of hydration beyond just quenching thirst.
They’re also early adopters, adds Kioussis, “who enjoy discovering and trying new products, which makes them the primary engine behind emerging hydration trends and premium innovation.”
PepsiCo’s Cauterman calls it “a more intentional lens” on how younger consumers purchase beverages, adding that “a big part of what’s motivating them is social. What they choose to drink increasingly reflects their taste, preferences and identity.”
Water takes shape: Packaging formats
While suppliers continue to experiment with new packaging formats, those Grocery Business spoke with say PET, 100 per cent recycled PET and cans dominate the category, with cans specifically accounting for close to 70 per cent and being the preferred on-the-go format, according to data from Nestlé Canada.
“Looking ahead, the biggest shift will likely be continued innovation in packaging sustainability, including increased use of recyclable materials, recycled content, and packaging designs that support recycling systems to meet consumer expectations and environmental goals,” says Gallard.
Coca-Cola Canada Bottling’s Kioussis adds that cans are growing quickly, “particularly in premium occasions, where they’re outpacing other formats.”
PepsiCo’s Cauterman notes that the company has seen firsthand how new formats play out in the market. When PepsiCo introduced bubbly sparkling-water beverage with a mini-can size, “it resonated strongly with condo dwellers and single-person households looking for a more practical option that takes up less space than a full case pack.” At the same time, he says on-the-go consumers who have daily water intake goals are moving toward larger premium formats, like one-litre bottles. “That format lets them carry enough water to get through the day. Pack size has become a much bigger lever than it used to be.”
What’s Shaping the Beverage Category
Generation wellness
Mental wellness is a big focus for younger generations. They are turning to products with botanicals and apoptogens to manage stress, and Gen Z in particular are purchasing mushroom-based wellness shots and choosing tonics over coffee or alcohol.
Power of pairing: Protein + fibre
Protein remains a priority for consumers, with fibre quickly gaining traction. Beverage brands are responding with products that pair protein and fibre. These products feature enhanced mouthfeel and meal replacement textures to deliver the physical and psychological fullness consumers seek.
Drinks as snacks
Partly tied to the growing use of GLP-1s, consumers who enjoy snacking are increasingly substituting a beverage for their snack; a study from Circana notes that 68 per cent of consumers are doing this.
What’s next
Perhaps one of the biggest shifts is in premium hydration. Suppliers say once considered “special occasion” products, the premium hydration category has moved into everyday occasions. According to Nestlé Canada research, 79 per cent of premium beverage occasions in Canada are everyday occasions, 66 per cent occur at home and 36 per cent take place during dinner and evening.
“Premium hydration solutions, which are very often ‘better for you’ options with no or much lower sugar levels versus traditional sodas and some functional ingredients, are becoming part of daily rituals and meal occasions, creating opportunities for retailers to think beyond traditional category boundaries,” says Gallard.
Another category shift retailers should keep an eye on is tap water, advises Cauterman.
“Retailers may not have fully caught up. Tap water is on the rise. A lot of that behaviour is happening with electrolyte add-ins or reusable bottles rather than pre-bottled formats. That’s a real opportunity for the category. We’ve actually built our own Gatorade powder sticks around that shift. We recently reformulated to remove artificial colours and flavours, and updated our stick serving size to 591 milliltres to match the reusable bottles people are already carrying.”
The category itself is changing, says Kioussis, noting it’s fragmenting into “distinct consumer need states, rather than operating as a single category. Shopper behaviour is tied to specific benefits, whether that’s everyday wellness, functional hydration, relaxation, recovery or a healthy lifestyle. Alkaline and antioxidant water, for example, is one of the fastest-growing segments within premium water, driven by consumers seeking added functionality beyond hydration.”
What’s clear is that health and wellness will continue to drive food and beverage choices, and retailers that organize assortments around consumer needs and occasions will be best positioned to capture long-term growth, says Gallard.
Retailers will need to treat bottled water as a “strategic growth platform, not a commodity aisle,” advises Kioussis.
“Water remains one of the largest and most significant categories in the basket, and while consumption habits are steady, the real opportunity lies in value: consumers are increasingly willing to pay more for products that deliver added benefit or convenience.”
Carbonated drivers: Variety, hydration, packaging
Thirty-five per cent of Canadian and U.S. consumers in a 2026 Innova Market Insights survey said greater variety increased their carbonated beverage consumption. Forty-one per cent cited hydration, and 25 per cent said stackable packaging as reasons they increased beverage consumption.
Flavour exploration: Adventurous mashups
This is Global Flavours 2.0, with consumers delving deep into flavours and ingredients from around the world, seeking authenticity, excitement and new taste experiences. Expect to see rising interest in ingredients such as pandan, Moroccan spices, and Japanese sudachi.
From “swicy” to “swavoury”
While the sweet-spicy trend will continue, there is a growing shift to sweet-savoury profiles with combinations such as basil lime or herb-infused spritzers with light umami that are beginning to move into the beverages space.
BevSource.com | Circana.com | Innovamarketinginsights.com (2026 reports on flavoured/unflavoured water trends + soda trends)
