According to new figures provided by drinks consultancy Zenith International, the West European water cooler market returned to growth in 2011. Market analyst Iva Hatzold explains more.
In a number of countries across the region, water cooler companies now believe that the worst of the economic downturn is over and are reporting stabilisation of the market.
The combined installed water cooler base in western Europe increased by 1.2% to reach 2.7 million units at the end of 2011.
The number of mains-fed water cooler units, which has been showing double-digit growth in the years before the economic downturn, has slowed down in the last three years and in 2011 it was slightly over 8%.
Mains-fed coolers continued to encroach on bottled coolers' market share to reach 40% of the total cooler base. Bottled water cooler placements remained in decline, though the losses eased compared to 2009 and 2010.
UK is top national market
The UK remains the leading national market within western Europe, followed by Italy. Together they hold over 41% share. In terms of total installed base, the Netherlands, Finland and Greece saw the largest declines mainly driven by significant losses in bottled water cooler placements.
2011 was particularly successful for Italy, Switzerland and Austria, which showed the strongest performance in 2011. In absolute growth terms, the Italian market achieved the greatest number of new placements, ahead of France.
Though suffering an overall decline, Greece achieved the biggest increase in mains-fed units in the region. However, penetration among the population is still far under the average for western Europe, which is 2.67 units per 1,000 people.
For bottled water coolers, Austria showed the largest growth in 2011.
Eden Springs remains the largest distributor and bottler, while within the mains-fed cooler market, UK-based PHS Waterlogic ranks as the largest distributor in the region.
Aggressive price politics
2011 saw very aggressive price politics and negative price trends for bottled water coolers and mains-fed units. Monthly rental and 18.9-litre bottles average prices decreased, which in combination with a decrease in bottled water cooler placements resulted in significant total revenue declines.There are even reports of free cooler rental on bottled coolers in some countries.
Mains-fed prices for rented and sold units have been extremely competitive, as well with UK and Portugal seeing the largest decline in monthly rentals.
In 2011, commercial premises continued to dominate the bottled water cooler placement, whereas the residential market still remains underdeveloped, with the European average standing at only 3% of the installed base.
The difficulties in penetrating the home market are diverse. However, the main challenges remain the high competition coming from packaged bottled water, filter taps and jugs, tap water as well as service and delivery issues.
In contrast to bottled water coolers, the penetration of mains-fed into domestic premises increased significantly in 2011 to reach 11% of total installations. Uptake of mains-fed machines in hotels, restaurants and catering also improved. This development has been driven mainly by innovative and convenient design, cost effectiveness and ease of maintenance.
According to Zenith International, 2012 will remain challenging for lots of national markets as a result of the global economic slowdown and heightened uncertainty. However, the water cooler industry still has potential for growth, and from 2013 most markets are anticipated to return to healthy growth.
In the next five years, nearly 430,000 additional machines will be installed across western Europe, taking the combined installed base to 3.1 million in 2016.
Mains-fed cooler growth will continue, though at a slower pace, and is expected to reach nearly 50% share.
Source: Zenith International
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