This is marketing research on the Bottled Water industry and can include information on the background, market structure, definitions, competitors, trends and developments of bottled water and is related to other topics such as beverages, drinks and health.

Table of Contents

[edit] Background

Bottled water is drinking water packed in bottles for individual consumption and retail sale. The water that is used can be obtained from a variety of sources including glacial water, spring water, well water, purified water as well as public water sources (i.e., tap water). Most countries regulate the water used in the bottled water industry. The marketing of bottled water is a challenge for the companies that produce it. In most cases, labels do not describe the source in any way and the consumer often believes the water may be from a spring when in fact the water is simply filtered tap water from public sources. Several large players are addressing this issue in 2007 as a result of public criticism.

[edit] Market Structure

Bottled water is a large global business. Most countries have significant sales of bottled water and production in emerging or developing markets is often fragmented. That is not the case in developed markets. There are many smaller niche players such as Fiji Waters which often market brands from a particular source. Large players, however, dominate the business in developed countries. Many major beverage companies found this a natural brand extension of already successful beverage lines. It was very simple to roll out bottled water products to complement soft drinks or other beverages which these companies sell. Pepsi, Coca-Cola and Nestle have all been highly successful in these efforts and their products have dominant positions in Western markets.

The challenge has primarily been one of marketing. Brands need to be amplified and public perceptions positively affected. This product essentially represents an extremely low cost of raw materials (especially if it is tap water based). Most of the costs are therefore associated with packaging, branding and other marketing expenses such as advertising. Many of these producers have already optimized the manufacturing and distribution processes. The challenge is staying ahead on marketing needs and being perceptive of trends in the market.

[edit] Industry Definitions

Several terms are commonly used to describe the products of the bottled water industry, including some of the following:

• Artesian water - this type originates from a confined aquifer that has been tapped. The purification is based on gravity.

• Fluoridated Water - often used as a health focused drink for growing children, it contains fluorine within permissible limits.

• Ground water - obtained from underground sources, pumped out using pressure that is equal to or more then atmospheric pressure.

• Mineral water - defined as water with at least 250 parts per million total dissolved solids. The source of water is either ground water or a spring.

• Purified water - produced by distillation, deionization, and reverse osmosis. It is basically de-mineralized water from public sources.

• Sparkling water - water injected with carbon dioxide

• Spring water - water obtained from an underground formation from which water flows naturally to the earth’s surface.

• Sterile water - water that meets the requirements specified under government or other "sterility tests".

• Well water - water used is sourced from wells dug in ground.

[edit] Market Metrics

U.S. Market

The U.S. is the world’s largest market for bottled water with annual consumption of more then 26 billion liters. In the U.S., average per person consumption stands at about 190 liters annually. The United States is the largest market for bottled water - the rest of the world averages approximately 24 liters per person.

The growth rate in bottled water sales in the U.S. has slowed somewhat from a rate of over 12% annually earlier in the decade, but estimates are that it is still growing about 10% annually. It is a significant business in the United States, generating about US $10 billion in sales annually. It is also estimated that for the first time, sales of bottled water exceeded sales of either beer or coffee in the U.S. during the decade.

A significant driver of bottles water sales is the perceived health benefit. The older generation as well as younger generation is favoring bottled water as it has fewer calories and is seen as healthier. Trends toward organic and green products have further boosted sales of bottled water. Artificially carbonated bottled water has also become trendy and popular in the U.S.

World market

Total bottled water sales may be as high as 160 billion liters annually. In many cases, bottled water is viewed as a necessity due to unsafe locally produced water alternatives. This is been a consistent driver of high sales of bottled water in emerging markets and developing economies. The global market for bottled water is estimated as between US $50 billion to $100 billion. This level of consumption is increasing at a rate of 7 to 10 percent annually. Western Europe is the largest consumer of bottled water. In some emerging markets such as India, consumption of bottled water is growing at the rate of more then 50%.

The global bottled water market grew by 6.3% in 2005 to reach a value of $58 billion.

In 2010, the market is forecast to have a value of $75.3 billion, an increase of 30% since 2005.

The global bottled water market grew by 7.4% in 2005 to reach a volume of 120.2 billion liters.

In 2010, the market is forecast to have a volume of 159.2 billion liters, an increase of 32.4% since 2005.

Still unflavored water forms the most lucrative sector of the market, with a 66.5% share of the market's value.

Europe is the leading region in the global market, with a 51.8% share of the market's value.

Nestle S.A. is the leading company in the global market, with a 17% share of the market's volume.

Supermarkets and hypermarkets form the most significant distribution channel in the global market, with a 41.2% share of the market's volume.

Source: Bottled Water Industry Guide

The largest consumers of bottled water in 2004

Country 			     Consumption
				(In billions of liters)

United States			        25.8
China					11.9
Brazil					11.6
Italy					10.7
Germany				        10.3
France				         8.5
Mexico				         7.7
India					 7.4
Spain					 5.5
India					 5.1

Rest of the World		        39.9

[edit] Industry Players

As Europeans are heavy consumers of bottled water, two of the largest producers are headquartered there including Nestle and Danone. Evian has also long been a key player and well recognized brand in the bottled water industry.

Some representative global bottled water players include the following:

• Nestle Waters of America

The largest food company in world, Nestle, is the largest bottled water seller in the U.S. Annual sales in the United States alone exceeds US $2.7 billion. Popular brands include Poland Spring, Perrier, and Arrowhead.

• Pepsi

Pepsi Co. sells Aquafina, one the leading brand of bottled water in the U.S. Total bottled water sales for the company are estimated at US $1.1 billion.

• Coca Cola

Coca Cola offers bottled water under the brand name Dasani, and markets enhanced water offerings under the labels Dasani Plus and Water Plus. Annual water bottle sales (2006) are estimated at US $1 billion for Coca Cola.

• Danone

Group Danone offers brands such as Evian, Danone, and Sparkletts. Sales are estimated at US $800 million per year in the United States market alone.

• Fiji

Fiji bottled water is imported from the island nation of Fiji, and has seen very high growth in the US market. Sales were estimated at US $48 million for 2006.

[edit] Trends and Recent Developments

More and more health alternatives of bottled water are expected to come into the market which may be a threat to its continued growth. The biggest threat to bottled water sales is likely the increased focus on environmental issues. This has become a major news item in 2007 with criticism directed at the environmental impact of landfill problems created by the bottles themselves. It is argued that the positive benefits of better quality water are mitigated by the need to either recycle of dispose of all the plastic or glass used in the bottles. The manufacture, storage and transport of the bottles is estimated to consume 17 million barrels of oil per year. The argument is that tap water is essentially acceptable and that the costs related to energy could have been diverted to better use elsewhere. The costs of pollution and landfill costs from all the bottles may be even higher than the energy consumed.

This issue has not abated much as of mid 2007 and the impact on bottled water sales has yet to be researched in detail.

[edit] Sources

Academic Evergreen

Datamonitor

Organic Consumers

Wikipedia