The bottled water markets of Asia and the Middle East are rapidly gaining share in the world's fastest growing beverage category, according to the latest report commissioned by the Asia Bottled Water Association (ABWA) from food and drink consultancy Zenith International.
Bottled water sales in the 50 countries covered by the Zenith Report have more than doubled in the past four years to 43 billion litres in 2002. This represents 30 per cent of the global total, a substantial leap from 21 per cent in 1997.
"Tough economic conditions, the struggle for stability in the Middle East and most recently the SARS outbreak in Asia have tested all fast moving consumer goods markets," commented Zenith research director Gary Roethenbaugh.
"What is notable about bottled water is its ability to weather the storm. It is a very robust beverage sector that has capitalised on the overriding need for pure water from a trusted source."
Ita Thaher, ABWA Secretary General, agreed: "Bottled water companies are now creating tremendous opportunities, yet challenges remain. Regulating bottled water quality is vital to control the practices of unauthorised, often unscrupulous, operators. Only through the finest quality bottled water will consumers benefit fully from the virtues of its health giving hydration."
Zenith's report surveys 50 countries in four regions - Asia, Middle East, North Africa and Transcaucasus. Asia and the Middle East have achieved the strongest volume increases, but their profiles are quite different in nature. Asian markets are often young and emerging, with evolving distribution structures and a rapid influx of new players. The Middle East also has some new emerging markets, but is generally characterised by a mature and well established bottled water industry.
The report showed that despite price pressures, the total bottled water market grew to $8.6 billion (€7.3bn) on the back of a 16 per cent increase in volumes during 2002, driven by the steady increase in per capita consumption. This has more than doubled in five years from 5.2 litres in 1997 to 11.1 litres in 2002, even after allowing for a 7 per cent population increase. Everyday usage has contributed to particularly high levels in many Middle East countries, Zenith said.
Asia is by far the most important region, with 24 countries accounting for 75 per cent of volume sales in 2002. The 15 countries of the Middle East claimed a further 23 per cent.
Out of the 50 markets tracked for ABWA, there are now nine countries where bottled water consumption exceeds 1 billion litres. Seven of these are in Asia - China, Indonesia, Thailand, South Korea, India, the Philippines and Japan. The two remaining countries are Turkey and Saudi Arabia in the Middle East.
In Turkey, the closure of unlicensed water stations spurred the rapid advance of pack sizes above 10 litres, Zenith said, and this segment has in fact made the greatest gains across the whole region. But there were also advances for home and office delivery (HOD) and small pack sizes for on-the-go hydration, Zenith said.
"Asia and the Middle East have pushed out the boundaries of opportunity for bottled water," said Roethenbaugh. "Many more consumers now rely on bottled water for daily use, turning to it in preference to poor quality mains water."
The principal issues identified by Zenith as key to the future are developments in the ongoing acquisition trails and route to market strategies of the major international bottled water players - Nestlé, Danone, Coca-Cola and PepsiCo. Zenith also highlights the threat of price erosion, the need to uphold quality standards, the relentless pace of structural change in retailing and the entrenchment of bottled water consumption habits.
Bottled water has already proven its resilience. Despite economic and political hurdles to overcome, a flood of new products and sustained investment from existing players should set the stage for continued growth. Zenith expects a buoyant market to brave testing conditions and pass 70 billion litres by 2007.
For further details the Zenith International report, click here.