Determinants of Bottled Water Prices in Saudi Arabia: An Application of the Hedonic Price Model

Abstract

This study investigates the determinants of bottled water prices in Saudi Arabia using a hedonic price model, analyzing data collected from nine retail stores in Al-Ahsa Governorate. The analysis of 499 observations reveals that physical attributes, such as bottle size, packaging material (glass and aluminum), non-standard caps, and packaging type (multipack and box), significantly influence the price. Specifically, larger bottles, multipacks, and boxes are associated with lower per-liter prices, while glass and aluminum packaging and non-standard caps command higher prices. Chemical characteristics of bottled water, including total dissolved solids (TDS), sodium, and pH, have a minimal impact, and in some cases, they exhibit a negative influence on prices. Crucially, market dynamics, including the source of origin (imported vs. domestic) and the type of retail store, impact prices significantly. Imported bottled water is priced higher than domestically produced varieties, while products sold in hypermarkets are cheaper than those in other retail stores. Moreover, when analyzing domestic and imported bottled water separately, physical characteristics lose their statistical significance for imported products, and chemical characteristics become irrelevant for domestically produced bottled water. The study highlights the complex interplay of product characteristics and market factors shaping bottled water prices, providing insights for both the bottled water industry and policymakers.

1. Introduction

Bottled water is one of the most popular packaged beverages in the world. Global consumption of bottled water reached more than 400 billion liters in 2020 [1]. There are several reasons for the high consumption of bottled water. These include negative perceptions of tap water quality, trust in water providers, and a preference for high mineral content [2].

Bottled water was first introduced in Saudi Arabia in the early 1970s by a Lebanese company called Sohat (meaning “health” in Arabic). Accounts from Western travelers at the time noted that a bottle of Sohat water in Saudi Arabia was more expensive than a bottle of champagne in London [3]. Domestic production of bottled water began in 1973 in the capital city, Riyadh [4]. Since then, local investments in this industry have surged significantly, with the number of bottled water factories in Saudi Arabia increasing from just 15 in 1994 to 214 in 2023 [5,6]. According to Bouhlel et al. [7], the bottled water market in Saudi Arabia is considered one of the ten fastest-growing national markets, with a compounded annual growth rate of 10% during 2018–2021. Additionally, Saudi Arabia ranks among the top 20 countries in terms of sales, exceeding $3 billion in 2021. All of this resulted in a highly competitive and differentiated bottled water market in Saudi Arabia [8].

Similarly, bottled water consumption in Saudi Arabia has also been increasing. Per capita consumption is over double the global average, increasing from 76 L per person in 1999 to 120 L in 2020 [1,9]. This rise ranks Saudi Arabia as the eleventh-highest consumer of bottled water in the world. A recent government survey found that 57.24% of households in Saudi Arabia rely on bottled water as their primary source of drinking water [10]. Despite being significantly more expensive than petrol, bottled water consumption in Saudi Arabia continues to rise [11].

The literature on bottled water is extensive, mainly focusing on the determinants of choice between bottled and tap water. However, few studies have examined the factors affecting bottled water price. He et al. [12] studied the impact of bottle size on bottled water prices using a hedonic price model, based on 390 observations from ten supermarkets in Atlanta, Georgia, US. Their regression model accounted for several factors, including water types (artesian, distilled, drinking, mineral, spring, natural, and purified), production sources, store dummies, and brand names. They found that bottle size negatively affected price. Conversely, small and medium sizes, along with convenient packs, had a statistically positive effect on bottled water prices. Capehart [13] focused on the impact of various intrinsic characteristics on premium bottled water prices (i.e., water source, carbonation, orientation, minerality, hardness, and virginality of the water). The authors used data for 296 observations from a guidebook on fine bottled water around the world. They also employed a methodology similar to that of He et al. [12]. They found that water-related characteristics explain only a small part of the price differences among the bottled water brands. Finally, Carlucci et al. [14] investigated the impact of both intrinsic characteristics, related to water chemical composition, and extrinsic characteristics, related to bottled water packaging, on the price of bottled water. The study analyzed 374 observations from eight retail stores in Italy, and employed a methodology similar to that used in previous studies. They concluded that extrinsic characteristics are the main drivers of bottled water prices. Research on Chilean water rights markets analyzed 10,345 transactions, revealing that climatic conditions, economic factors, and industrialization significantly influence pricing, with scarcity decrees paradoxically reducing water rights values [15]. Furthermore, recent studies have investigated the role of trust in advertising, consumer beliefs, product knowledge [16], label elements [17], and environmental values and materialism [18] in shaping purchase intentions, emphasizing the evolving market dynamics.

This paper aims to extend the literature on the determinants of bottled water prices using data from Saudi Arabia. Given the country’s unique market dynamics and environmental context—characterized by high temperatures, limited freshwater resources, and a rapidly growing population—this research provides valuable insights for all stakeholders regarding the factors influencing bottled water prices. Building on this context, the purpose of this study is to investigate the determinants of bottled water prices in Saudi Arabia using a hedonic price model, with a focus on understanding how physical attributes, chemical characteristics, and market dynamics influence pricing in this rapidly growing market. This is crucial in a region where water security is a paramount concern. Thus, understanding pricing mechanisms could influence both consumer behavior and policymaking. This research not only contributes to the literature on hedonic pricing, but also has practical implications for bottled water companies looking to optimize their offerings and pricing strategies, as well as for policymakers aiming to regulate this critical market. The paper is organized as follows: the data and methodology are detailed first, then the results are presented and discussed, and finally, the paper provides conclusions.

2. Materials and Methods

2.1. Study Area

Al-Ahsa Governorate (henceforth Al-Ahsa) is located in the Eastern Province of Saudi Arabia. It is the largest governorate in the country in terms of area (representing about 25% of Saudi Arabia), and the fifth-largest in terms of its population, which is about 1.1 million [19]. According to the latest statistics from the General Authority for Statistics, Al-Ahsa’s demographic indicators closely match national averages. For example, the average age in Al-Ahsa is 27.7, with 26.6% of the population under 15 years old, and 2.6% aged 65 and older. The average household size is 4. Nationally, the average age is 29, with 24.5% of the population under 15 and 2.6% aged 65 or older, and the average household size is 3.7. Therefore, Al-Ahsa can be considered well representative of Saudi Arabia. There are no official statistics on bottled water consumption in Al-Ahsa. However, at the regional level, 62.79% of households in the Eastern Province rely on bottled water as their primary source of drinking water [10].

2.2. Data

Data on bottled water prices and characteristics were collected through direct observation of the shelves in the nine largest retail stores in Al-Ahsa Governorate, Saudi Arabia. We collected the data in October and November 2024 from four hypermarkets (Panda, Al Amer, Nesto, and LuLu), three supermarkets (Farm, Othaim, and Danube), and two markets (Prime and Tamimi). In every retail store, we employed a snapshot method for data collection. That is, we visited each retail store once to directly record the prices and characteristics of all bottled drinking water available in the store. Since the same product was sometimes offered in different packaging or at varying prices, each item was treated as a separate observation. We excluded products sold at discounted prices when normal prices were not indicated, to avoid any possible bias in the results. We also limited our analysis to convenient-sized bottles, excluding any bottles larger than 1.5 L.

By examining the products and their labeling, we obtained various pieces of information for each product. This included the price and physical characteristics, such as the type of packaging, bottle size, material, color, and type of cap. In addition, information on chemical composition or intrinsic characteristics were obtained, such as total dissolved solids (TDS), sodium content, fluoride content, pH, and type of effervescence. Finally, we recorded the water source, the origin of the product (domestic or imported), the brand, and the store brand. Since some imported products lacked some information, such as TDS, we obtained these data from water quality reports available on the brand’s website. Table S1 in the Supplementary Material presents the data used in the analysis.

2.3. Statistical Analysis

We use descriptive and regression analysis to examine the factors that determine the price of bottled water. Our regression model is based on the hedonic price theory, which we discuss below.

Hedonic Price Model

To analyze the relationship between the price of bottled water and its various characteristics, we use the hedonic price model approach. This approach is based on Lancaster’s [20] theory of characteristics demand, where consumers derive utility directly from the quality attributes embedded in a product, rather than from the product itself. In other words, any differentiated product can be considered to be a bundle of quality attributes that are independently valued by consumers at the time of purchase. The basic framework for the hedonic price model is provided by Rosen [21], whereby consumers choose between differentiated products with multiple attributes or characteristics to maximize their utility. This approach has been used to analyze the price of various food products, including eggs [22], beef [23], olive oil [24], yogurt [25], coffee [26], fruit beverages [27], and dairy-alternative beverages [28], among others.

In applying this model to the bottled water market, let $Z=(z_1,z_2, \dots , z_n)$ be a vector of observable attributes, where $z_i$ measures the amount of the $i^{th}$ attribute in bottled water, such as physical attributes (e.g., size or bottle material) or chemical attributes (e.g., TDS or sodium content). Estimating the hedonic price equation will yield the implicit or shadow price of a specific attribute, which can also be used as a measure of the marginal willingness to pay (MWTP) for such an attribute [29].

Therefore, our empirical model is written as the following:

$$\mathrm{l}\mathrm{n}\left(P\right)={\beta }_0+\beta X+\epsilon$$

(1)

where $\mathrm{l}\mathrm{n}\left(P\right)$ is the natural log of price per liter of bottled water, ${\beta }_0$ is the intercept, $\beta X$ represents a vector of bottled water related characteristics of interest, and $\epsilon$ is the error term. We estimate the regression model defined by the above equation using Ordinary Least Squares (OLS) to examine the relationship between the different characteristics and the price of bottled water.

3. Results

3.1. Descriptive Analysis

Table 1. Summary statistics.

Variable	Description	Unit	Mean	Std. Dev.	Min	Max
Price per liter *	The price per liter of bottled water	SAR/Liter	5.08	6.08	0.51	30.15
Size	The bottle size	Liter	0.56	0.43	0.20	1.50
Small	Value = 1 if the size is small (less than 0.5 L), 0 otherwise	0/1	0.55	0.50	0	1
Medium	Value = 1 if the size is medium (0.5–1 L), 0 otherwise	0/1	0.30	0.46	0	1
Large	Value = 1 if the size is large (1.5 L), 0 otherwise	0/1	0.15	0.36	0	1
Single	Value = 1 if the product is a single bottle, 0 = otherwise	0/1	0.41	0.49	0	1
Multipack	Value = 1 if the product is a multipack (4–12 bottles), 0 otherwise	0/1	0.22	0.42	0	1
Box	Value = 1 if the product is in a box (24–48 bottles), 0 otherwise	0/1	0.37	0.48	0	1
Bottles	The number of bottles in a pack/box	Number	14.75	15.65	1	48
Plastic	Value = 1 if the bottle is made from plastic, 0 otherwise	0/1	0.82	0.38	0	1
Glass	Value = 1 if the bottle is made from glass, 0 otherwise	0/1	0.16	0.37	0	1
Aluminum	Value = 1 if the bottle is made from aluminum, 0 otherwise	0/1	0.01	0.09	0	1
Cap	Value = 1 if the bottle has a non-standard cap, 0 otherwise	0/1	0.03	0.17	0	1
Color	Value = 1 if the bottle is colored, 0 otherwise	0/1	0.05	0.22	0	1
GW	Value = 1 if the source is groundwater, 0 otherwise	0/1	0.81	0.39	0	1
Desalinated	Value = 1 if the source is desalinated water, 0 otherwise	0/1	0.09	0.29	0	1
Spring	Value = 1 if the source is a spring, 0 otherwise	0/1	0.17	0.38	0	1
Carbonated	Value = 1 if the water is carbonated, 0 otherwise	0/1	0.11	0.31	0	1
TDS	Total dissolved solids	ppm	170.19	156.81	10	1040
Sodium	Sodium content	ppm	12.43	18.11	0	110
Fluorides	Fluoride content	ppm	0.75	0.35	0	1
pH	Measures how acidic/basic the water is	Log. Units	7.20	0.72	5	9
Imported	Value = 1 if the bottled water is imported, 0 otherwise	0/1	0.21	0.41	0	1
Hypermarket	Value = 1 if the product is sold at a hypermarket, 0 otherwise	0/1	0.46	0.50	0	1
Supermarket	Value = 1 if the product is sold at a supermarket, 0 otherwise	0/1	0.39	0.49	0	1
Market	Value = 1 if the product is sold at a market, 0 otherwise	0/1	0.16	0.36	0	1

* Price per liter = Price/(Size × Bottles); observations = 499.

provides summary statistics for our data, which contain 499 observations from nine retail stores in Al-Ahsa, Saudi Arabia. The mean price per liter of bottled water was SAR 5.08 (USD 1 = SAR 3.75), with a standard deviation (SD) of SAR 6.08, indicating considerable variability in pricing. The prices ranged from SAR 0.51 to SAR 30.15.

For physical characteristics, the average bottle size was 0.56 L, with an SD of 0.43, suggesting a prevalence of smaller bottle sizes on the market. Indeed, 55% of the observations can be placed into the small category, 30% in the medium category, and 15% in the large category. In terms of packaging, 41% of the products were single bottles, while 22% were sold in multipacks (4–12 bottles), and 37% were packaged in boxes (24–48 bottles). This distribution indicates a notable preference for single and box packaging formats among bottled water consumers in Saudi Arabia. For bottle material, we found that 82% of the bottled water products were packaged in plastic, followed by 16% in glass, and only 1% in aluminum cans. Also, only about 3% of the products used non-standard caps, such as push–pull caps, and 5% of the products had colored bottles.

Regarding the source of water, about 81% of bottled water products sourced their water from groundwater, while 9% used desalinated water, and 17% sourced their water from natural springs. For chemical characteristics, the average total dissolved solids (TDS) was 170.19 ppm, with a minimum of 10 ppm and a maximum of 1040 ppm. The average sodium content was 12.43 ppm, with an SD of 18.11, indicating high variability between bottled water products. The average fluoride content was 0.75 ppm, and the mean pH level of water was 7.20. In addition, about 11% of the bottled water products were carbonated.

In terms of market distribution, 21% of the bottled water products available in the retail stores were imported. Moreover, hypermarkets were found to be the primary sales channels for bottled water, where 46% of the observations were made, followed by supermarkets (39%) and markets (16%).

3.1.1. Bottled Water Prices by Retail Store, Size, and Type of Packaging

Table 2. Summary of bottled water prices by store and bottle size (price per liter).

Store ID		Summary of Prices
	Store Name	Small	Medium	Large	All Sizes
1	Panda Hypermarket	7.78 [54]	8.23 [26]	3.01 [13]	7.24 [93]
		(8.68)	(5.50)	(4.85)	(7.60)
2	Farm Supermarket	3.91 [29]	4.08 [17]	1.07 [11]	3.41 [57]
		(3.49)	(4.90)	(0.20)	(3.78)
3	Prime Markets	1.84 [6]	1.20 [1]	1.03 [2]	1.59 [9]
		(0.64)	(0.00)	(0.05)	(0.63)
4	Tamimi Markets	6.41 [31]	8.57 [29]	3.31 [9]	6.91 [69]
		(7.75)	(4.90)	(3.40)	(6.38)
5	Al Amer Hypermarket	3.71 [22]	6.47 [14]	0.88 [5]	4.31 [41]
		(4.90)	(5.02)	(0.19)	(4.91)
6	Nesto Hypermarket	1.84 [11]	1.62 [5]	1.18 [6]	1.61 [22]
		(0.34)	(0.32)	(0.13)	(0.40)
7	Othaim Supermarket	2.74 [31]	4.67 [12]	1.28 [9]	2.93 [52]
		(2.74)	(6.34)	(0.20)	(3.79)
8	LuLu Hypermarket	4.08 [43]	4.24 [18]	1.75 [11]	3.77 [72]
		(5.50)	(5.67)	(1.36)	(5.16)
9	Danube Supermarket	6.77 [49]	6.88 [26]	3.16 [9]	6.42 [84]
		(8.01)	(5.97)	(4.09)	(7.12)
Total		5.21 [276]	6.37 [148]	2.05 [75]	5.08 [499]
		(6.68)	(5.60)	(2.84)	(6.08)

Notes: Number of observations in [brackets] and standard deviation in (parentheses). Small bottles are less than 0.5 L, medium bottles are between 0.5 and 1 L, and large bottles are 1.5 L.

and

Table 3. Summary of bottled water prices by store and type (price per liter).

Store		Summary of Prices
ID	Store Name	Single	Multipack	Box	All Types
1	Panda Hypermarket	7.54 [43]	8.11 [30]	5.28 [20]	7.24 [93]
		(7.91)	(8.25)	(5.63)	(7.60)
2	Farm Supermarket	5.73 [22]	1.21 [16]	2.52 [20]	3.41 [57]
		(4.94)	(0.31)	(2.06)	(3.78)
3	Prime Markets	2.55 [1]	1.03 [2]	1.62 [6]	1.59 [9]
		(0.00)	(0.05)	(0.57)	(0.63)
4	Tamimi Markets	12.16 [20]	5.15 [15]	4.61 [34]	6.91 [69]
		(5.74)	(5.78)	(5.21)	(6.38)
5	Al Amer Hypermarket	5.87 [22]	2.67 [6]	2.42 [13]	4.31 [41]
		(5.63)	(3.03)	(3.38)	(4.91)
6	Nesto Hypermarket	1.52 [13]	1.11 [1]	1.81 [8]	1.61 [22]
		(0.35)	(0.00)	(0.41)	(0.40)
7	Othaim Supermarket	4.27 [25]	1.54 [8]	1.76 [19]	2.93 [52]
		(5.15)	(0.59)	(0.52)	(3.79)
8	LuLu Hypermarket	4.70 [20]	4.15 [19]	2.98 [33]	3.77 [72]
		(5.51)	(6.14)	(4.30)	(5.16)
9	Danube Supermarket	9.16 [37]	4.02 [15]	4.15 [32]	6.42 [84]
		(8.48)	(4.32)	(5.24)	(7.12)
Total		6.82 [203]	4.56 [112]	3.42 [185]	5.08 [499]
		(6.93)	(6.10)	(4.32)	(6.08)

Notes: Number of observations in [brackets] and standard deviation in (parentheses). Multipacks have 4–12 water bottles and boxes have 24–48 water bottles.

provide a summary of bottled water prices by store, bottle size, and type of packaging. For bottle size, we saw considerable variability in bottled water prices across the nine retail stores, especially for small- and medium-sized bottles. The results show that Panda Hypermarket (SAR 7.24) and Tamimi Markets (SAR 6.91) had the highest average prices, while Prime Markets (SAR 1.59) consistently offered the lowest prices across all bottle sizes. Among all sizes, large bottles generally had the lowest average price (SAR 2.05), highlighting potential cost advantages for consumers purchasing larger quantities.

For the type of packaging, we found that there were distinct pricing patterns across the three types. Tamimi Markets exhibited the highest average price for single bottles (SAR 12.16), while Panda Hypermarket had the highest average price for multipacks (SAR 8.11) and boxes (SAR 5.28). On the other hand, Nesto Hypermarket had the lowest average price for single bottles (SAR 1.52), and Prime Markets for multipacks (SAR 1.03) and boxes (SAR 1.59). Overall, the average price per liter for single bottles (SAR 6.82) was significantly higher than that of both multipacks (SAR 4.56) and boxes (SAR 3.42), indicating that consumers may benefit from buying larger quantities.

3.1.2. Bottled Water Prices by Retail Store and Place of Origin

Table 4. Summary of bottled water prices by store and product place of origin (price per liter).

Store		Summary of Prices
ID	Store Name	Domestic	Imported	All
1	Panda Hypermarket	3.18 [66]	17.15 [27]	7.24 [93]
		(3.04)	(6.10)	(7.60)
2	Farm Supermarket	2.71 [52]	10.76 [5]	3.41 [57]
		(2.86)	(4.66)	(3.78)
3	Prime Markets	1.59 [9]	.	1.59 [9]
		(0.63)	.	(0.63)
4	Tamimi Markets	2.94 [42]	13.09 [27]	6.91 [69]
		(2.89)	(5.31)	(6.38)
5	Al Amer Hypermarket	2.03 [32]	12.39 [9]	4.31 [41]
		(1.97)	(3.35)	(4.91)
6	Nesto Hypermarket	1.61 [22]	.	1.61 [22]
		(0.40)	.	(0.40)
7	Othaim Supermarket	2.35 [50]	17.58 [2]	2.93 [52]
		(2.33)	(4.36)	(3.79)
8	LuLu Hypermarket	1.84 [61]	14.48 [11]	3.77 [72]
		(0.66)	(6.11)	(5.16)
9	Danube Supermarket	2.51 [60]	16.18 [24]	6.42 [84]
		(2.03)	(5.77)	(7.12)
Total		2.46 [394]	14.90 [105]	5.08 [499]
		(2.32)	(5.77)	(6.08)

Notes: Number of observations in [brackets] and standard deviation in (parentheses).

shows the differences in the average price of bottled water between domestic and imported products. Imported bottled water was consistently priced higher across all stores, with Othaim Supermarket showing the highest average price (SAR 17.58), while Farm Markets offered the lowest average price (SAR 10.76). Overall, the average price for domestically produced bottled water was SAR 2.46, compared to SAR 14.90 for imported bottled water, suggesting cost advantages for consumers purchasing domestically sourced products.

3.1.3. Bottled Water Prices by Brand Name

Table 5. Summary of bottled water prices by brand name (price per liter).

Brand	Mean	Std. Dev.	Freq.	Brand	Mean	Std. Dev.	Freq.
evian	18.39	4.88	25	OSKA	1.96	1.40	19
Perrier	17.37	5.29	10	Safa Makkah	1.94	0.56	13
VOSS	16.36	5.17	10	Nestle Pure Life	1.83	0.77	32
souroti	16.28	6.97	8	arwa—zero sodium	1.80	0.43	8
Rare	15.87	5.16	3	Tania	1.79	0.65	20
San Pellegrino	15.09	4.18	7	arwa	1.76	0.51	24
Modariz	15.07	12.97	2	arwa—low sodium	1.72	0.53	8
Volvic	14.90	2.91	8	Rode	1.60	1.27	2
ACQUA PANNA	14.48	6.46	8	haley	1.58	0.20	3
Fiji	12.40	1.76	4	Pure aqua	1.58	0.52	7
solan	12.32	1.86	2	Abar	1.53	0.57	3
URSU	9.43	1.87	5	LuLu	1.52	0.47	7
WILDALP	9.25	1.85	4	Al Qassim	1.44	0.59	5
RASUWA	8.92	1.38	2	Tamimi Markets	1.41	0.31	3
Highland	5.58	2.09	3	Valiana	1.41	0.00	1
Nova	4.23	3.62	64	LUZAN	1.25	0.00	1
Berain	3.45	3.34	69	Tasneem	1.25	0.00	1
Mana	2.55	0.00	1	Panda	1.24	0.25	3
RAFA	2.39	0.00	1	Qitaf	1.23	1.10	3
Ava	2.20	0.47	9	Al-Dhabi	0.96	0.61	3
AQUAFINA	2.07	1.44	59	Besan	0.93	0.00	1
IVAL	2.02	0.55	24	Albarah	0.81	0.23	4
				Total	5.08	6.08	499

shows the average prices of the 44 bottled water brands collected in this study. We see a disparity in prices among different bottled water brands. Imported brands are generally more expensive than domestic brands. For imported bottled water, evian was the most expensive brand, with an average price of SAR 18.39, while Highland had the lowest average price, at SAR 5.58. For domestic bottled water, Nova had the highest average price, at SAR 4.23, while Albarah had the lowest average price, at SAR 0.81.

3.2. Regression Results

The regression results in

Table 6. Regression results.

Dependent Variable: ln (Price Per Liter)	(1)	(2)	(3)	(4)
Medium	0.05		−0.16 ***	−0.29 ***
	(0.08)		(0.05)	(0.04)
Large	−0.68 ***		−0.70 ***	−0.70 ***
	(0.11)		(0.07)	(0.05)
Glass	1.39 ***		1.03 ***	0.88 ***
	(0.08)		(0.10)	(0.11)
Aluminum	1.40 ***		0.85 ***	1.16 ***
	(0.34)		(0.25)	(0.17)
Cap	0.35 **		0.53 ***	0.48 ***
	(0.14)		(0.10)	(0.11)
Color	0.36 ***		−0.22	−0.57 ***
	(0.12)		(0.15)	(0.14)
Multipack	−0.16 *		−0.19 ***	−0.11 **
	(0.09)		(0.06)	(0.05)
Box	−0.35 ***		−0.26 ***	−0.22 ***
	(0.08)		(0.05)	(0.04)
Desalinated		−0.22 ***	−0.11 **	−0.00
		(0.07)	(0.05)	(0.04)
Spring		0.45 **	0.27	−0.24 ***
		(0.18)	(0.17)	(0.08)
Carbonated		0.94 ***	0.10	0.19
		(0.19)	(0.20)	(0.24)
TDS		−0.00	−0.00	−0.00
		(0.00)	(0.00)	(0.00)
Sodium		0.01 ***	0.00	−0.00
		(0.00)	(0.00)	(0.00)
Fluorides		−1.30 ***	−1.38 ***	−0.07
		(0.16)	(0.15)	(0.11)
pH		0.02	0.04	−0.01
		(0.08)	(0.06)	(0.06)
Imported				1.81 ***
				(0.12)
Hypermarket				−0.09
				(0.05)
Supermarket				−0.06
				(0.05)
Constant	1.07 ***	1.76 ***	1.85 ***	1.13 ***
	(0.06)	(0.61)	(0.50)	(0.41)
Observations	499	499	499	499
Adjusted R-squared	0.50	0.60	0.77	0.85

Robust standard errors in parentheses; *** p < 0.01, ** p < 0.05, * p < 0.1.

illustrate the factors influencing the price per liter of bottled water. Four models are estimated, with varying specifications. The first includes physical characteristics, the second includes chemical characteristics, the third combines both, and the final model adds market distribution variables.

The results show that across all models, physical characteristics have statistically significant impacts on the price of bottled water. Bottled water size has a negative impact on price, indicating that compared to small bottles, medium and large bottles are associated with lower prices per liter. Using model (4) as our preferred specification, we find that medium and large bottles have a lower price per liter by 29% and 70% compared to small-sized bottles. Packaging material also has a positive impact on bottled water price. Compared to plastic, if a bottle is made from glass or aluminum, the price per liter of bottled water increases by 88% and 116%. Non-standard caps also increase the price per liter of bottled water by 48% compared to standard caps. Multipacks and boxes have negative impacts on bottled water price, indicating that purchasing bottled water in bulk is cheaper than purchasing single bottles by 11% and 22%, respectively.

For chemical characteristics, we see that they influence bottled water price in model (2); however, most of their impacts became statistically insignificant when we control for physical characteristics in model (3), except for two variables: source of water and fluorides content. For the former, we find that using desalinated water results in an 11% decrease in the price of bottled water. Adding fluorides is also associated with a lower price per liter of bottled water. Our results indicate that adding fluorides to bottled water results in a 138% decrease in the price of the bottled water.

Among the market distribution variables in model (4), we find that being an imported brand has a positive and significant effect on the price per liter of bottled water. Specifically, we find that if bottled water is imported, it will result in an increase in the price of bottled water by 181%.

Controlling for market distribution variables in the model makes all the chemical characteristics variables statistically insignificant or produces unexpected significance (e.g., spring). Therefore, we examine this issue further by estimating two more models in

Table 7. Regression results (domestic vs. imported bottled water).

Dependent Variable: ln (Price Per Liter)	(1)	(2)
Medium	−0.26 ***	−0.47 ***
	(0.03)	(0.07)
Large	−0.68 ***	−0.84 ***
	(0.04)	(0.15)
Glass	1.40 ***	−0.09
	(0.08)	(0.09)
Aluminum	0.91 ***	−0.10
	(0.22)	(0.18)
Cap	0.50 ***	0.36 ***
	(0.11)	(0.08)
Color		0.03
		(0.08)
Multipack	−0.13 ***	0.01
	(0.04)	(0.07)
Box	−0.25 ***	−0.08
	(0.04)	(0.06)
Desalinated	0.05
	(0.04)
Spring	−0.13 *	−0.08
	(0.07)	(0.07)
Carbonated	0.15	−0.19
	(0.21)	(0.15)
TDS	0.00	0.00
	(0.00)	(0.00)
Sodium	0.00	−0.00 **
	(0.00)	(0.00)
Fluorides	−0.05	−0.66 ***
	(0.08)	(0.20)
pH	−0.02	−0.19 ***
	(0.07)	(0.05)
Hypermarket	−0.09 *	−0.09
	(0.05)	(0.07)
Supermarket	−0.04	0.03
	(0.05)	(0.07)
Constant	0.88 **	4.49 ***
	(0.40)	(0.36)
Observations	394	105
Adjusted R-squared	0.79	0.58

Robust standard errors in parentheses; *** p < 0.01, ** p < 0.05, * p < 0.1.

: (1) is for domestically produced bottled water, and (2) is for imported bottled water. We find that most of the physical characteristics (bottle material, color, and type of packaging) lose their statistically significant impact on the price of bottled water in model (2), indicating that such features do not affect the price of imported bottled water. In addition, chemical characteristics do not affect the price of domestically produced bottled water. This is expected, since most domestic products follow the guidelines of the Saudi Food and Drug Authority for these characteristics, which results in little variation in terms of these characteristics. For imported bottled water, we see that sodium content has a negative and small statistically significant impact on the price of imported bottled water. Specifically, a 10 ppm increase in sodium content results in a 3% decrease in the price of imported bottled water. Fluoride and pH also have negative and statistically significant impacts on the price of imported bottled water. Finally, the results for market distribution characteristics indicate that buying domestically produced bottled water from hypermarkets lowers prices by 9%.

4. Discussion

This study has explored the factors that influence the price of bottled water in Saudi Arabia using a hedonic price model. Our findings highlight the importance of both physical characteristics and market dynamics in shaping prices in this growing and competitive industry.

4.1. Physical Characteristics

Our results demonstrate that bottle size is a major driver of price. Specifically, larger bottles consistently result in a lower per-liter price, suggesting that consumers who purchase larger quantities benefit from a cost advantage. This may reflect economies of scale in production and distribution. Conversely, the fact that smaller bottles are the most prevalent in the market suggests a consumer preference for convenience and portability, even at a premium. This finding is consistent with the literature, and aligns with the consumer behavior patterns reported by Doria [2], showing that smaller packages are usually more expensive due to the convenience they provide, while larger ones provide economies of scale. He et al. [12] also find that small sizes and convenient packs increase prices. Packaging material also significantly determines the price, as glass and aluminum packaging commands higher prices per liter compared to plastic, with important sustainability implications. This echoes findings in the food product literature, where higher-quality packaging materials often command premium prices [24,25]. In addition, the impact of the bottle cap on the price is important, as non-standard caps like push–pull caps increase prices significantly.

4.2. Chemical Characteristics

The influence of chemical characteristics, such as TDS, sodium, fluoride, and pH, was less clear. While some of these factors appeared to be statistically significant in models (2) and (3), they lost some of their power when market distribution variables were included in the full model (model (4)). This aligns with studies like that by Capehart [13], which have found that while intrinsic water characteristics impact price, they explain only a small portion of the overall price variability in the bottled water market. This might be because bottled water brands in Saudi Arabia might not explicitly market these chemical attributes, or because consumers do not value such attributes when purchasing. Consumers tend to focus more on tangible physical features, such as bottle size and packaging, as well as market cues like brand origin, rather than on intrinsic water quality. This highlights the importance of understanding local perceptions of water attributes, as demonstrated by Alnasser et al. [11], who found differences in preferences among Saudi consumers. Many domestic bottled water products adhere to strict regulatory guidelines, which reduces variation in chemical attributes and diminishes their role in consumer decision-making. Moreover, when chemical parameters meet baseline safety and quality standards, they become less influential in the purchasing decision.

4.3. Market Dynamics

Market distribution variables show that the price of bottled water is highly affected by whether it is domestically produced or imported, with imported brands consistently sold at higher prices, suggesting a premium associated with brands perceived as higher-quality, or due to increased transportation costs. This reinforces observations by Almeshal and Alhidari [8] on the highly competitive and differentiated nature of the bottled water market in Saudi Arabia. This price premium for imported water is significant, and may reflect a preference for specific brands among some consumer segments. This may indicate that some Saudi consumers associate higher price points with higher quality. Furthermore, the finding that purchasing water from hypermarkets results in a lower price is also relevant, implying that these retailers may benefit from economies of scale or provide a more cost-effective distribution channel. Heterogeneity across retailers was noticeable in all our results, indicating the strong role that retailers play in the final price of bottled water. As demonstrated in our findings, there are significant price differences among the bottled water brands on the Saudi market, which aligns with findings in other countries, such as those by Carlucci et al. [14]. This confirms the highly competitive and differentiated nature of the Saudi bottled water market.

Our study confirms the findings of other studies, that extrinsic and packaging characteristics are the most important in influencing the price of bottled water, while the impact of water attributes is less significant [14]. While our approach to studying this issue is in line with that of previous studies in other countries, our results may have a distinct pattern for this particular market. This study has a few limitations. As it was only conducted in Al-Ahsa, there is a need for further investigation across diverse regions in Saudi Arabia, including urban centers like Riyadh and Jeddah, and also rural areas across the northern parts of the country, to explore potential regional variations and capture a more comprehensive picture of the bottled water market. Also, the study was conducted at a snapshot in time, and may not be reflective of price changes during different times of the year. Furthermore, some water attributes, such as sensory ones, are not analyzed here. Future research may consider these limitations. Overall, this research provides a detailed picture of the determinants of bottled water prices in Saudi Arabia. The findings have implications for businesses in the bottled water industry, as well as for policymakers. By understanding the factors driving price, companies can adjust their product offerings and pricing strategies to remain competitive in this dynamic market.

5. Conclusions

This study provides a comprehensive analysis of the determinants of bottled water prices in Saudi Arabia, revealing the relative impact of various characteristics on the market. Our research demonstrates that physical attributes, such as bottle size, packaging material, and cap type, are the primary drivers of bottled water prices, indicating the significant influence these factors have on consumer choices. The study also highlights the significant price differences between domestic and imported bottled water, reflecting varying consumer preferences and market dynamics. By carefully exploring the complexities of the bottled water market, this research offers valuable insights for all stakeholders, including businesses and policymakers, helping them to understand why this market in Saudi Arabia is so large and continues to expand. The findings underscore the importance of product offerings and pricing strategies for companies in this industry, and provide a basis for policymakers to better regulate and guide the market. Policymakers could implement enhanced labeling requirements to improve transparency regarding product attributes and environmental impacts, encourage the adoption of sustainable packaging practices and recycling programs, and launch targeted consumer awareness campaigns that emphasize both the health and environmental benefits of sustainable bottled water options. Ultimately, this detailed understanding of the factors that drive bottled water prices will aid both the industry and regulatory bodies in making well-informed decisions about this increasingly crucial product.