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Autor: anton • July 16, 2011 • 652 Words (3 Pages) • 745 Views
Competition in the Bottle Water Industry
From 1996 to 2001 the bottle water industry worldwide sales went from 21 billion gallons to 32 billion gallons, with an annual growth rate average of 8.7%. The worldÐ²Ð‚™s largest market for bottled water, the United States attributes their 9.2% annual growth rate to consumerÐ²Ð‚™s concerns regarding the purity of tap water, and a more health conscious society. The convenience and portability of bottle water made it a perfect match for the active lifestyles of American consumers. The top competitors in both the U.S. and global market include Nestle Waters, Groupe Danone, Coca-Cola, and PepsiCo. The competition in the bottle water industry is intense. The driving forces of the bottle water industry are causing competitors to merge with one another, develop new product variations, and enhance production and distribution channels.
PART 1. DRIVING FORCES
The growing assumption that we will no longer see the growth rates increase, as we have in the late 1990s and early 2000s is causing price competition. The slowdown in the rate is also causing the industry to become unattractive for smaller competitors. The smaller regional competitors have begun merging with larger competitors. Another attempt companies are making is differentiation.
A pricing survey reported the strong price competition in the industry caused retail prices to decrease by 3.4 percent from July 2001 to July 2002. The pricing survey also reported some brands to decrease as much as 9 percent. Some of this price decline can be attributed to the introduction to the multipacks of bottle water. The consumerÐ²Ð‚™s demand for the packaging of the bottle water is changing. The demand for bulk water sold in 1 galloon or more containers is decreasing while the demand for water sold in one-liter or less is increasing.
Nestle Waters started acquiring smaller regional companies in 2000 with Aberfoyle Springs and then in 2001 they acquired Black Mountain and Aqua Cool. Groupe Danone acquired Naya and McKesson in 2000. Similar acquisitions were taking place with other leading bottle water competitors. This industry consolidation was creating a more global competitive environment for the bottle water industry. See the below exhibit that shows the top 5 U.S. Bottled Water Brands in 2001
Exhibit 2 Top 5 U.S. Bottle Water Brands, 2001
Rank Brand Parent Company Market Share
1 Aquafina PepsiCo 10%
2 Dasani Coca-Cola 8.6%