Bottled Water Market - Essay Example

Introduction This paper provides an insight into the bottled water market in the developing as well as developed countries of the world. Bottled water market including mineral water, treated water, sparkling water, carbonated water and soft drinks etc has been having a considerable hike for the past few decades. The scenario appears to be more or less same for both the developed and under-developed nations. There lie several dimensions for this boost in the bottled water demand that will be explored in the paper. The paper has been split up into two parts: the first part of the paper penetrates into major reasons underlying the enhanced demand for bottled water industry in the context of developed as well as underdeveloped countries of the world. The second part will contrast the bottled water market in two specific countries. The countries chosen for this purpose are Scotland and Saudi Arabia, whereas the major bottlers in these countries selected are Strathmore and Masafi mineral water respectively. -- Part I -- Reasons For Purchase Of Bottled Water There appear to be several reasons inducing people to purchase bottled water in any part of the world. Of course, bottled water is far costlier than the tap water for the people in the developing countries as compared to the under-developed countries. However, the demand for bottled water in all its forms has been on a substantial rise in both the sections of the world. People in the poor as well as rich countries are willing to pay a high price for bottled water while avoiding having tap water that is available to them cheaply. The motives driving the people to purchase bottled water are discussed below in the context of developed and developing countries of the world. Developed Countries: The bottled water market is booming in all parts of the world with an annual volume of about 89 billion litres, which shows that an average person drinks 15 litres of bottled water every year (Danone, 2000). The western consumers comprise the major market for the bottled water companies especially from the European countries. Apparently, these are the developed countries of the world with high per capita income and enhanced awareness of health and purity matters. Scotland is also one of the developed nations of world with a booming bottled water market. It is interesting to note that in developed nations of the world, the tap water available to people is much safer to drink, albeit the people are inclined to purchase bottled water more than those in developing countries. The main reasons inducing people to purchase bottled water in a developed European country like Scotland are as follows: People buy bottled water in the country because they are concerned profoundly with health matters and thus inclined to regard bottled water as a source of good health. People also refrain from using tap water and opt for bottled water because of the contamination of tap water and disease threats associated with impure water. People also make their bottled water purchases under the influence of social practices and fashion symbols In Scotland, people have relatively higher level of income and good standard of living, therefore they tend to spend more on bottled water such as carbonated drinks etc for fun and pleasure Due to increase in the number of cars owned by individuals every year. Bottled water are easy to carry and dispose off due to their convenient package, therefore people prefer to buy bottled water while travelling. Developing Countries As evident from the above discussion, much of the reasons motivating people to purchase bottled water come from their life styles, fitness concerns, marketing influence, pleasure, income patterns and social status etc. These factors are rarely visible in most of the developing countries in the world. The two most important factors motivating the people to purchase expensive bottled water in developing world, especially in a country like Saudi Arabia are discussed below: Scarcity of water is one of the acute problems faced by many developing nations of the world, in particular when it comes to the availability of clean and pure water. Saudi Arabia is a desert, therefore, a shortage of pure drinking water has always been a problem for the country, causing people to purchase bottled mineral water for their consumption. Contamination in tap water is the major concern leading to the purchase of bottled water in any country and this issue raises particular concerns when it comes to the developing countries. The threats of diseases and water-related contaminations lead people in developing countries to opt for bottled water, which they consider to be beneficial for their health. Lenzer (1997) suggests that one of the reasons people are motivated to buy bottled water is that they fear a health loss caused by water flowing in filthy city water pipes. -- Part II -- Demand For Bottled Water The demand for bottled water has been surging substantially in all parts of the world. There are several dimensions causing the bottled water mania to boost and add to the demand of such products every year. Albeit the price of bottled water is too high as compared to the tap water, the demand continues to rise. It is therefore apparent that demand for bottled water is showing an inverse relationship with its price. There are several factors behind this hiking demand of bottled water. Health Concerns Among People The bottled water consumers, observably tend to consider tap water as bad in quality and this is the 'selling' phenomenon that is capitalized by the bottling companies around the world. People in developed countries happen to be more aware of their health matters. Mc Nulty (2004) propounds that the pre-eminent secret behind the success and growth of bottled waters is the health-consciousness among people. Feeling Of Well-Being And Pleasure In the developed countries of the world, the bottled water is demanded because it bears a feeling of pleasure for consumers. The western consumers consider bottled water as a secret to their fitness and these bottles have a special feeling associated with them. Hence, one of the factors promoting the growth of bottled water happens to be the fitness mania prevailing among general public especially females and youngsters. Aggressive Marketing Campaigns The marketing and promotional campaigns run by the bottled water companies also sum up to be a major reason behind such a hike in their demand. The marketing campaigns promote the bottled water as low-calorie water and seriously raise concerns among public such as purity, healthy life, safety, fitness etc to make people consider bottled water as healthful. The recent success of bottled water products, such as mineral water, purified water, soft and carbonated drinks illuminate the influence of aggressive marketing campaigns on general public. Urbanization and Fashion Symbols Increasing city dwelling and fashion awareness also drive consumers to purchase the product in certain nations. Consumers living in city have easy access to bottled waters and they confront with concerns regarding the impurities in tap water, flowing through lead pipes etc, inclining them to purchase bottled water. People also tend to see bottled waters as fashion symbols, the consumption of which gives them urban and fashionable spirit. High Income And Standard Of Living A high standard of living and sufficient income patterns are evident in developing regions of the world, therefore, people tend to visit supermarkets more often where they easily come across attractive bottled water, including soft drinks and mineral water etc. Drinking bottled water matches these consumers' social and income patterns, having a sign of high social status. Bottled Water Market- Scotland Vs Saudi Arabia Both Scotland and Saudi Arabia, although there happens to be a considerable difference between their economic state, consumer behaviour patterns, and income level etc, offer a promising market for bottled water as evident in recent growth level. However, the market patterns for bottled water varies between the two countries. Scotland The Scottish bottled water market is highly booming. According to Food Standards Agency Scotland (2006), the bottled water market in Scotland is valued at approximately 169 million. The take home bottled water market in 2006, on the other hand, equals 44.5, accounting for about 10% of whole UK market. This shows that Scottish market for bottled water is really attractive; therefore, various foreign suppliers have also entered the market, as depicted by the chart below: Suppliers Market Share Scottish Brands 35% French 30.4% Food Standards Agency Scotland (2006) The above chart illustrates that the major suppliers of bottled water in Scotland are the local brands with a market share of 35%. This shows that bottled water market in the country is dominated slightly by the Scottish brands with French brands competing vigorously because of the future attractiveness of the market. Saudi Arabia The bottled water market of Saudi Arabia comprises of both the national suppliers as well as the foreign suppliers. The foreign suppliers of carbonated drinks, such as Pepsi and Coke dominate the market, while the local suppliers dominates in juice market (The Saudi Arabian Economy, 2005). Saudi Arabia has a strong market for all varieties of bottled water, in particular the carbonated drinks market owing mainly to its hot weather as depicted in the chart below. However pure bottled water demand was next to the carbonated drinks demand being 28.1%. Therefore, the market pattern for bottled water demand in the country shows a hierarchy from carbonated drinks, to bottled water and then juices. Saudi Bottled Water Market Demand By Volume: 2001 Total Demand- 3100 Million Litres Category Market demand Carbonated Drink 44.2% Juices 18.7% Bottled Water 28.1% Source: Market Review And Outlook (2002) The table presented below exhibits the growth of bottled water market demand from the year 2001-2006. According to the chart, the demand for bottled water has grown by about 3.5% during the period of five years, while the juice market dominated the growth in bottled water demand by 8.0%. There is evident growth in all the three major sectors of the bottled water market demand in the country during 2001-2006. Saudi Bottled Water Market Demand: 2001-2006 Category Growth Carbonated Drink 2.5% Juices 8.0% Bottled Water 3.5% Source: Market Review And Outlook (2002) Major Suppliers of Bottled Water- Scotland And Saudi Arabia The major suppliers of bottled water in both the countries include local as well as foreign suppliers. The Scottish leading brand, however, is named Strathmore and in Saudi Arabia, the prominent brand name in bottled water market is Masafi Mineral Water. Strathmore Strathmore is the leading local brand of bottled water in Scotland. It supplies all the categories of bottled water including still water, sparkling water, flavoured water and juices. The company launched its first mineral water brand in the year 1960 and ever since then, it has been ruling the industry. It is seeing a period of market growth in Scotland with bottled water demand hiking at an advanced level and is also an evidence of dominating share of Scottish bottled water in the entire market. Strathmore is not only a leading brand name is Scotland but also a very prominent producer of bottled water throughout the UK and Great Britain (Strathmore, June 16, 2006) Masafi Masafi is a major producer of bottled mineral water in the Middle East region with a market leadership for about 26 years. It was formed in the year 1976 and since then it has been providing its products to Middle East countries including Saudi Arabia. Masafi was the first brand to achieve the ISO 9002 certification in the whole region and received the ISO 9001:2000 certification for enhancing and preserving a high standard quality of its products. Masafi Water is pure, genuine and truly natural water. It has also acquired certification of various testing authorities in the industry. Masafi is a member of International Bottled Water Association (IBWA) and Asia Bottled Water Association (ABWA). Masafi Water is examined and certified by NSF International, U. S. A., which is responsible to conduct surprise audits at an yearly scale on behalf of IBWA (Strategiy. Com, June 16, 2006). References Danone, Annual report 1999, Groupe Danone, (2000) Lenzer, R. A monster beverage event, In Forbes Magazine, 20 October 1997 Strike Healthful Balance, Nation's Restaurant News, 38 (1997) Market Review And Outlook, The National Commercial Bank- Economics Department, 11.29 (2002). June 15, 2006 Masafi, Strategiy Company News. June 16, 2006 McNulty, B., Bottled-Up Demand, Restaurants and Institutions, 114.13 (2004), pp. 45-46 Strathmore. Strathmore Down The Years. June 16, 2006 The Saudi Arabian Economy. U.S.- Saudi Arabian Business Council. November 16, 2005. June 16, 2006 http://www.us-saudi-business.org/The%20Saudi%20Arabian%20Economy.html#PACKAGING Read More