- 1 Definition / Scope
- 2 Market Overview
- 3 Key Metrics
- 4 Market Risks
- 5 Top Market Opportunities
- 6 Market Drivers
- 7 Market Restraints
- 8 Industry Challenges
- 9 Technology Trends
- 10 Pricing Trends
- 11 Other Key Market Trends
- 12 Market Size and Forecast
- 13 Market Outlook
- 14 Distribution Chain Analysis
- 15 Competitive Landscape
- 16 Competitive Factors
- 17 Strategic Conclusion
- 18 References
Definition / Scope
Bottled water can be defined as a water which is sealed packed in food grade bottles and are produced for the consumption all around the world. There are some common categories of bottled water which are:
- Spring water-The most premium in all the bottled water is spring water. It is derived from the underground water which naturally flows towards the surface of earth. It can be collected only in spring. It is purest of all waters and devoid of any chemicals.
- Purified Water: This is a type of drinking water which is processed with distillation, deionization and reverse osmosis. It is labeled as purified drinking water.
- Mineral Water: It is a water that is particularly ingested with dissolved solids which are natural minerals. These minerals are derived from rock formations that the water travels through its way on spring source.They are also known as still water.
- Sparkling Bottled Water: This type of water that contains bubbled much like a soda but without the calories. Sparkling bottled waters may be labeled as sparkling drinking water, sparkling mineral water or sparkling spring water.
- Artesian Water: Artesian water comes from a well that taps a layer of rock or sand-in which the water level is above the top of the aquifer. Artesian water comes out of the ground under pressure. They are labelled as the same in the packaging.
However, for the purpose of this research only two types of bottled water has been considered which are mentioned below:
- The Functional water is the most common type of water found in Brazil. This water offers additional health or other functional benefits as it is infested with supplements of vitamins, minerals, acids, herbs and raw fruits & vegetables.
- The Flavored water is also known as the carbonated water consists of water but other additional ingredients such as sugar, artificial flavorings, sugar or sweeteners. They also contain caffeine and may have vitamin C in few brands.
As of 2017, the annual consumption of bottled water in Brazil stands at 4.80 billion gallons which ranks the country in 5th position in the world in terms of the consumption demand of bottled water. As Brazil is densely populated with over 200 million people residing in the country and also richest in the fresh water resources in the world. However, water pollution is one of the major environmental problems faced by the individuals living in the rural and urban areas of the country. Despite of this, the Brazilians have been identified with consuming 'premium' bottled water for domestic and regular use. 
The seven main sizes of bottled water that is available in Brazil are:
- 300 ml plastic bottles- Available in convenience stores, street vendors and bakeries
- 330 ml premium water bottles- Served in restaurants, cafes, pubs and bars
- 500 ml bottles – Common size found everywhere including in schools, universities and supermarkets.
- 1.5 l, 5l and 6l bottles- Sold at supermarkets and particularly used at home.
- 10l,20l gallons- used in offices and home
As of 2017,The functional water in Brazil consists of 90% of the share in the bottled water industry whereas the rest 10% is penetrated by the flavored water segment.
|Base Year||2018||Researched through internet|
After the World Health Organization (WHO) recently announced that it will be launching a review of the risks of plastic particles in drinking water, the study revealed that 90% of the samples from the world's most popular bottled water brands were identified with plastic particles. The study involved 295 brands from 11 countries in which Brazil was also one. In average per liter concentration of micro plastic was 325 pieces including various types such as nylon, polyethylene, terephthalate and polypropylene. The 'Minalba' brand of Brazil also had a concentration of 863 micro plastics per liter of water.
Plastic contamination could lead to health issues such as cancer, ADHD, autism and lower sperm count. However, any conclusive research has not been undertaken so far to prove this fact. As plastic microfibers are airborne and we are literally living in a plastic environment, the source of plastic in water is not necessarily through direct water. But as media highlights these facts, the consumers might be hesitant to consume bottled water and opt for tap or home-filtered water instead but these sources are also not completely free of micro plastic fibers.
Top Market Opportunities
97% of the products related to bottled water launched in 2015 were of unflavored category leaving the flavored category behind because of the decrease in consumption of the carbonated or flavored drinks by 6 percent until 2014. The new entrants in the industry are focusing on the non-flavored part because of the increasing consumption of the Brazilians of this segment as they are pursuing healthier lifestyles. Companies which are present only in the flavored segment should expand their product line to the plain water and juice to penetrate the market to extent possible. 
Similarly, the new innovative packaging is another attractive opportunity for the companies to receive appeal in the market. According to a recent survey the 15% younger consumers in Brazil particularly aged between 16-24 have shown tremendous interest in new kind of packaging where a pouch is used with a suction cap instead of the common solid bottle design. Thus companies can use these flexible pouch tops for marketing messages in it and also it is more transportable and trendy than the normal packaging design of water bottles in the market.
As per survey, 9 out of 10 consumers revealed that they prefer unflavored bottled water but 33.3% of consumers actually drink flavored bottled water. As consumers are health conscious, in the flavored market consumers' interest have shifted to energy drinks or simple water that is injected with vitamin, minerals, magnesium and antioxidants with a touch of fruit flavor. The companies involved in the industry can position themselves in a way where they brand their drinks free of caffeine and yet a natural source of energizer to the consumers. Similarly, consumers who are conscious about their weight can be gratified with calorie free drinks.
After health, sustainability is another factor which can be opted by the bottled water manufacturing companies because 23% of the Brazilians in a survey revealed that they prefer environmentally friendly packaging. Thus, companies can share the information the entire process or the life cycle of the product from the ingredients up till how will it be disposed through the means of media to attract more people to buy such product. As recycling rates are still low in Brazil, companies who will take such initiatives will receive the first mover's advantage.
The demand for Bottled water in Brazil is growing at a steady pace and the demand has shifted from the soft drinks and alcoholic beverages to functional, flavored and mineral water. This has boosted the sales and margins of companies operating within the industry and raised the overall production volume. As Brazil is the third most obese population in the world, the main factor contributing to drive the sales of the industry is the growing health consciousness among the consumers in Brazil. In terms of brands higher sugar beverages have received reduction in demand and shifting towards zero-calorie drinks which increased the number of similar brands launch in the national market of Brazil.
The entry of foreign multinational companies in Brazil especially in the functional and mineral water sector within the industry is one of the major drivers of bottled water production in Brazil. The profit margins stored with these products are high and the return on investment can be realized within a short period of time. As Brazil contains not only groundwater rich in minerals but also the largest reserves of fresh water supply in the world and the forecasts reveal that the water scarcity in the world will reach 18% by 2050 mostly affecting the North American, Middle east, Asia Pacific and African region. Thus, the demand of bottled water will definitely increase in near future. As Brazil will have competitive advantage in terms of water supply the new companies which are entering the industry are embracing the entry as a long term-strategy to grow across the world through the means of Brazilian market. 
The value chain of bottled water in Brazil is another factor driving the growth of industry. There are a number of suppliers to the bottled water producing industry such as water extraction, suppliers of plastic bottles, caps and suppliers of labels closure and seals. Similarly, the channels where the end product is distributed to multiple channels such as retail outlets, bars, restaurant, hotels, corporate and public buying channels etc. These forward and backward integration that exists in the bottled water industry of Brazil has made it efficient in terms of operation and also helped to reduce costs. For instance, plastic supplying industry is also looking for constant improvement in design and technology in producing the packages which are sustainable and appealing in the market and this in turn increases demand of such products through bottled water producing firms. Thus, a synergy effect by integrating with several other industries on the both supply and consumer fragment.
The research suggests that the carbonated water generally causes health problems such as digestive issues leading to weight gain and heart burn. Keeping this factor in mind, the Brazilian Health Surveillance Agency has issued some mandates regarding the ingredients to be used in the functional and flavored water in Brazil. For instance, there are limits to add sodium, potassium and magnesium in the composition of flavored water.
Similarly, another institution called Brazilian Institute of Technical Norms (ABNT) also controls the packaging including both PET plastics and cans to be certified before the packaging is processed. The guideline to recycle the used packages is the responsibility of each individual companies in the sector. Further, the companies have to make sure that their packaging doesn’t degrade the environment or cause any environment related threat to the nation. Thus, these stringent regulations create further lengthen the operations to be carried out.
The major challenge being faced by the bottled water industry not only in Brazil but throughout the globe is same. The challenge is to save the environment of further pollution and degradation that it has caused up till now. The consumption of the bottled water is increasing despite of the presence of tap or regular water in urban areas and due to the scarcity in certain areas of the country, it has become a forced choice. This suggests that more production is required in future however, this has its own implications. 
The environmental impact of the industry at present is 40 times more than it was a decade ago. The entire process of creating bottled water includes the energy costs of making the plastic bottles, processing the water that goes into them and cleaning, filling, sealing, labelling and transporting them to market. Up to 2000 times more energy is consumed to produce bottled water than the same volume in tap water. Besides, that the industry is also pumping million tons of greenhouse gases into the air including CO2 and others.
Although, the negative image of the industry is disproved by the fact that it is healthy drink. But definitely not an environment friendly. According to a study by the IBWA, most throwaway water bottles are made from a plastic called polyethylene terephthalate (PET). 1% of the global oil is used to make PET plastic drink bottles. Although Pet is 100 per cent recyclable, there are only a few number of players that do so in Brazil and more than 60% of bottles which are not recycled ends up in ocean. A PET bottle that goes into the sea will take 450 years to break down into plastic particles, as it floats around the surface of water, the marine wildlife gets killed.Due to these issues International Bottled Water Association, is looking forward to hire consumers as “citizen lobbyists” in respective countries to put pressure upon concerned government bodies on issues important to the bottled water industry. Thus the companies involved in the sector have to shift their focus towards environmentally sustainable packaging as soon as possible.
Valid is a world renowned company in production of secure documents. It recently participated in the 17th Brazilian natural mineral water conference which was held at Rio De Jenerio from September 5- 7, 2018. The initiative of the company to participate was to contribute towards improving the tracking and origin of mineral water in Brazil. Both digital and physical seals were demonstrated and this is essential to prevent the fraudulent bottling of mineral water and track the origin of the product. Ten States in Brazil now require seal on large bottles as per regulatory requirement and they have started using seals in small disposable bottles as well.
The Valid Company's offer to the bottled water producers will comply with the state legislation's requirement to reveal origin of water used and the seal is built with anti-fraud technology. The security features include an alphanumeric code, a random check code, and fluorescent printing on an invisible background that is sensitive to ultraviolet light, a scratch-off portion, holographic hot stamping, and a series of features to prevent their reproduction. These are for the 10-20 liter bottles. The seals in small bottles are printed using Valid's system on the bottom of the bottle.
Further the consumers will also be able to verify the origin of water they are consuming through the medium of an application provided by Valid. Generally, these type of technologies enhance the processes and increase reliability and quality of the brand. If such technologies are used by bottled water manufacturers then it will surely help to improve their brand proposition across consumers.
Premium bottled water is the most popular category in Brazil which is consumed by most of the people in urban areas and these premium brands can further be divided into domestically produced and imported brands. The prices have been listed in the range of lowest to highest as follows:
- Domestically produced brands
- Acquissima- $36.4 for 510ml
- Sao Laourenco- $39 for 300ml
- Bona font VIP- $39 for 330 ml
- Finesse- $39 for 330 ml
- Bioleve Prime- $39 for 310 ml
- Pedra Azul Premium- $39 for 310 ml
- Petropolis Paulista – $44.21 for 500 ml
- Crystal VIP- $44.21 for 350 ml
- Ouro Fino Gourmet- $52.01 for 300 ml
- Minalba Premium- $91.2 for 300 ml
- FYS- $156 for 310 ml
- Imported Brands Brands
- Acqua Panna (Italy) - $132.6 for 250 ml
- San Pellegrino (Italy) - $143.03 for 250 ml
- Perrier (France) - $143.03 for 330 ml
- Evian(France)- $171.6 for 330 ml
- Badoit (France) - $171.6 for 330 ml
Other Key Market Trends
A brand called Eklo Water based in Rio De Janerio, Brazil has partnered with Crown Emblalagens Metalicas and introduced the first flavoured water to be filled in aluminum cans. This trend has been presented for the first time in Brazil by studying the consumer traits. As Brazilians desire healthy beverages instead of soda and teas these flavoured water don’t consist any preservatives or calories. These cans are portable, have and exceptional design and durable are becoming popular among consumers. The can is not only made to meet the preferences of consumers but is also eco-friendly as they are 100% recyclable.
Market Size and Forecast
Revenue in the Bottled Water in Brazil amounts to US $8.3 billion in 2018 whereas the average per ca pita consumption stands at 65 liter. The per person revenues account at $ 39.06 generated in the year 2018. 
Further,the revenues are expected to grow at a CAGR of 7.6% from 2018 to 2021. Whereas, the total volume of bottled water production is expected to reach to an amount of 15,068.1 ml by 2021 respectively.
The overall revenue from the Brazil's flavored and functional water was valued $ 5 billion in 2015 but is expected to increase at a CAGR or 7.3% from 2016 to 2024. By 2024, the market revenues are expected to reach $9.4 billion. 
Similarly, the other regions in Brazil is expected to have more distribution of bottled water in near future with a growth at CAGR of 7.8% between 2016 to 2024.
In the flavored and function water market, 0.2% of total revenue will be generated through online sales by 2021. Thus e-commerce is one of the most potential channel of sales for companies at present.
The average price per unit in the market for Bottled Water amounts to US$0.6 in 2018.This figure suggests that the price is resonable and thus will keep the prices of the products in the market stable in near future
Distribution Chain Analysis
Looking at the geography of Brazil, both the functional and flavored water can be divided into 5 regions which are south east, north east, south, central west and north in which the most of the distribution is mostly concentrated to the south east region of the country. This region is expected to grab a total of 38.2% share of total market by 2024. Followed by the north-east region which will encounter a CAGR of 7.8% through the same period of time.
As per the distribution channel, the retail stores are the most popular channel with a share over 35% in 2015 and is expected to grow at a CAGR of 5.9% until 2024. Besides these the other channels are convenient stores, one-stop shop, grab and go services which is going to contribute towards the sales growth of flavored and functional water market in Brazil.
The mineral water market in Brazil has a total of 589 enterprises producing 422 brands and the new brand launches and firm entry is encountered every year.The bottled water production is Brazil is fragmented with large players and small and medium enterprises (SME's). Around 70% of the market is captured by numerous SME's whereas the 30% market is captured by large players led particularly by four multinational firms- Nestle Waters, Danone, Coca-Cola and Pepsi respectively. These multinational companies have control to quote the price and amount of water sold in bottles. However, the presence of the domestic firms is also strong and they have good distribution network all across the Brazilian market and altogether dominate the industry. Some of the major firms involved in the sector are:
- Edson Quiroz Group- Indaia and Minalba ( Mineral Water)
- Mocellin- Ouro Fino (Flavored water)
- Coca-cola- Crystal Spal (Mineral water)
- Nestle Waters- Sal Lourence, Levissima, Petropolis, Aquarel (Premium and regular water)
Nestle Water which has a portfolio 50 brands in five continents, its most prevalent brand in Brazil is Sao Lourenco. With Sao Lourenco and all of its brand produced all over the world, Nestle assures that the bottles used for packaging will be 100% recyclable or reusable by the year 2025. Following the footsteps of Nestle, The Doanne Company's Evian has also pledged to use a PET for the entire packaging of water bottles by 2025. A PET is a high value plastic that has a property of ability to be recyclable. Thus these companies producing bottled water are concerned about the litter caused in the environment and taking initiatives to protect environment from wastes and debris in land and sea caused by bottled water.
Nestle has partnered with a logistics company called AmBev to carry out distribution of products through various channels. As per the contract between two companies, the bottled water has to reach 450,000 new outlets in different parts of the country. Through, this partnership the company can expand its brand's presence across various channels such as bars, cafes, grocery stores and supermarkets. These channels account 80% of the general point of sale for bottled water whereas remaining 20% are the supermarket chains. Thus, all the channel will remain under control of Nestle because of extensive distribution and high penetration.
Ouro Fino is the only Brazilian water company to have been certified with National Sanitation Foundation (NSF). The foundation not only ensures high quality of water to be used in the bottled water manufacture but also assists to export its products to foreign markets like Europe and North America. Ouro Fino also has a strong promise to protect the natural environment. The bottling plant of the company spreads up to 2,200 acres of primary forest and this ecological reserve is one of the most visited attraction for the tourists in Brazil.
The demand of the bottled water is increasing in the world due to climatic changes and water scarcity. Another factor is the unavailability of the pure drinking water which has led the people to shift towards bottled water consumption. As Brazil is world's largest supply of fresh water it stands a strategic geo-location where in future the manufacturers in this industry can dominate the market by charging high prices and creating a differentiated product in terms of packaging, sustainability, technology processing etc. Even though the industry is highly fragmented with the presence of multinational companies and domestic firms the profits and revenues from the industry is increasing steadily every year. As Brazil has rich soil base to extract good quality water, more international companies are eyeing at Brazil to start up their subsidiaries for bottled water production. The companies at present have been using an effective distribution and logistics management and sustained branding through extensive marketing. Thus, the future of bottled water industry is Brazil stores high prospects as there are few challenges existing within the industry except the stringent regulations applied to the sector.