As consumers become increasingly health conscious, they are switching from higher calorie carbonated soft drinks to bottled water. In addition, the European bottled water market benefits from the general reluctance in the population to drink tap water.
New analysis from Frost & Sullivan (financialservices.frost.com), European Bottled Water Industry: Investment Analysis, finds that the market earned €24.52 billion in 2006 and is expected to grow at a compound annual growth rate of 2.5 percent in Western Europe and 17.7 percent in Eastern Europe during 2007-2010.
An increasing awareness of obesity-related health risks is causing a shift away from carbonated soft drinks toward healthier alternatives such as bottled or flavored water, driving the European bottled water market. Being a life product, the bottled water market is controlled by stringent laws and regulations and is considered very safe for consumption.
"Moreover, water is perceived to be an essential part of skin hydration and is linked strongly with health and beauty," says Frost & Sullivan Senior Research Analyst Ramakrishnan Sitaraman. "Not surprisingly, bottled water manufacturers have built on this link by positioning bottled water as a skincare product."
Overall, the Eastern European market is likely to outpace the Western market in growth due to its larger untapped potential. While flavored/enhanced water appears to have the brightest prospects, still water continues to account for the biggest share of market volume. The home and office delivery (HOD) segment also has great potential for growth, as it is a largely unexplored market.
Market entrants', especially multinational companies', favorite mode of entry to the European bottled water industry has been through acquisitions. There have been only a few instances of institutional investment in Europe, such as those in Devin (Bulgaria) by the Austrian Wing Equity Management and in AP Aqua (Hungary) by Euroventures.
Meanwhile, the industry is readying for another major trend – the entrance of breweries and soft drink manufacturers. All of these factors will make companies amend or streamline their business strategies.
"Companies are likely to be cost conscious, since water is a low-margin, penny business," notes Ramakrishnan. "They have begun to adopt financial management systems on a systems, applications & products in data processing (SAP) platform, which is considered one of the best practices in the industry."
Bottled water companies will also have to combat the campaigns mounted by municipal utility companies, which accuse bottled water companies of bottling the same water that is freely available via the utilities for a price. The bottled water companies need to initiate public awareness campaigns and publish statistics to counter this point.
There are also concerns regarding pollution created by the disposal of non-biodegradable packaging material. Companies have to demonstrate corporate social responsibility by using environmentally safe materials.
If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the investment opportunity analysis in the European bottled water industry, then send an email to Chiara Carella, Corporate Communications, at chiara.carella[.]frost.com, your full name, company name, title, telephone number, company e-mail address, company website, city, state and country. Upon receipt of the above information, an overview will be sent to you by email.
European Bottled Water Industry: Investment Analysis is part of the Financial Benchmarking in the Water Industry program, which also includes research in the following markets: North American Bottled Water Market - Investment Analysis and Growth Opportunities, North American Industrial Water Services and Outsourcing Market - Investment Analysis, Asia Pacific Residential Water Treatment Equipment - Investment Analysis and Growth Opportunities, European Residential Water Treatment Equipment Market - Investment Analysis and Growth Opportunities, and North American Residential Water Treatment Equipment: Investment Analysis and Growth Opportunities. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Interviews with the press are available.
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European Bottled Water Industry: Investment Analysis N31F