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Bottled water industry in China to grow at 12% until 2025

The bottled water industry is in a growing state with a total revenue of USD 46238 million in 2018. It is expected to grow at the CAGR of 5-12% within the forecasted period of 2015-2025. Safety concerns associated with the quality of tap water and rising consumer consciousness is driving its growth and development.

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Definition / Scope

Water is a basic human need and access to it is a fundamental right.[1] However, transportation and storage have always been a major issue for humankind. In this context, the introduction of the plastic or glass for this purpose was a very useful true invention.[2] Bottled water is drinking water either natural or processed, which is sold in plastic or glass bottles.[3] [4] It might be artesian, well, distilled, mineral or spring water. Its market is also segmented into carbonated and non-carbonated water.

Bottled water q.png

Market Overview

China has the world's largest market for bottled water and represents 15% of the global market.[5] The sales of bottled water have grown from USD 1 billion to USD 14 billion within 14 years from 2000 to 2014. The total revenue of this market was USD 46238 million in 2018 and is expected to grow up to USD 58154 million by 2022.[6] It is expected to grow at the CAGR of 5-12% within the time period of 2015-2025.[7] However, the volume of bottled water sales has been decreased from 5% in 2015 to 4.2% in 2017 in China due to immense competition and market saturation within the Asian market.[8]

Key Metrics

Metrics Value Explanation
Base Year 2018 Researched through internet


Market Risks

  • Issue of plastic waste management

Increasing bottled water production will create more plastic waste but plastic recycling is limited in China. In order to produce one tonne of bottled water, around 28.5kg of plastics are needed. It has been estimated that almost 1.6 million tonnes of plastic were required to produce bottled water in 2012. However, only 23% of all plastics were recycled in 2013.[9] It indicates the pressure of plastic waste upon the landfills and incineration system, finally to the ecosystem. As a result, the plastic water bottle might be replaced and restrain its growth.[10]

  • Strain to groundwater and other water resources

A study had shown that to produce one bottle of water almost three bottles of water. Along with this, almost 71% of China's bottled water production is located in scare freshwater resources.[11] As the production of bottled water is increasing, it is going to create extra pressure for the limited water resources available in China. At present government of China is concerned with the three Red Lines Policy to improve water efficiency which is also going to create the risk for the development of this market.

Top Market Opportunities

  • Poor tap-water quality

In China, the tap water is supplied from the rivers which are highly polluted. For instance, in the biggest city in China, Shanghai, almost 80% of tap water is supplied from the Huangpu river which was found to be filled up of 7,500 rotten pig carcasses in 2013.[12] Because of this, mistrust is created among the public regarding the safety of the tap water which in turn creates a favorable environment for the bottled water market.

  • Increasing health awareness among consumer

A survey conducted by the global market research Nielsen showed that almost 81% of Chinese consumers read packaging label carefully for nutritional value, 70% trust the health claims on food packaging and three-quarters are willing to pay more for healthier food.[13] It indicates the health awareness among the public. As the population is aware of the water quality, they will prefer to incline towards bottled water for safety concerns instead of the tap drinking water. This creates a favorable environment for the growth of the bottled water market.

  • Shortage of water

China has only 6.5% of the total world's renewable water resources and almost 400-699 cities with 30 million population are going through a shortage of water. As a result, the Chinese have to rely on bottled water for drinking purpose.[14]

Market Drivers

  • Water Pollution

In the context of China, about 33% of the industrial wastewater and 90% of household sewage is released into rivers and lakes without treatment. As a result, underground water is contaminated in 90% of the cities. It has created the suspicion about the water resources and the public prefer to use bottled water of the standard quality.[15]

  • Higher income levels

In China, the economy of the country remains bigger than before. It is growing at a rate of 6% over 30 years.[16] Because of this, the tastes and preferences of the people are also changing and moving towards western culture. In terms of water consumption, they are getting inclined towards bottled water over municipal tap water.[17]

  • Increasing popularity of natural mineral bottled water[18]

Due to the increase in the awareness level of consumer, they are preferring the products with nutritional benefits. Because of this, they prefer water with natural minerals.

  • Safe alternative to soft drinks

The bottled water is the quite healthier option of beverage in comparison to the soft drinks. For instance, soda, various researches have shown the linkage of soda consumption with type 2 diabetes, heart disease, obesity, and reproductive problems.[19] Chinese people are preferring it as they have a better understanding of health in general.[20]

  • Strong investment in bottled water market[21]

The leading companies involved in the bottled water market is rising their investment and increase their effort for the development of this market, which is driving the growth of this market.

Market Restraints

  • Market saturation[22]

Because of the immense competition in the beverage market globally, the growth of this market might get hindered. In the context of China, the sales volume are on the decline due to market saturation.

  • Failure in National Food and Drug Administration food safety inspection

An inspection conducted by the FDA in 2015 has shown that almost 400 out of 407 beverages samples has failed to meet the standards of water quality. Not only this, almost 60% of sampled bottled water failed to pass national standard in 2012 in Huan province.[23] This will create the situation of mistrust among the consumers which in turn restrain the market.

  • False labeling of bottled water

The bottled water market is facing the issue of the validity of labeling. It was found that bottle labeled as mineral water didn't actually contain the relevant minerals in testing. This also creates the issue of mistrust. Because of this, the Food safety National Standard on Packaged Drinking Water was developed in 2015. [24]

Industry Challenges

  • Existence of unauthorized companies

In the news, it has been reported that almost 100,000 carboys of water were produced by the unauthorized small industries. Usually, these industries use tap water without treatment and preparing the bottled water of low quality. Thus, it is one of the important challenges for the development of this market.[25]

  • Price of bottled water

In comparison to the tap water, the cost of the bottled water is quite expensive. The National Bureau of statistics has estimated that almost 7-14% of average per capita income of urban residents has to be spent only for bottled water.[26] As a result, it is quite difficult for low-income families to afford it for regular consumption. So, it is a challenge for market players to create the product of good quality at low cost.

Technology Trends

In terms of the equipment used for the production of bottled water, new technologies are evolving. For the production of these bottles, commonly used technologies are Blow molding to prepare PET bottles, chemical treatment, disinfection, bottle washing, filtration, and filling and capping. Use of the technology depends upon the type of water resource, the quantity of water to be treated, and content of contaminants.[27]

Pricing Trends

In China, the price of the bottled water varies as per the brand of the products[28] and detailed information regarding it is tabulated below:

Price of botteled water.png

Regulatory Trends

  • National standard of Drinkable Natural Mineral water GB8537-87:

In 1987, China has issued this standard for the first time in the sector of the mineral water.[29]

  • Food Safety National Standard on Packaged Drinking Water[30]

It has been implemented in 2015 to address the issue of labeling of the bottled water. Along with this, it has set the limit for the physicochemical and microbial contaminants.

  • New Hygienic standard of Packing Drinking water

It was implemented in 2015 and is applied for all packaged water products except mineral water products.[31]

Other Key Market Trends

  • Highly concentrated market

In the context of China, small local firms account for the majority of the market share which is national and localized brands.[32] For instance, Nongfu Spring, cest and Danone are the top national brands of China which hold almost 21.5% of the total market share.[33] There are almost 1,500 local brands and 220 new companies have emerged.[34]

Market Size and Forecast

In China, bottled water sales volume was 27 billion liters in 2017 from 25 billion liters in 2015. As far as the per capita consumption of bottled water is considered, the average bottled water consumption is 30 liters per person in China.[35] In 2018, the total population of China was 1.42 billion.[36] On the basis of it, China's bottled water sales volume is estimated at 42.6 billion liters in 2018. It is expected to reach 49 million tons of water by 2020.[37][38] The total revenue for this market was USD 46238 million in 2018. It is expected to reach USD 58154 million by 2022.[39] [40]

Revenue of the bottled water market in China.png

Market Outlook

In China, the sales of the bottled water market are expected to reach 49 million tons of water by 2020.[41] The value of this market sales is expected to reach USD 51504 million by 2019.[42] The bottled water market is projected to grow at the CAGR of 5-12% within the time period of 2015-2025.[43]

Distribution Chain Analysis

In China, the bottled water market is framed out into off-trade i.e. in stores, on trade( bars, restaurants) and bulk delivery sites(home, offices) Here, off trade is valued at retail prices and bulk sales are valued at the wholesale value.[44] Here, Nongfu Spring Co Ltd is the market leader with the largest share of bottled water market i.e.8.5% followed by Shenzhen Cest Bon Food & Beverages Co Ltd while Coca-cola China Ltd has the lowest share in the market.[45]

Competitive Landscape

There are almost 67 bottled waters in China.[46] On the basis of the type of source of water and its processing, this market is segmented as Mineral water, Sparkling water, and Flavoured water. Although the mineral water holds the highest share in the market, sparkling water is the best-growing segment in 2018.[47]

Bottled market share.png

Competitive Factors

  • E-marketing

In order to connect the market online, most of the companies are competing to manage online presence and increase their reputation as Chinese people make a lot of research online and the impact of social networks is immense on the consumer level.[48]

Key Market Players

The market players of the bottled water industry are Wahaha, Nong Fu spring, Shenzhen Cest Bon Food & Beverages, Danone food & Beverage, Ting Hsin International group, Shenzhen Ganten Industry, Coca-cola, Kang Shi Fu and others. Top three market players are Wahaha, Nong Fu spring, and Kang Shi Fu, detailed description is tabulated below [49] In 2018, Nongfu Spring Co Ltd holds the largest market share i.e. 26.4 % followed by Cest Bon Food & Beverages Co Ltd.[50]

Bottle company des.pngBrand china water.png

Strategic Conclusion

The bottled water market in China is one of the world largest markets and is overwhelmed with blooms of opportunities such as growing health awareness about water quality. However, its sales volume was dipped from 5% to 4.2% from 2015 to 2017 and is forecasted to decrease up to 2.8% by 2021.[51]

References

  1. https://www.un.org/press/en/2001/sgsm7738.doc.htm
  2. https://www.nestle-waters.com/ask-nestle/is-plastic-bottle-water-a-necessary-need
  3. https://www.yourdictionary.com/bottled-water
  4. https://en.wikipedia.org/wiki/Bottled_water
  5. https://www.thethirdpole.net/en/2016/01/29/chinas-bottled-water-industry-poses-new-threat-to-precious-resources/
  6. https://www.statista.com/outlook/20010000/117/bottled-water/china#market-globalRevenue
  7. http://ecommercechinaagency.com/bottled-water-chinese-beverage-market/
  8. https://www.mintel.com/press-centre/food-and-drink/market-saturation-hinders-bottled-waters-growth-in-China-reaching-27-billion-litres-in-retail-volume-sales-in-2017
  9. http://www.chinawaterrisk.org/wp-content/uploads/2015/09/CWR-8-Things-You-Should-Know-About-Bottled-Water-In-China-Sep-2015-ENG.pdf
  10. https://www.thethirdpole.net/en/2016/01/29/chinas-bottled-water-industry-poses-new-threat-to-precious-resources/
  11. https://www.thethirdpole.net/en/2016/01/29/chinas-bottled-water-industry-poses-new-threat-to-precious-resources/
  12. http://ecommercechinaagency.com/bottled-water-chinese-beverage-market/
  13. http://www.chinadaily.com.cn/china/2015-01/28/content_19426251.htm
  14. http://ecommercechinaagency.com/bottled-water-chinese-beverage-market/
  15. http://factsanddetails.com/china/cat10/sub66/item391.html
  16. https://en.wikipedia.org/wiki/Economy_of_China
  17. http://www.daxueconsulting.com.hk/bottled-water-market-in-china/
  18. https://www.euromonitor.com/bottled-water-in-china/report
  19. https://foodrevolution.org/blog/food-and-health/soda-health-risks/
  20. http://www.daxueconsulting.com.hk/bottled-water-market-in-china/
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  23. http://www.chinawaterrisk.org/wp-content/uploads/2015/09/CWR-8-Things-You-Should-Know-About-Bottle
  24. http://www.chinawaterrisk.org/wp-content/uploads/2015/09/CWR-8-Things-You-Should-Know-About-Bottle
  25. http://www.chinawaterrisk.org/wp-content/uploads/2015/09/CWR-8-Things-You-Should-Know-About-Bottle
  26. http://www.chinawaterrisk.org/wp-content/uploads/2015/09/CWR-8-Things-You-Should-Know-About-Bottle
  27. https://cph.world/2017/01/30/new-technologies-propel-the-bottled-water-processing-equipment-market/
  28. https://daxueconsulting.com/mineral-water-market-in-china/
  29. http://www.finewaters.com/bottled-waters-of-the-world/china
  30. http://www.chinawaterrisk.org/wp-content/uploads/2015/09/CWR-8-Things-You-Should-Know-About-Bottle
  31. http://www.agr.gc.ca/eng/industry-markets-and-trade/international-agri-food-market-intelligence/reports/sector-trend-analysis-bottled-water-in-china/?id=1486580447145
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  33. https://daxueconsulting.com/mineral-water-market-in-china/
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  35. https://daxueconsulting.com/bottled-water-market-in-china/
  36. http://statisticstimes.com/demographics/china-vs-india-population.php
  37. https://www.beveragedaily.com/Article/2018/03/26/China-s-bottled-water-market-growth-slows-but-other-emerging-markets-pick-up-the-slack-Mintel
  38. http://ecommercechinaagency.com/bottled-water-chinese-beverage-market/
  39. https://www.statista.com/outlook/20010000/117/bottled-water/china#market-globalRevenue
  40. https://daxueconsulting.com/mineral-water-market-in-china/
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  43. http://ecommercechinaagency.com/bottled-water-chinese-beverage-market/
  44. https://www.statista.com/outlook/20010000/117/bottled-water/china#market-globalRevenue
  45. https://daxueconsulting.com/mineral-water-market-in-china/
  46. http://www.finewaters.com/bottled-waters-of-the-world/china
  47. https://www.marketingtochina.com/guide-market-brand-bottled-water-china/
  48. http://ecommercechinaagency.com/bottled-water-chinese-beverage-market/
  49. http://ecommercechinaagency.com/bottled-water-chinese-beverage-market/
  50. https://www.foodnavigator-asia.com/Article/2019/01/28/Danone-Yili-bottled-mineral-water-calls-it-a-day-in-China-amid-intense-market-competition
  51. https://www.mintel.com/press-centre/food-and-drink/market-saturation-hinders-bottled-waters-growth-in-China-reaching-27-billion-litres-in-retail-volume-sales-in-2017

Appendix

  • RMB= Renminbi
  • FDA= Food and Drug Administration


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