The Bottled Water Industry Essay

2288 words - 9 pages

Markets

Water is something that anyone around the world could get from the tap for free, but now it is all the rage for the beverage industry. Bottled water has become the industry's fastest growing segment, both in volume and profits. Due to the consumer's needs and wants for a healthier lifestyle, the beverage industry provides a necessary product to the consumers, which is bottled water. Water is essential and with the demand to participate in a healthy lifestyle, the water industry will be successfully profitable. The market size for this industry has been growing and will continue to grow in a rapid pace. Over the past ten years, bottled water has moved from being the preserve of a relatively small market into the U.S. mainstream, with sales of about $7.5 billion, and that's only for water in bottles of 1.5 liters or less (Durr). According to the International Bottle Water Association, Americans spend $5.6 billion in 2000 on bottled water. By 2005, Americans will consume 7.2 billion gallons of bottled water, up from about 5 billion gallons in 2000, the association reported.

A factor that will continue to drive the bottled water market is foremost the desire to live a healthy lifestyle. Which leads to the concerns of contaminants found in the tap water. People will pay high prices for water, just to be ensured that it is safe to drink the water that they purchased. Drinking lots of water also prevents dehydration. According to the Bottled Water Web (www.bottledwaterweb.com), 75% of Americans are chronically dehydrated. Most people know the health benefits of drinking water, which will drive the consumer to hit the water bottles more. At the same time, packaging in a portable plastic bottles and greater availability from the supermarket to the vending machines, have made the consumer's choice of bottled water easier. With the demand of water increasing in the markets, industries have diversified by introducing new types of water products that contain flavors or vitamin supplements.

Volume growth has spurted over the past three years, climbing to about 1 billion cases last year. According to John Sicher, publisher of Beverage Digest: "It is a huge category and it's growing dramatically. Water will be a very, very important part of big beverage companies for years to come." Bottled water is outpacing the growth of every other beverage product, and water is about 20 percent more profitable than carbonated soft drinks (Durr). This kind of margin has prompted companies such as PepsiCo and Coca-Cola; the two top leading carbonated soft drinks in the world, to move fast to capture the market share. PepsiCo and Coca-Cola made their branded versions of bottled water, Dasani and Aquafina, respectively, the top two products in the US market in the past three years (Durr). European companies such as Groupe Danone, which produces Evian and Nestle which produces Arrowhead, Calistoga, Vitttel, and Perrier have got...

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