Zenith Report on US Point of Use Coolers
October 2010 SAMPLE
Zenith Report : October 2010
US Point of Use
2010
2010 ZENITH REPORT ON US POINT OF USE COOLERS Page Brief summary
1
SECTION 1 - MARKET ANALYSIS
2
US Overview Introduction US POU overview Quantifying the POU market History of POU in the US Bottled water culture Bottled water coolers Tap water culture POU cooler concept Competitive forces: point of use vs bottled water coolers Conversion from bottled water cooler to POU National regulations Competition to POU Geographic penetration of POU in the US Industry structure Industry consolidation Market characteristics Hot/cold/ambient/carbonating RO vs filtration Distillation Outlets Counter-top vs floor-standing Pricing structure Rental charges Purchase price Service and maintenance Key market developments Outlook to 2014
2 2 2 3 4 5 6 7 9 10 11 12 13 13 15 17 17 18 20 20 21 22 22 23 24 24 28
SECTION 2 – TABLES
30
US bottled water cooler and point of use market analysis, 2005-2009 US bottled water market, 2005-2009 Leading US point of use companies, 2007-2009 Leading US point of use manufacturers, 2007-2009 Leading US point of use suppliers, 2007-2009 US point of use distributors, 2007-2009 US and West European point of use characteristics, 2009 US and West European point of use revenue indicators, 2009 US point of use market forecast, 2010-2014
30 31 32 33 34 35 36 37 38
SECTION 3 – PROFILES
39
© Zenith International Ltd 2010
Zenith Report : October 2010
SECTION 4 – APPENDICES Definitions, Symbols, Abbreviations
© Zenith International Ltd 2010
US Point of Use
2010
70
US Point of Use
Zenith Report : October 2010
2010
US OVERVIEW Some POU manufacturers have sought Canadian Standards Association (CSA) certification, which is also recognised within the US. Competition to POU Point of Entry (POE) is commonplace both in domestic and commercial settings. It is a water treatment unit which treats water at the point of entry. This ensures that all water used within the entire building is treated, regardless of which tap it comes from. However, where cost is a concern, an under sink POU unit with a separate tap offers a more economical alternative in that it treats only the water intended for direct consumption (drinking and cooking) typically at a single tap or a limited number of taps, thus reducing operating costs of the treatment device. The existing untreated water tap can then be used for all other cleaning and washing purposes. The costs savings achieved through selective treatment offers consumers the chance to have better quality water than they otherwise might be able to afford. Filter jugs or ‘pitchers’ are widely used and represent the easiest and cheapest means of improving the quality of tap water. Two companies dominate this sector, market leader Brita and Procter & Gamble. Brita pitchers range in price from between US$20 and US$35. A single replacement cartridge starts at US$8 apiece, falling to US$6 when sold as part of a multi-pack. Procter & Gamble also produces a range of filter jugs and filter cartridges under the PUR brand. PUR jugs come in a range of sizes, priced at between US$15 and US$32. Jugs and filters are readily available through large retailers across the country. However, within the residential sector, one of the biggest sources of competition to the POU unit are refrigerators that incorporate a water filtration and chilling facility. These units are becoming particularly popular as they offer a two-in-one solution for both refrigeration and purified, chilled water. Some units also include an icemaker. The filtration unit is readily accessible at the base of the fridge and filter changes can be easily carried out by the consumer, whilst a filter indicator light alerts consumers to the need to change the filter, based on either the length of time the filter has been installed or the gallonage of water filtered, typically every six months or 100 gallons. Whilst the wide array of filtration options available are a source of competition to POU, at the same time the marketing initiatives of filter companies such as Brita and Procter & Gamble have helped boost consumer awareness and acceptance of the concept of water filtration, which has benefited the POU industry as a whole. The other main source of competition to both the POU and bottled water cooler industries is the retail packaged water market, which has been enjoying strong growth in recent years. The 50cl bottled water format is particularly appreciated by consumers who want a convenient source of water whilst on the move throughout the day. Another significant source of purified water, and consequently a competitor to POU, is the dispensing stations, often found in retail centres or water stores. These stations enable consumers to refill their own bottles at very low cost. Atmospheric water generators, which collect and purify water from the atmosphere are also available in the US. Companies producing these include WaterPure International, EcoloBlue and Air2Water. They represent a very small niche at present and are not included within the scope of this report. The unit itself, which is not dissimilar in appearance to a standard POU unit, requires simply an electrical connection, without any water inlets or outlets. It is marketed as an ideal choice for homes, boats, recreational vehicles (RVs) and even small offices.
Š Zenith International Ltd 2010
12
US Point of Use
Zenith Report : October 2010
2010
US TABLES 1. US BOTTLED WATER COOLER AND POINT OF USE MARKET ANALYSIS, 2005-2009 Units in December
2005
2006
2007
2008
2009e
Point of use 000 units POU % growth Units per '000 people % share of total market Bottled water coolers 000 units BWC % growth Units per '000 people % share of total market Total coolers 000 units % growth Units per '000 people
Š Zenith International Ltd 2010
30
Zenith Report - US Point of Use Coolers
October 2010
PHSI PURE WATER TECHNOLOGY USA Company Structure Address: Tel: Website:
120 East Lake Street, Suite 401, Sandpoint, Idaho 83864, USA +1 208 265 8408 Fax: +1 208 265 8670 www.purewatertech.com Email: Via website
Senior management: Related activities: Non-related activities:
Alan Crosby, President and CEO
Point of Use Unit Analysis Units placed on market by year end (total of units through current rental contracts, plus number sold directly or indirectly) 2007 Indirect supply
USA
Total POU units
USA
2008
2009
Marketing Analysis Unit type %, 2009 Cold-ambient Hot-cold
Outlets %, 2009 % %
Away From Home
%
Commentary In 1996 Craig Story formed two incorporated companies - Pure Health Solutions, Inc (PHSI) and Pure Water Technology, Inc with the purpose of developing, manufacturing and selling water purification systems. In 1998 PHSI launched a six-stage water purification system. The company operates an exclusive dealer base throughout the US and overseas. Originally point of use skeleton units were sourced from Oasis and equipped with purification equipment by PHSI. The contract was switched in late 2004 to South Korea's ENstar Co, which produced a premium range of point of use units, under the brand name BONaqua. In September 2005, PHSI acquired ENstar Co. In January 2010 PHSI was itself acquired, by private equity fund ClearLight Partners. Alan Crosby was named CEO, replacing Craig Story.
Š Zenith International Ltd 2010
US Point of Use
Zenith Report : October 2010
2010
APPENDIX DEFINITIONS Manufacturer: Company that manufactures and/or assembles POU units for sale to suppliers and/or distributors. Supplier: Company that purchases POU units from manufacturers before reselling them to distributors and/or end-users. Distributor: Company that sells or rents POU units direct to end-users. SYMBOLS e
Estimate
f
Forecast
na
Not available, not applicable
AWWA
American WaterWorks Association
CSA
Canadian Standards Association
EPA
Environmental Protection Agency
EPDWA
European POU Drinking Water Association
FDA
Food and Drug Administration
GSA
General Services Administration
HOD
Home and Office Delivery
HORECA
Hotels, restaurants and catering establishments
IBWA
International Bottled Water Association
NRDC
Natural Resources Defense Council
NSF
National Sanitisation Foundation
OCS
Office coffee service
POE
Point of entry
POU
Point of use
PWS
Public Water Source
RO
Reverse osmosis
ROI
Return on investment
Š Zenith International Ltd 2010
70
US Point of Use
Zenith Report : October 2010
UV
Ultra violet
WQA
Water Quality Association
2010
US STATE ABBREVIATIONS Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah
Š Zenith International Ltd 2010
AL AK AZ AR CA CO CT DE DC FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT
71
US Point of Use
Zenith Report : October 2010
Vermont Virginia Washington West Virginia Wisconsin Wyoming
Š Zenith International Ltd 2010
2010
VT VA WA WV WI WY
72