Zenith Report on UK Water Coolers February 2010
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Zenith Report on UK Water Coolers February 2010
Copyright All copyright in all Zenith reports is reserved. All text, tables, charts and other material contained within this report, which are the exclusive property of Zenith International Ltd, may not be copied, distributed, transferred or displayed without the express written consent of Zenith International Ltd. Liability Whilst every effort has been made to ensure that the information presented in this document is accurate and that the opinions expressed are sound, Zenith International Ltd cannot be made liable for any errors or omissions or for any losses or consequential losses resulting from decisions based on its contents. Zenith International Ltd 7 Kingsmead Square Bath BA1 2AB United Kingdom t +44 (0)1225 327900 f +44 (0)1225 327901 zenithinternational.com
Zenith Report : February 2010
UK water coolers
2010
2010 ZENITH REPORT ON UK WATER COOLERS CONTENTS Introduction
1
Brief summary
2
PART 1: 2009 total UK water cooler market Total water cooler market overview Total UK cooler market, 2004-2009 Bottled water cooler and POU cooler unit growth, 2009 Bulk bottled water versus small pack bottled water volume growth, 2004-2009 Bulk water category volume shares, 2009 Bulk water packaging split, 2009 Bottled water cooler throughput levels, 2009 Strategies for increasing water consumption in the POU and bottled cooler industries, 2009
3 3 3 4 5 5 5 6 7
PART 2: 2009 total UK water cooler industry structure Industry concentration Top 5 UK cooler companies, 2009 2009 changes to industry structure Bottled water cooler industry operators, 2004-2009 POU water cooler industry operators, 2004-2009 Leading cooler operators' activities Annual acquisitions: bottled water and POU units that changed hands UK water cooler mergers and acquisitions, 2009-10 Leading bulk water brands Industry soundbites
8 8 8 9 9 9 10 11 12 12 13
PART 3: 2009 UK water cooler services and the service offering The service offering POU cooler machine types, 2009 Pricing Sanitisation and maintenance Bottled water cooler units placed by outlet type, 2009 POU cooler units placed by outlet type, 2009 Consumer attitudes and behaviour External factors influencing the market Legislative factors
14 14 16 17 19 21 21 24 26 30
PART 4: Total UK water cooler market forecast Forecast to 2014 Features and trends for the short-term future – survival of the fittest Market potential for industry investors
33 33 33 34
SECTION 2 - CHARTS 1 2 3 4 5 6
Total UK cooler market, 2004-2009 UK cooler share of bottled water, 2004-2009 UK cooler water types, 2009 UK cooler bottle sizes, 2009 Top 5 UK cooler companies, 2009 UK bottled cooler industry concentration, 2004-2009
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Zenith Report : February 2010 7 8 9 10 11 12 13 14 15 16 17 18 19 20
UK POU industry concentration, 2004-2009 Top 5 UK water cooler brands, 2009 POU machine types, 2009 Average annual cooler revenues, 2006-2009 POU company units per employee, 2009 Dual providers‟ units per employee, 2009 UK bottled cooler outlets, 2009 UK POU cooler outlets, 2009 Fuel and oil prices by month, 2009 UK mean temperature, 2004-2009 UK sunshine hours, 2006-2009 UK rainfall, 2007-2009 Total UK cooler market, 2009-2014 UK bulk water market, 2009-2014
UK water coolers
2010 42 43 44 45 46 47 48 49 50 51 52 53 54 55
SECTION 3 - TABLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 19B
UK bottled water market, 2004-2009 UK water cooler market, 2004-2009 UK water cooler market breakdown, 2004-2009 Total UK cooler market outlet splits, 2004-2009 UK water cooler companies and groups by own units, 2004-2009 UK water cooler companies' market shares, 2004-2009 UK POU cooler companies and groups by own units, 2004-2009 UK water cooler brands by volume, 2004-2009 UK water cooler brands market share, 2004-2009 UK water cooler bottlers by sales volume, 2004-2009 UK water cooler bottlers' market share, 2004-2009 UK water cooler distributors by volume, 2004-2009 UK water cooler distributors‟ market share, 2004-2009 UK water cooler throughput by bottler-distributor, 2004-2009 UK water cooler units supplied by bottlers, 2004-2009 UK water cooler distribution by bottlers, 2009 Revenue Indicators, 2007-2009 Total UK cooler industry indicators, 2004-2009 Total UK cooler industry indicators, 2009-2014 Total UK cooler industry indicators, 2009-2014
SECTION 4 – PROFILES Distributor profiles Manufacturer profiles
56 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 123
SECTION 5 - APPENDICES APPENDIX 1: Supplementary information on regulation APPENDIX 2: Glossary APPENDIX 3: Acronyms and abbreviations
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2010
Introduction This report on the UK Water Cooler Market in 2009 is the nineteenth in the series of Zenith Internationalâ€&#x;s UK Water Coolers reports. This report includes equal insight into both the bottled cooler and point of use (POU) cooler industries. An updated companion Zenith Report on UK Bottled Water has now also been issued, together with reports on the European water cooler and POU markets. We are particularly grateful for the help we receive from the bottled water cooler and POU cooler companies we interview. With each report, our aim is to make contact with every significant company active in the relevant sector and to produce as complete a picture as possible at a price accessible to any business with a serious commercial interest. As our research is updated on a regular basis, we always welcome any comments or suggestions about possible improvements. The full range of Zenith Internationalâ€&#x;s reports are available from www.zenithinternational.com/2010reports Thank you for your purchase. Should you have any questions, please contact cholmes@zenithinternational.com for further details.
Mark Groves Director Zenith International
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Charmaine Holmes Senior Analyst Zenith International
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Zenith Report : February 2010
UK water coolers
2010
Brief summary 1.
xx bottled water cooler units were in place at the end of 2009, a decline of xx%, and down from xx units in 2008. However, the decline has lessened from xx% in 2008. The xx unit loss can be attributed to a number of contributing factors; continuing point of use (POU) encroachment, a third year of poor summer weather and the impact of the recession on clients.
2.
The estimated annual revenue of the water cooler industry is just under ÂŁxx million.
3.
Reaching xx units, the POU installed base grew by xx% in 2009, the equivalent of xx new POU units placed.
4.
Water sales through coolers stood at xx million litres from xx million litres, a xx% drop. Overall, the total bottled water market registered a xx% increase, in contrast to a xx% decline the previous year. Bulk water's share of the total market fell from xx% in 2007 to xx%, continuing the downward trend seen since 2003.
5.
Throughput decreased to xx bottles per cooler per month, down from xx in 2008.
6.
In 2009 xx overtook xx c to become the leading operator in the UK water cooler market. Xx maintained third place, ahead of xx, with the fifth position claimed by xx. The top five cooler distributors held a xx% share of the total UK cooler base.
7.
Bulk water volume classified as purified/other accounted for xx% in 2009, down from xx% in 2008. Spring water has continued to grow, now accounting for a xx% market share, with natural mineral water taking a xx% share of total sales.
8.
18.9 to 19.2 litre bulk water represented xx% of total volume sales in 2009. The 17.5 litre R PET bottle format accounted for xx%; whilst the 11/11.3 and 22/22.7 litre formats represented xx% and xx% respectively. 15 litre NR PET took xx%.
9.
xx% of all bottled water cooler units and xx% of POU units were placed in commercial environments in 2009. Offices accounted for xx% of bottled cooler placements and xx% of POU. The residential market accounted for less than xx% of all coolers installed in the UK.
10.
The cold-ambient model accounts for xx% of the POU machines installed in the UK. Carbonated units take an increasing xx% share.
11.
Zenith forecasts that by 2014 the total market will have grown to xx units. POU placement is anticipated to reach xx units, a xx% share of the market, with bottled water coolers standing at xx units.
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Zenith Report : February 2010
UK water coolers
2010
PART 2: 2009 total UK water cooler industry structure The UK cooler industry has witnessed many changes since its inception in 1989. Starting as a highly concentrated core of small players, it is now estimated that there are in the region of xx companies, large and small alike, vying for market share. Between 1993 and 1996, new entrants enticed by the low barriers to entry and high return caused a fragmentation and regionalisation of the market. The growing popularity of POU in the UK during the late 1990s opened the door to a huge influx of entrepreneurs gaining easier access to the cooler industry, without the need for the complex logistical water delivery network associated with the bottled cooler market. Fragmentation at the top end of the market was short lived as the new major players embarked on a period of heavy acquisition activity, although this has slowed considerably over the past three years.
Industry concentration In 2009: the top five cooler companies held xx units the top ten accounted for xx units the top five bottled cooler companies held xx bottled cooler units the top five POU cooler companies held xx POU units the top ten bottled cooler companies accounted for xx bottled cooler units the top ten POU cooler companies accounted for xx POU units For bottled cooler players, xx units are held by those outside the top ten and for POU operators, xx machines are serviced by non-top ten firms.
Top 5 UK cooler companies, 2009 In 2009 xx displaced xx to become the leading operator in the UK water cooler market, with an installed base of xx. Between 2004 and 2009, xx has increased its installed base by xx%. xx has seen a xx% decline in its total number of units since 2004, with particular heavy declines in its bottled installed base. However, the acquisition of xx at the beginning of 2010, may help xx to recapture first position by the end of the year. xx maintained third place in 2009, although its installed base has declined by xx% over the past five years. xx, standing in fourth position with xx units has increased xx% since 2004, whilst xx has grown by xx%. Gains have been heavily influenced by the installation of POU units, whilst equally, those with large bottled cooler portfolios have suffered the greatest declines. The top five cooler distributors held a xx% share of the total UK cooler base, down slightly from xx% in 2008.
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Zenith Report - UK Water Coolers
February 2010
1: UK BOTTLED WATER MARKET, 2004-2009 Million litres
2004
2005
2006
2007
2008
2009e
2006
2007
2008
2009e
All bottled water % change Packaged water absolute volume change % change % share Water cooler % change absolute volume change % share Source: Zenith International
2: UK WATER COOLER MARKET, 2004-2009 Million litres
2004
2005
Production Exports Imports Consumption Production % increase Exports as % of production Imports as % consumption Consumption % increase Bottled cooler machines (000 units in December) POU cooler machines (000 units in December) Average throughput (18.9 litre bottles per month)
Source: Zenith International
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3: UK COOLER WATER TYPES, 2009
Mineral xx%
Purified/other xx%
Spring xx%
Total consumption: xx million litres
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APPENDIX 2: Glossary Bottled water cooler A unit that dispenses bottled purified, spring or mineral water. Units are usually either free-standing or table-top. Free-standing units have dominated the market for some years and account for about 95% of units placed in the UK; they usually take 18.9 litre bottles and are about 1.4 metres in height (including the bottle). Table-top units are most commonly placed in offices and residential settings where space is limited; they take smaller bottle formats than their free standing counterparts (5 litre, 7.5 litre and 11.4 litre). Bottled water cooler units are further categorised by the number of taps and the nature of the water they dispense – single (cold water) tap; two tap (hot and cold or cold and ambient); or three tap (hot, cold and ambient). Bottler
Bottlers supply water to distributors in tankers or bottles. They have no cooler units of their own.
Bottler-distributors
Bottler-distributors have their own water source, fill bottles under their own brand, install their own cooler units and run their own distribution service. They may also fill bottles under contract for other distributors, either under their own brand or under distributor brands.
Distributor
Distributors service their own machines using water supplied by bottlers or bottler-distributors. The water may be marketed under the bottler’s, bottler-distributor’s or the distributor’s brand name.
Horeca
Hospitality sector (concatenation of hotel, restaurant and café).
Natural mineral
To qualify for natural mineral water status, the water must: come from a specified underground source that is protected from any kind of pollution, be stable in its chemical and physical composition, satisfy microbiological criteria and be free of any harmful bacteria, receive no treatment other than filtration (to remove items such as sand particles) or carbonation by the addition of carbon dioxide (although some waters are naturally carbonated), be bottled at source and fitted with a tamper-evident seal, undergo regular analyses after recognition by an approved laboratory to ensure that these exacting standards are maintained. Approval for natural mineral water status requires scientific analysis over time to ensure freedom from pollution and a consistent mineral composition. It is subject to the Natural Mineral Water, Spring Water and Drinking Water Regulations 1990 (SI 1540) and must comply with the Natural Mineral Water, Spring Water and Bottled Drinking Water Regulations 1999 as amended by The Natural Mineral Water, Spring Water and Bottled Drinking Water (Amendment) (England) Regulations 2003 and The Natural Mineral Water, Spring Water and Bottled Drinking Water (Amendment) (England) Regulations 2004. These regulations implement in England the provisions of the parent
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European Directives 98/83/EC and 80/777/EEC (as amended by 96/70/EC and 2003/40/EC. POU cooler
A water cooler device that is plumbed into a potable water supply and improves the quality of the water through some method of filtration or purification. Such machines rarely have a drainage system, unless the method of filtration is reverse osmosis or individual country legislation requires it, otherwise the water is either consumed at the point of release or enters the drip tray. The water is usually chilled, heated or carbonated. Units can be under-sink, faucet/tap, free-standing or table-top. Under-sink units are housed in the cupboard/cabinet below the sink area. They lower the amount of heavy metals such as copper, lead, cadmium and barium in the water as well as magnesium, fluoride and sediment prior to delivery via a mains or secondary source; filtration methods include reverse osmosis, ultra violet (UV) and carbon filter. Faucet/tap units typically utilise carbon and combined staged filtration to deliver filtered water – a ‘diverter’ may be incorporated to bypass the filtration process for dishwashing, etc.
Purified water
Mains or other water subjected to further processing and treatment. Sometimes called ‘drinking water’ or ‘table water’. It may come from more than one source or from a single underground source. It may include the public water supply or be transported from the source to the bottling plant. Bottling companies may carry out filtration and treatment processes on the water to amend its constituents before the water is distributed for sale. Some companies may also add mineral salts and carbon dioxide to their water. It is subject to the Natural Mineral Water, Spring Water and Drinking Water Regulations 1990 (SI 1540) and must comply with the UK and EU texts outlined in ‘Natural mineral water’.
Spring water
Any water from a spring or well may qualify if it meets the same standards as domestic tap water. Impurities may be removed by processing and treatment. Spring water must: be bottled at source unless it was being tankered before 23 November 1996, be safe without disinfection and not treated in any way which will alter the natural microbiology, be bottled under only one name as the largest item on the label (the name of source or place of exploitation), be untreated except to remove unstable elements (sediment, precipitating iron and manganese), meet the parametric requirements of the Drinking Water Directive 80/778/EEC. Unlike natural mineral water, spring water does not have to have a characteristic composition, be free from all traces of pollution or be from a recognised (as opposed to registered) source. It is subject to the Natural Mineral Water, Spring Water and Drinking Water Regulations 1990 (SI 1540) and must comply with the UK and EU texts outlined in ‘Natural mineral water’.
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APPENDIX 3: Acronyms and abbreviations ...
Negligible, less than 0.05
cl
Centilitre
e
Estimate
f
Forecast
na
Not available, not applicable
ACS
Auto cleaning and sanitisation solution
BATTRT
Best available treatment recovery and recycling techniques
BSDA
British Soft Drinks Association
BWC
Bottled water cooler
BWCA
British Water Cooler Association
BWIO
Bottled Water Information Office
CAGR
Compound annual growth rate
DEFRA
Department for Environment, Food and Rural Affairs
DFID
Department for International Development
DTI
Department of Trade & Industry
DWI
Drinking Water Inspectorate
EA
East/East Anglia
EC
European Commission
EFBW
European Federation of Bottled Waters
EPDWA
European Point of use Drinking Water Association
EU
European Union
EVA
European Vending Association
FSA
Food Standards Agency
HET
Health Education Trust
HOD
Home and office delivery
Mid
Midlands
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MRSA
Methicillin resistant Staphylococcus aureus
MSD
Muskoskeletal disorder
NHS
National Health Service
NI
Northern Ireland
Nor
North
NR
Non returnable packaging
ONS
Office of National Statistics
PBB
Polybrominated biphenyl
PBDE
Polybrominated diphenyl ether
PET
Polyethylene terephthalate
PDA
Personal digital assistants
POU
Point of use
R
Returnable packaging
R&D
Research and development
RoHS
Restriction of hazardous substances
Sco
Scotland
SE
South East
SME
Small- and medium-sized enterprise
SSTI
Self-sanitising technology system
UNESDA
Union of European Beverages Associations
UV
Ultra violet
VAT
Value-added tax
Wal
Wales
WEEE
Waste Electrical and Electronic Equipment Directive
WRAP
Waste Resources Action Programme
WRAS
Water Regulations Advisory Scheme
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