The bottled water manufacturing industry's growth in Australia during the past five years has been buoyed by ongoing consumer desire for healthy, convenient beverages and generally sound economic conditions.
IBISWorld industry analyst Naren Sivasailam, said: “Bottled water has been among the best performing beverages for the past decade.”
After falling off briefly following the global financial crisis, this growth trend looks set to continue in the years ahead. Demand from supermarkets and convenience stores is expected to pick up in response to rising consumer expenditure, warmer than average weather and growing health awareness.
IBISWorld estimates that industry revenue will increase at an annualised 0.2% over the five years through 2012-13 to total $600.7m. In 2012-13, Bottled Water Manufacturing industry revenue is expected to decline by 0.1%.
The industry faces a relatively bright future over the next five years, with the recovering economy, rising average temperatures, growing health awareness and consumers' ongoing need for convenience expected to drive sales of bottled water.
Mounting environmental criticism of bottled water looms as the industry's major threat. “Producers have moved to counter this criticism by developing more environmentally friendly packaging and emphasising their green credentials”, Sivasailam adds. Over the five years through 2017-18, revenue is forecast to increase moderately.
The Bottled Water Manufacturing industry displays a medium level of market share concentration. The top two players in the industry are Coca-Cola Amatil and Asahi Holdings Australia.
Industry concentration has been increasing gradually over the past five years with larger beverage companies acquiring successful bottled water brands.
For example, Coca-Cola Amatil entered the bulk packaged water segment with its purchase of Peats Ridge and Neverfail. During August 2010, Asahi Breweries agreed to buy P&N Beverages for about $360m.
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 $962m.
In February 2011, the ACCC blocked the acquisition due to competition concerns in the carbonated soft drinks, fruit juice and bottled water markets. However, in August 2011 the ACCC approved the acquisition of P&N's water and juice businesses by Asahi.