The 1970’s is when the bottled water industry started to grow, since then it has continued to grow a rapid rate across the world. In 2013 the market value was 157.26 billion dollars. By 2020 it is predicted to reach 279.65 billion Many people are starting to be more health concisous which has helped the bottled water manufacturing business grow exponentially. Subindustrys of of bottled water are: still, carbonated, flavored, and functional .Still (non-carbonated) water is the largest segement of the bottled water industry. In 2013, still water made up for 64.9% of the market share the global market for bottled water. The second largest part is the carbonated bottled water, at 22.9% of the market share, 7.1% for the flavored bottled water, and 5.1% for functional bottled waters.
The industry is not only growing fast in dollars but also in volume. The CAGR is exprecting an 8.7% rise during the years 2014 through 2020. Excpted growing in volume for the years 2014-2020 the CAGR is 8.3%. Rising disposable income is one contributors leading to the growth of the bottled water industry and being able to purchase water in bulk. More knowledge awaring people of the possible hazards to health from drinking tap water has been a major factor helping bottled water industry growth.
The bottled water industry has been divivded into four regions across the globe: North America, Europe, RoW, and Asia Pacific. In 2013 the Asia Pacific segment made up 33% pf the industry, and is expected to continue to grow at 10.5% CAGR and remain the industry leader up until atleast 2020. The Europe region comes in second in market size of estimated 28.8%
The United States has three major players. Coca-Cola Company produces the Dasani brand of bottled water. PepsiCo, Inc. produces the brand Aquafina. Mountain Valley Spring Company
Economies of Scale:
To enter into the bottled water industry very high sunk costs, however the per unit cost is not very costly at all. Producing more bottles of water will result in an increase in profits because the expenses won’t increase as much with an increase in sales. Basically, a a reduction in unit costs is attributed to a larger output.
Porter’s Five Forces:
Risk of Entry: The risk of entry into the bottled water industry is very low, because there are many established compeitors already in the market. Access to distribution is a strong barrier and people are brand loyal.
Bargaining Power of the Suppliers: The power of the suppliers is weak because water is easily and readily available from all cities.
Threats of Substitutes: The threats from possible substitutes is moderately strong all non-alcoholic drinks such as, juice and milk are possible substitutes that are within the same…