Feasibility Study

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Financial Appraisal

Group 08

WAQAS AHMED117
IJAZ SHIGRI25
SABIHA RIZWAN83
SHAISTA ASAD90
HINA ZEHRA22

Project: Mineral Water Plant

GENERAL BREIFING

WORLD’S PRESPECTIVE:

Traditionally, Mineral water was water from a mineral spring containing various minerals such as salts and sulfur compounds. After emerging the theme of safe drinking water and expanding trend of tourism and portability, Mineral water started to be bottled and gradually made a great blast in Food & Beverage Industry. Now there are more than 3,000 brands of mineral water commercially available worldwide. By  2002,  the  global  bottled  water  industry  was  at  an  inflection  point.  Traditionally,  the industry  had  been  fragmented  among  many  local  and  regional  players,  but  over  the  last decade four large multinationals (Danone, Nestlé, PepsiCo, and CocaCola) had been battling for  global market share. These four companies controlled over 30% of the global market. The world bottled water market amounts to an annual volume of 89 billion liters, which represents an average 15 liters of bottled water drunk yearly per person (DANONE, 2000). Western Europeans are the major consumers, drinking nearly half of all the world bottled water, with an average of 85 liters/person/year (Sollberger, 1994). In United States, 54% of Americans regularly drink bottled water (Olson, 1999). More than half (59%) of the bottled water drunk in the world is purified water, the remaining 41% being spring or mineral water (Belot, 2000). Bottled water consumption has been steadily growing in the world for the past 30 years. It is the most dynamic sector of all the food and beverage industry: bottled water consumption in the world increases by an average 12% every year, in spite of its excessively high price compared to tap water and although industrialized countries consumers have, in principle, access to cheap good quality tap water. Government has termed the bottled water market, with 33 million liters of consumption per annum in 1999, as small but positively on the rise. It is envisaged that a bottle of 1.5 liters has a production cost of Rs. 12.51 only. In United States, bottled water costs between 0.25 dollar to 2 dollar per bottle, while tap water costs less than US 0.01. This shows high rate of return in this field.

COUNTRY’S PRESPECTIVE:

Bottled Water sector in Pakistan:
In Pakistan, the unchecked and more than needed population explosion has heightened the need to ensure uninterrupted access to improved drinking-water supply, especially in mega cities like Karachi and Lahore where traces of multiple deadly rudiments including the human feces are reported by laboratory reports. Chemical contaminants in drinking water such as arsenic, fluoride and nitrate are discovered at various locations. Arsenic contamination is found in southern Punjab and central Sind. Contamination in drinking water is the major cause of many serious water borne diseases. Due to which Pakistan have turned to bottled water as an apt substitute to drinking unfiltered faucet water or contaminated water of other sources where there is no public drinking water service. Average person consumes just two liters of bottled water per annum in Pakistan, compared to four in India and 10 in China. In our country, there are approximately twenty to thirty companies engaged in this business. Official figures show an estimated number of 26 corporations, while in summer time, this number increases up to 70. But from the perspective of quality control, Pakistan Council of Renewal Water Resources is witnessing a fluctuation in the market of 50 percent, e.g. half of the brands disappear and are replaced by new brands every year. Bottled Water Market Trends in PAKISTAN:

The bottled water market in Pakistan is witnessing annual growth rates nearing 40 percent. Bottled water in Pakistan is not considered a ‘beverage'. Beverage processing includes...
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