H2O = Big Business in a Bottle

Changing Consumer Tastes Creates Explosive Growth for Domestic and

International Bottled Water Brands - Revenue in 2007 Expected to Reach

$5.974 Billion With Growth Set to Climb Higher Through 2012



May 20, 2008, 01:00 ET from IBISWorld

    LOS ANGELES, May 20 /PRNewswire/ -- With another sweltering summer
 forecast for 2008, IBISWorld, Inc., today revealed the hot trends that are
 driving growth in the burgeoning, multi-billion dollar bottled water
 industry - and two worldwide mega brands are bound to benefit - Coca-Cola
 Enterprises, Inc., and The Pepsi Bottling Group. From fashion, to flavour,
 to function, the outlook for the bottled water industry is bright, yet
 there are some issues with regard to purity and value that marketers will
 face in the foreseeable future. IBISWorld, Inc., (http://www.ibisworld.com)
 is recognized as one of the nation's most respected independent publishers
 of business intelligence research.
 
     Profit In A Bottle
 
     This financial year, IBISWorld expects the global soft drink and
 bottled water manufacturing industry will produce revenue of $146.5
 billion, with growth expected to continue at a rate of four percent, with
 the U.S. at its forefront, producing revenue of an estimated $168.6 billion
 by 2012.
 
     Driving this growth is the global rate of consumption rising by 10
 percent in 2007. And at the forefront of the industry, selling purified
 water aimed at the low-cost, bulk purchase market, are U.S. companies
 bottlers Coca-Cola Enterprises, Inc., and The Pepsi Bottling Group. Both
 companies are dominating the arena through aggressive marketing programs
 that have turned both the Aquafina and the Dasani brands into block-buster
 successes.
 
     Driven largely by health consciousness consumers with strong disposable
 income, and warm weather, the bottled water market has been identified by
 IBISWorld as being the fastest growing beverage segment in the U.S., with
 the market share for bottled water increasing from 11.7 percent in 2005 to
 14.5 percent in 2007, and producing revenue of $5.974 billion for fiscal
 year 2007.
 
     Purified water is currently the leading global seller, with U.S.
 companies dominating the field. The U.S. is the largest consumer market for
 water the world, followed by Mexico, China, and Brazil. Natural spring
 water, purified water and flavoured water have been identified by IBISWorld
 as the fastest growing segments.
 
     Designer Drops
 
     "But there's more to the industry's strong performance than meets the
 eye," according to Senior Analyst with IBISWorld Mr. George Van Horn.
 "Because of the homogenous nature of the product, producers need to invest
 substantially in branding, advertising, and promotional activity to
 differentiate their offering, and to attract and retain consumers who would
 otherwise substitute readily between waters," said Mr. Van Horn. "As a
 result, we're seeing growth in the so-called 'premium' section of the
 industry, with some manufacturers promoting their water as superior in an
 attempt to extract higher margins." He added, "This has led to an increase
 in the market for imported products, as is demonstrated by the success of
 cafe- focused European brands such as Perrier and San Pellegrino, and the
 recent success of Fiji water in the U.S."
 
     "In the U.S., the supply market is largely geared toward the production
 of purified water, to be sold in bulk - often through supermarkets and
 small retailing stores," said Mr. Van Horn. "And while this has spurred the
 dominance of the U.S. as a global market supplier, providing low cost, bulk
 purchase water to local and international markets, the growing trend
 towards fashionable, premium products may see more infiltration from
 imported brands within the U.S."
 
     Mr. Van Horn explained that following trends abroad, bottled water had
 the potential to become as much a fashion accessory as a beverage,
 predicting savvy producers will establish niche operations supplying
 limited market segments with specialized and top-of-the line products.
 
     "The current mediascape, particularly women's magazines, is saturated
 with images of celebrities flaunting premium water products in fashionable
 designer bottles," he said. "This has particularly been the case with Fiji
 water, with celebrity uptake no doubt contributing largely to the brand's
 success in the U.S."
 
     "Females and younger consumers account for slightly larger levels of
 bottled water consumption, with media support behind a brand, the bottle
 design, and the label all playing a part," said Mr. Van Horn. "Women are
 also more diligent than men at drinking the recommended eight glasses of
 water a day, as well as being, on the whole, more health conscious."
 
     Function Over Fashion
 
     Alongside premium waters, 'functional' water is another area that is
 driving industry revenue, with products making unique health claims
 targeting consumers who switch drinks during the day depending upon their
 immediate needs.
 
     "The creation and promotion of sports waters and other near waters has
 helped bottled water win market share from high-sugar soft drinks, energy
 drinks, and sports drinks," he said, anticipating that this trend will
 continue," said Mr. Van Horn.
 
     Functional waters - encompassing sports, flavoured, near and enhanced
 waters - compete as substitutes for soft drinks, as they are flavoured but
 do not have a high sugar content found in soft drinks. IBISWorld believes
 that as the industry matures and consumers become more informed, these
 sub-segments should become more clearly defined in the market.
 
     Functional waters - encompassing sports, flavoured, near and enhanced
 waters - compete as substitutes for soft drinks, as they are flavoured but
 do not have a high sugar content found in soft drinks. IBISWorld believes
 that as the industry matures and consumers become more informed, these
 sub-segments should become more clearly defined in the market.
 
     "The rapid introduction of new products, and new packaging, make the
 bottled water market an extremely dynamic industry, and America's high
 level of carbonated soft drinks (CSD's), energy drinks, and sports drinks,
 and comparatively low-level of consumption of premium and enriched water
 products suggests that the U.S. market still has potential for a high rate
 of sales growth before reaching saturation," Mr. Van Horn added.
 
     Water To Go
 
     The bottled water industry has gained from the increasingly frantic
 pace of life. "With people trying to accomplish more each day, with less
 time for rest, and the rising preference for convenient snacks, dining out
 and takeaway meals, bottled waters are becoming an important convenient
 fact of life," explained Mr. Van Horn.
 
     Are All Bottled Water Brands Safe and Pure?
 
     And though most brands of bottled water have been tested and shown to
 have no health benefits above those of tap water, many consumers won't be
 convinced. In fact, consumers are increasingly worried about the quality of
 bottled water that is often bottled using the same municipal water supplies
 that come out of home tap water.
 
     "Following a recently released report based on a five-month undercover
 story, the Associated Press (AP) revealed that a vast array of
 pharmaceuticals have been found in the drinking water supplies of millions
 of Americans," said Mr. Van Horn. "What most consumers don't know is that
 most brands of bottled water undergo no filtration during the bottling
 process. Many bottled water brands are essentially the same quality that
 comes from everyday home tap water. Consumers are essentially buying a
 brand, a nice label, and the convenience."
 
     Members of the AP Investigative Team reviewed hundreds of scientific
 reports, analysed Federal drinking water databases, visited environmental
 study sites, treatment plants, and interviewed more than 230 officials,
 academics and scientists across the U.S.
 
     What they found was alarming. For example, officials in Philadelphia
 said testing there discovered 56 pharmaceuticals, or drug by-products in
 treated drinking water, including medicines for pain, infection, high
 cholesterol, asthma, epilepsy, diabetes, heart disease, and mental illness.
 Sixty-three pharmaceuticals or by-products were found in the city's
 watersheds.
 
     At a conference last summer, Mary Buzby, director of environmental
 technology for Merck & Co. Inc., said: "There's no doubt about it,
 pharmaceuticals are being detected in the environment and there is genuine
 concern that these compounds, in the small concentrations that they're at,
 could be causing impacts to human health or to aquatic organisms."
 
     At a conference last summer, Mary Buzby, director of environmental
 technology for Merck & Co. Inc., said: "There's no doubt about it,
 pharmaceuticals are being detected in the environment and there is genuine
 concern that these compounds, in the small concentrations that they're at,
 could be causing impacts to human health or to aquatic organisms."
 
     "We know we are being exposed to other people's drugs through our
 drinking water, and that cannot be good," says Dr. David Carpenter, who
 directs the Institute for Health and the Environment of the State
 University of New York at Albany. While the bottled water industry is
 beginning to address this issue, according to the EPA, currently there are
 no sewage treatment systems specifically engineered to remove
 pharmaceuticals.
 
     According to Mr. Van Horn, not all bottled water is laced with various
 pharmaceutical drugs. "Brands like Fuji Water, Evian, and many other
 premium brands are bottled from water sources that are found in remote
 places such as in the mountains where pharmaceutical drugs from human waste
 don't exist."
 
     Tougher Times Ahead?
 
     Looking ahead beyond safety issues, Mr. Van Horn said there will be
 significant challenges facing the industry, mostly in the form of
 increasing infrastructure in developing countries, competition from premium
 labels and imports, and competition from low-calorie, sugar free carbonated
 soft-drinks (CSD's) and energy drinks, as well as dental care and
 environmental concerns, and mounting packaging costs.
 
     Mr. Van Horn added, "Within the U.S. suppliers currently focus on the
 production of low cost purified water, a market that is largely supported
 by developing countries, and concerns about the quality of tap water rather
 then fashion or brand loyalty."
 
     "In the coming years, due to developments in infrastructure in these
 countries, we may see great improvement in the quality of public water
 sources which may detract from further growth," predicted Mr. Van Horn.
 
     "The U.S. is also still the major consuming country of soft drinks in
 the world with Americans consuming around 51.4 gallons of carbonated soft
 drinks per person each year, while at the same time Americans are becoming
 increasingly health-conscious. With that, the bottled water market
 increasingly finds itself competing with low-calorie, sugar free CSD's, and
 nutrient-enriched energy and so-called sports drinks.
 
     "As consumption of bottled water by children increases, so too will
 concerns about the impact on their teeth - with tap water currently
 providing their main source of fluoride," said Mr. Van Horn. "Increasing
 environmental awareness, and concerns about the effects of manufacturing
 bottled water will also place pressure on the industry - with studies
 showing that it can take up to seven quarts of water and a quart of crude
 oil to produce about one quart of bottled water."
 
     "In addition, over the next few years packaging costs, particularly for
 petroleum-based PET resin, will rise, putting pressure on profit margins.
 This is another reason why manufacturers will ramp up investment in
 developing higher priced premium spring waters and functional waters to
 partially offset cost pressures," Mr. Van Horn added.
 
     Yet on the flip side, IBISWorld predicts these changing trends will
 surely see dominant U.S. players Coca-Cola Enterprises, Inc. and The Pepsi
 Bottling Group moving forward in the premium water market, creating new
 products focusing on nutrient enriched and flavoured water products and
 adopting fashionable packaging to appeal to the style-conscious. A move,
 which coupled with strong marketing campaigns, and the brand strength
 already achieved by these companies, could lead to U.S. premium water
 brands expanding more aggressively into the South American, Asian and
 Australian premium product markets.
 
     About IBISWorld
 
     Founded in 1972, IBISWorld provides a unique and extensive online
 portfolio of business research and analysis products designed to serve a
 range of business, professional service and government organizations.
 Delivered through enterprise subscriptions, the company publishes in-depth
 reports on more than 700 industries and offers profiles on more than 8,000
 U.S. companies. In addition, the company provides databases of economic
 analysis, demographic data, and risk assessment reports relevant to
 virtually every business sector. IBISWorld's materials are valued for the
 breadth and depth of the research and analysis covering the entire U.S.
 economy, incorporating both financial and non-financial information
 impacting tracked industries and companies. IBISWorld Business Information
 is well known for its accuracy, consistency and timeliness. This is why
 almost all online information aggregators seek us out to include our
 reports as part of their global databases. Current IBISWorld partners
 include Hoovers, Valuation Resources, Superfactory and American Small
 Business Development Centers. With U.S headquarters located in Los Angeles,
 IBISWorld has offices in New York, Melbourne, and Sydney. For more
 information, visit http://www.ibisworld.com or call 1-800-330-3772.
 
 
 

SOURCE IBISWorld
    LOS ANGELES, May 20 /PRNewswire/ -- With another sweltering summer
 forecast for 2008, IBISWorld, Inc., today revealed the hot trends that are
 driving growth in the burgeoning, multi-billion dollar bottled water
 industry - and two worldwide mega brands are bound to benefit - Coca-Cola
 Enterprises, Inc., and The Pepsi Bottling Group. From fashion, to flavour,
 to function, the outlook for the bottled water industry is bright, yet
 there are some issues with regard to purity and value that marketers will
 face in the foreseeable future. IBISWorld, Inc., (http://www.ibisworld.com)
 is recognized as one of the nation's most respected independent publishers
 of business intelligence research.
 
     Profit In A Bottle
 
     This financial year, IBISWorld expects the global soft drink and
 bottled water manufacturing industry will produce revenue of $146.5
 billion, with growth expected to continue at a rate of four percent, with
 the U.S. at its forefront, producing revenue of an estimated $168.6 billion
 by 2012.
 
     Driving this growth is the global rate of consumption rising by 10
 percent in 2007. And at the forefront of the industry, selling purified
 water aimed at the low-cost, bulk purchase market, are U.S. companies
 bottlers Coca-Cola Enterprises, Inc., and The Pepsi Bottling Group. Both
 companies are dominating the arena through aggressive marketing programs
 that have turned both the Aquafina and the Dasani brands into block-buster
 successes.
 
     Driven largely by health consciousness consumers with strong disposable
 income, and warm weather, the bottled water market has been identified by
 IBISWorld as being the fastest growing beverage segment in the U.S., with
 the market share for bottled water increasing from 11.7 percent in 2005 to
 14.5 percent in 2007, and producing revenue of $5.974 billion for fiscal
 year 2007.
 
     Purified water is currently the leading global seller, with U.S.
 companies dominating the field. The U.S. is the largest consumer market for
 water the world, followed by Mexico, China, and Brazil. Natural spring
 water, purified water and flavoured water have been identified by IBISWorld
 as the fastest growing segments.
 
     Designer Drops
 
     "But there's more to the industry's strong performance than meets the
 eye," according to Senior Analyst with IBISWorld Mr. George Van Horn.
 "Because of the homogenous nature of the product, producers need to invest
 substantially in branding, advertising, and promotional activity to
 differentiate their offering, and to attract and retain consumers who would
 otherwise substitute readily between waters," said Mr. Van Horn. "As a
 result, we're seeing growth in the so-called 'premium' section of the
 industry, with some manufacturers promoting their water as superior in an
 attempt to extract higher margins." He added, "This has led to an increase
 in the market for imported products, as is demonstrated by the success of
 cafe- focused European brands such as Perrier and San Pellegrino, and the
 recent success of Fiji water in the U.S."
 
     "In the U.S., the supply market is largely geared toward the production
 of purified water, to be sold in bulk - often through supermarkets and
 small retailing stores," said Mr. Van Horn. "And while this has spurred the
 dominance of the U.S. as a global market supplier, providing low cost, bulk
 purchase water to local and international markets, the growing trend
 towards fashionable, premium products may see more infiltration from
 imported brands within the U.S."
 
     Mr. Van Horn explained that following trends abroad, bottled water had
 the potential to become as much a fashion accessory as a beverage,
 predicting savvy producers will establish niche operations supplying
 limited market segments with specialized and top-of-the line products.
 
     "The current mediascape, particularly women's magazines, is saturated
 with images of celebrities flaunting premium water products in fashionable
 designer bottles," he said. "This has particularly been the case with Fiji
 water, with celebrity uptake no doubt contributing largely to the brand's
 success in the U.S."
 
     "Females and younger consumers account for slightly larger levels of
 bottled water consumption, with media support behind a brand, the bottle
 design, and the label all playing a part," said Mr. Van Horn. "Women are
 also more diligent than men at drinking the recommended eight glasses of
 water a day, as well as being, on the whole, more health conscious."
 
     Function Over Fashion
 
     Alongside premium waters, 'functional' water is another area that is
 driving industry revenue, with products making unique health claims
 targeting consumers who switch drinks during the day depending upon their
 immediate needs.
 
     "The creation and promotion of sports waters and other near waters has
 helped bottled water win market share from high-sugar soft drinks, energy
 drinks, and sports drinks," he said, anticipating that this trend will
 continue," said Mr. Van Horn.
 
     Functional waters - encompassing sports, flavoured, near and enhanced
 waters - compete as substitutes for soft drinks, as they are flavoured but
 do not have a high sugar content found in soft drinks. IBISWorld believes
 that as the industry matures and consumers become more informed, these
 sub-segments should become more clearly defined in the market.
 
     Functional waters - encompassing sports, flavoured, near and enhanced
 waters - compete as substitutes for soft drinks, as they are flavoured but
 do not have a high sugar content found in soft drinks. IBISWorld believes
 that as the industry matures and consumers become more informed, these
 sub-segments should become more clearly defined in the market.
 
     "The rapid introduction of new products, and new packaging, make the
 bottled water market an extremely dynamic industry, and America's high
 level of carbonated soft drinks (CSD's), energy drinks, and sports drinks,
 and comparatively low-level of consumption of premium and enriched water
 products suggests that the U.S. market still has potential for a high rate
 of sales growth before reaching saturation," Mr. Van Horn added.
 
     Water To Go
 
     The bottled water industry has gained from the increasingly frantic
 pace of life. "With people trying to accomplish more each day, with less
 time for rest, and the rising preference for convenient snacks, dining out
 and takeaway meals, bottled waters are becoming an important convenient
 fact of life," explained Mr. Van Horn.
 
     Are All Bottled Water Brands Safe and Pure?
 
     And though most brands of bottled water have been tested and shown to
 have no health benefits above those of tap water, many consumers won't be
 convinced. In fact, consumers are increasingly worried about the quality of
 bottled water that is often bottled using the same municipal water supplies
 that come out of home tap water.
 
     "Following a recently released report based on a five-month undercover
 story, the Associated Press (AP) revealed that a vast array of
 pharmaceuticals have been found in the drinking water supplies of millions
 of Americans," said Mr. Van Horn. "What most consumers don't know is that
 most brands of bottled water undergo no filtration during the bottling
 process. Many bottled water brands are essentially the same quality that
 comes from everyday home tap water. Consumers are essentially buying a
 brand, a nice label, and the convenience."
 
     Members of the AP Investigative Team reviewed hundreds of scientific
 reports, analysed Federal drinking water databases, visited environmental
 study sites, treatment plants, and interviewed more than 230 officials,
 academics and scientists across the U.S.
 
     What they found was alarming. For example, officials in Philadelphia
 said testing there discovered 56 pharmaceuticals, or drug by-products in
 treated drinking water, including medicines for pain, infection, high
 cholesterol, asthma, epilepsy, diabetes, heart disease, and mental illness.
 Sixty-three pharmaceuticals or by-products were found in the city's
 watersheds.
 
     At a conference last summer, Mary Buzby, director of environmental
 technology for Merck & Co. Inc., said: "There's no doubt about it,
 pharmaceuticals are being detected in the environment and there is genuine
 concern that these compounds, in the small concentrations that they're at,
 could be causing impacts to human health or to aquatic organisms."
 
     At a conference last summer, Mary Buzby, director of environmental
 technology for Merck & Co. Inc., said: "There's no doubt about it,
 pharmaceuticals are being detected in the environment and there is genuine
 concern that these compounds, in the small concentrations that they're at,
 could be causing impacts to human health or to aquatic organisms."
 
     "We know we are being exposed to other people's drugs through our
 drinking water, and that cannot be good," says Dr. David Carpenter, who
 directs the Institute for Health and the Environment of the State
 University of New York at Albany. While the bottled water industry is
 beginning to address this issue, according to the EPA, currently there are
 no sewage treatment systems specifically engineered to remove
 pharmaceuticals.
 
     According to Mr. Van Horn, not all bottled water is laced with various
 pharmaceutical drugs. "Brands like Fuji Water, Evian, and many other
 premium brands are bottled from water sources that are found in remote
 places such as in the mountains where pharmaceutical drugs from human waste
 don't exist."
 
     Tougher Times Ahead?
 
     Looking ahead beyond safety issues, Mr. Van Horn said there will be
 significant challenges facing the industry, mostly in the form of
 increasing infrastructure in developing countries, competition from premium
 labels and imports, and competition from low-calorie, sugar free carbonated
 soft-drinks (CSD's) and energy drinks, as well as dental care and
 environmental concerns, and mounting packaging costs.
 
     Mr. Van Horn added, "Within the U.S. suppliers currently focus on the
 production of low cost purified water, a market that is largely supported
 by developing countries, and concerns about the quality of tap water rather
 then fashion or brand loyalty."
 
     "In the coming years, due to developments in infrastructure in these
 countries, we may see great improvement in the quality of public water
 sources which may detract from further growth," predicted Mr. Van Horn.
 
     "The U.S. is also still the major consuming country of soft drinks in
 the world with Americans consuming around 51.4 gallons of carbonated soft
 drinks per person each year, while at the same time Americans are becoming
 increasingly health-conscious. With that, the bottled water market
 increasingly finds itself competing with low-calorie, sugar free CSD's, and
 nutrient-enriched energy and so-called sports drinks.
 
     "As consumption of bottled water by children increases, so too will
 concerns about the impact on their teeth - with tap water currently
 providing their main source of fluoride," said Mr. Van Horn. "Increasing
 environmental awareness, and concerns about the effects of manufacturing
 bottled water will also place pressure on the industry - with studies
 showing that it can take up to seven quarts of water and a quart of crude
 oil to produce about one quart of bottled water."
 
     "In addition, over the next few years packaging costs, particularly for
 petroleum-based PET resin, will rise, putting pressure on profit margins.
 This is another reason why manufacturers will ramp up investment in
 developing higher priced premium spring waters and functional waters to
 partially offset cost pressures," Mr. Van Horn added.
 
     Yet on the flip side, IBISWorld predicts these changing trends will
 surely see dominant U.S. players Coca-Cola Enterprises, Inc. and The Pepsi
 Bottling Group moving forward in the premium water market, creating new
 products focusing on nutrient enriched and flavoured water products and
 adopting fashionable packaging to appeal to the style-conscious. A move,
 which coupled with strong marketing campaigns, and the brand strength
 already achieved by these companies, could lead to U.S. premium water
 brands expanding more aggressively into the South American, Asian and
 Australian premium product markets.
 
     About IBISWorld
 
     Founded in 1972, IBISWorld provides a unique and extensive online
 portfolio of business research and analysis products designed to serve a
 range of business, professional service and government organizations.
 Delivered through enterprise subscriptions, the company publishes in-depth
 reports on more than 700 industries and offers profiles on more than 8,000
 U.S. companies. In addition, the company provides databases of economic
 analysis, demographic data, and risk assessment reports relevant to
 virtually every business sector. IBISWorld's materials are valued for the
 breadth and depth of the research and analysis covering the entire U.S.
 economy, incorporating both financial and non-financial information
 impacting tracked industries and companies. IBISWorld Business Information
 is well known for its accuracy, consistency and timeliness. This is why
 almost all online information aggregators seek us out to include our
 reports as part of their global databases. Current IBISWorld partners
 include Hoovers, Valuation Resources, Superfactory and American Small
 Business Development Centers. With U.S headquarters located in Los Angeles,
 IBISWorld has offices in New York, Melbourne, and Sydney. For more
 information, visit http://www.ibisworld.com or call 1-800-330-3772.
 
 
 SOURCE IBISWorld