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Bottled Water Industry Analysis

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Bottled Water Industry Analysis

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  • October 28, 2007
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I.Dimensions of Bottled Water Industry
The bottled water industry enjoyed substantial growth in the last decade, especially in the United States. The popularity of bottled water increased dramatically since 1996, and different customers were able to be targeted. The different customer groups included those concerned about water safety, those primarily concerned about fitness, and those customers that drink bottled water primarily for the convenience of it. Customers either purchased bottled water in bulk, or in single serve bottles. Bulk buyers purchase for the home and office in returnable five gallon containers, whereas single serving bottles are purchased from convenience stores, wholesale clubs, and grocery stores. Bottled water is sold in a worldwide market and it is showing positive growth in the United States. Nearly every location where food is sold now sells bottled water. Several manufacturers control the bottling process from raw material to end distributor, otherwise, licensing agreements must be purchased. Companies such as Coca-Cola and Pepsi enjoy an advantage because they can use their established channels of distribution to include bottled water. It is very important in the industry to have distribution access to supermarkets, wholesale clubs and convenience stores. It is also important that distributors maximize their deliveries in order to keep costs down. It is also necessary for competitors in the bottled water industry to manufacture in large volumes to obtain higher margins. II.Industry Structure

The industry enjoyed a nine percent growth rate from 1996 to 2000 in the United States, which made the U.S. the world's largest market and a product that was growing faster than any other beverage in that time period. Now bottled water is reaching the mature stage of the product life cycle and a few large firms dominate the industry. There are some small regional sellers, but the top five sellers have 75 percent of industry sales. The capital...