The closure will cause the loss of 17 jobs. The company has said it is committed to offering these employees alternative roles at other manufacturing sites.
The soft-drinks giant said Malvern accounted for only 1% of total bottled water sales in the UK in the past 10 years.
A spokesperson for Coca-Cola said: "We cannot produce enough Malvern Water on the scale it needs to compete in today's bottled water sector.
"Modern bottled water plants are around 10 times the size of Colwall and can often produce more water in a day than we do in a month. That's why Malvern Water costs more to produce and why a big two litre bottle of mineral water in the supermarket sells for as little as 68p.
"The size of our site – plus the amount of water we can actually extract – means Malvern is expensive to produce and cannot compete on price."
The plant at Colwall has been owned by Coca-Cola for 23 years. The company has said the site will now be used for residential, not commercial use.
Coca-Cola has over 4,500 employees in the UK and has seven manufacturing facilities.
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