However, a return to the favourable days of the early 2000s is unlikely, with opposition to bottled water on environmental grounds expected to continue and consumer spending to remain constrained for some time. According to IBISWorld’s report, the London Olympic Games will provide a boon to producers, while climatic conditions will have a major influence on industry performance. Industry revenue is forecast to grow by 2.8% per annum over next five years, to total £595.5m in 2016-17.
After a period of stellar growth during the late 1990s and early 2000s, the bottled water industry went gone into decline in 2006-07. This was caused by unfavourable climatic conditions, a mounting community backlash against the environmental impact of bottled water and the most savage recession in the UK for half a century.
All of these factors took their toll on industry revenue. IBISWorld estimates that revenue will contract by 2.5% per annum over the five years through 2011-12, despite a 2.2% increase in 2011-12. By the end of 2011-12, revenue is expected to total £517.6m.
According to IBISWorld analyst, Naren Sivasailam, conditions are forecast to improve over 2012-13 as the economy slowly recovers from the recession. “The London Olympic Games will be a boon for industry operators and any increase in average temperatures will stimulate sales, although stable growth will be hard to achieve,” says Sivasailam.
Demand for bottled water is expected to decline as consumers come to terms with rising interest rates, weaker public spending and higher taxes, while opposition to bottled water on environmental grounds is likely to resurface.
According to IBISWorld, future growth will need to be driven by savvy marketing and further innovation in products and packaging. Efforts to improve environmental image and the launch of new ‘ethical’ brands will be crucial to industry growth, as will better communicating the health benefits, natural sources and convenience of bottled water to consumers.
The UK Bottled Water industry displays a medium level of concentration, with the top four producers accounting for the majority of industry revenue in 2011-12. The major players in the UK include: Highland Spring (Highland Spring, Gleneagles, Speyside Glenlivet), Nestle Waters UK (Buxton, Nestle Pure, Perrier, San Pellegrino), Princes Limited (Aqua Pura) and Eden Springs UK.
Source: IBISWorld
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