Bottled Water - Market Overview
July 2012
Disclaimer
The following information is offered in good faith and represents an unqualified interpretation of a range of industry commentary and market
data. It does not purport to be a detailed analysis of the market on which business strategy should be hinged to or capital investment considered
without additional expert opinion being sought should that be deemed necessary.
Introduction
As for 2012, in 2013 the bottled water industry in Australia has remained relatively resilient over the last 12 months
despite a range of competitive and market forces applying pressure to the category. Although the health benefits of
bottled water are without question, the environmental impacts of the packaging and the constant cost comparison
to tap water by well organised anti-industry campaigns continue to challenge market growth as it did in the
previous period.
Competitors
The industry displays a high level of market share concentration. The top two players in the industry, Coca-Cola
Amatil and Asahi Holdings Australia, account for significantly more than 70% of industry revenue in 2013-14 and
represent approximately 85% of the volume with 50% and 36% respectively.
Industry concentration has been increasing gradually over the last five years with the larger beverages companies
acquiring successful bottled water brands. For example, Coca-Cola Amatil entered the bulk packaged water
segments with its purchase of Peats Ridge and Neverfail several years ago. Industry enterprises ate expected to
decline at an annualised rate of 3.6% in the five years through 2013-14.
During August 2010, Asahi Breweries agreed to buy P&N Beverages for approximately $360 million. Under the plan,
Asahi would combine P&N Beverages with its other Australian beverage business, Schweppes Australia, which it
acquired from Cadbury Schweppes in 2009 for $962 million. The combined company would have been Australia’s
second largest beverage producer. In February 2011 the ACCC blocked the sale due to competitive concerns in the
carbonated soft drinks and fruit juice markets. However, in August 2011 the ACCC approved Asahi’s acquisition of
P&N’s water and juice businesses.
Source: IBISWORLD
Internal Member Use ONLY
Key Statistics
Source: IBISWORLD
Source: IBISWORLD
Pack Share
Million litres
2012*
2011
2010
600ml PET bottle
194
189
190
-
35.0%
34.4%
34.9%
750ml PET bottle
34
33
33
-
6.1%
6.0%
6.1%
1.25 litre PET bottle sparkling
38
38
32
-
6.8%
6.9%
5.9%
1.5 litre PET bottle
110
110
110
-
19.8%
20.0%
20.2%
3 litre HDPE bottle
27
27
27
-
4.9%
4.9%
5.0%
Share
Share
Share
Share
Share
Internal Member Use ONLY
10 litre HDPE bottle
69
70
70
-
12.4%
12.8%
12.9%
Other
83
82
82
-
15.0%
14.9%
15.1%
555
549
544
Share
Share
Total
Source: Canadean
*end of data set
Major forces
The market is characterised by a high degree of new product introductions. Many of the major players in the
industry are expanding on their product range within the bottled water segment, producing two or three products
in the segment. Often these products are at different price levels, or are designed to appeal to particular segments
of the market. This can be achieved through the addition of particular vitamins and minerals or by attractive or
functional packaging such as pop-top bottles. Mild flavours are often also added, and the product is marketed as a
near-water.
External drivers affecting businesses
→Downstream demand from supermarket and grocery stores
Much of the industry’s output is sold into this market because some households purchase bottled water from a
supermarket on a regular basis, and so these retailers are the most important source of immediate sales for
producers in this industry. Demand from supermarkets and grocery stores is expected to increase in 2013-14.
Internal Member Use ONLY
→Real household discretionary income
The level of disposable income is a key determinant in bottled water expenditure. This is particularly so for singleserve bottles and premium spring water, mineral water and sports water. Real household discretionary income is
expected to increase in 2013-14.
→Health consciousness
Consumer values regarding health and nutrition are key drivers of bottled water consumption. Increasing health
awareness and greater knowledge of the benefits of adequate water consumption have boosted demand for
bottled water. In particular, as consumers shift away from high sugar soft drinks, demand for bottled water
increases. Health consciousness is expected to be slightly higher in 2013-14, representing an opportunity for
industry players.
→Annual mean temperature (deviation from average)
During years of unusually hot summers, consumption of beverages, including bottled water, tends to increase.
However, Australia’s annual mean temperature is expected to be marginally lower in 2013-14.
→Public concerns over environmental issues
Rising public concern over the contribution of PET plastic bottles to landfill and the unnecessary carbon emissions
generated by the production and transportation of bottled water have weighed on sales in recent years. Public
concerns over environmental issues is expected to increase in 2013-14, posing and increasing threat to the industry.
→Consumer sentiment index
Consumers are more likely to enjoy luxuries if confidence levels are high. Since bottled water can be seen as a
luxury good, as confidence levels increase, so should consumption levels. The consumer sentiment index is
expected to increase in 2013-14.
Industry Outlook
Despite criticism of the industry as was the case in 2012, it continues to grow at rates exceeding other beverage
categories. The five years through 2018-19 appears positive for the industry, with the recovering economy, forecast
rises in average temperatures, growing health awareness and consumers’ ongoing need for convenience set to drive
sales of bottled water. Mounting environmental criticism looms as the industry’s major threat. Producers have
moved to counter the criticism by developing lighter, recyclable packaging and branding themselves as carbon
neutral and environmentally friendly. Over the next five years, industry revenue is forecast to increase to an
annualised 2.5% to total $702.4 million. This includes forecast revenue growth of 2.0% in 2014-15.
Internal Member Use ONLY
NARTD Category - Australia
2010 - 2013
All Channels
2010
ML
Packaged Water
Bulk Water
Carbonates
Juice
Nectars
Still (Functional
Waters)
Squash/Syrups
Energy Drinks
Sports Drinks
Iced Tea
Iced Coffee
TOTAL
2011
% total
544
206
2388
524
195
11.3
4.3
49.6
10.9
4.1
55
528
110
108
43
112
4813
1.1
11.0
2.3
2.2
0.9
2.3
100.0
ML
552
192
2371
519
195
%total
2012
% change
vol change
ML
% total
2013
% change
vol change
ML
% total
% change
vol change
11.6
4.0
49.6
10.9
4.1
1.5
-6.8
-0.7
-1.0
0.0
8.0
-14.0
-17.0
-5.0
0.0
566
187
2369
493
196
11.9
3.9
49.7
10.3
4.1
2.5
-2.6
-0.1
-5.0
0.5
14.0
-5.0
-2.0
-26.0
1.0
597
182
2405
488
183
12.4
3.8
49.9
10.1
3.8
5.5
-2.7
1.5
-1.0
-6.6
31.0
-5.0
36.0
-5.0
-13.0
53
1.1
502 10.5
116
2.4
111
2.3
47
1.0
121
2.5
4779 100.0
-3.6
-4.9
5.5
2.8
9.3
8.0
-0.7
-2.0
-26.0
6.0
3.0
4.0
9.0
-34.0
56
1.2
492
10.3
121
2.5
114
2.4
51
1.1
125
2.6
4770 100.0
5.7
-2.0
4.3
2.7
8.5
3.3
-0.2
3.0
-10.0
5.0
3.0
4.0
4.0
-9.0
58
1.2
482
10.0
125
2.6
116
2.4
53
1.1
130
2.7
4819 100.0
3.6
-2.0
3.3
1.8
3.9
4.0
1.0
2.0
-10.0
4.0
2.0
2.0
5.0
49.0
Source: Canadean Partner Report
Internal Member Use ONLY