USA POU and Bottled Coolers Report by Zenith Global

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USA Bottled Water Coolers and Point of Use Report 2015

STRATEGY & MANAGEMENT  MERGERS & ACQUISITIONS  COMMERCIAL & MARKET  OPERATIONS & TECHNICAL  WATER & GEOTHERMAL  ENVIRONMENT & CARBON  PACKAGING & DISTRIBUTION

Table of contents Bottled water coolers and point of use Introduction

Methodology

Commentary Market overview - bottled water coolers (BWC) and point of use (POU) - BWC and POU in context - West Europe evolution 2010-2015e - US Overview & Industry developments Market structure - bottled water coolers - Throughput - Cancellations - Contract lengths - Outlets - Machine types - Water types - Legislation - Maintenance and additional services Market structure - point of use - Conversion - Outlets - Machine types - Rented/ sold - Maintenance and additional services

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7 7 9 16 19 19 19 20 21 21 22 22 23 24 26 27 28 28

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Table of contents Bottled water coolers and point of use Commentary (continued) Price structure and revenue indicators - bottled coolers and point of use Bottled coolers - companies Bottled coolers - brands Point of use - distributors Bottled coolers and POU forecasts

30 31 32 33 34

Charts Units in December - units/ million litres, % growth 2010-15e

Bottled water cooler units, 2010-15e Bottled water cooler volume, million litres, 2010-15e Bottled water cooler throughput, 2014-15e Bottled water cooler cancellations, 2014-15e Bottled water cooler outlets, 2015e Bottled water cooler machine types, 2015e Bottled water cooler water types, 2015e

17 17 19 19 20 21 21

Point of use units, 2010-15e Point of use units added, 2014-15e Point of use outlets, 2015e Point of use machine types, 2015e Point of use rented/sold, 2015e

24 24 26 27 28

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Table of contents Bottled water coolers and point of use Charts (continued) Bottled water coolers price structure, 2014-15e Point of use price structure, 2014-15e Bottled water coolers companies, machines, 2010-15e Bottled water coolers companies, volume, 2010-15e Bottled water coolers brands, volume, 2010-15e Point of use distributors, machines, 2010-15e Bottled coolers and POU forecasts, 2015e-20f Bottled coolers and POU split forecasts, 2015e-20f

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Appendix Definitions Symbols US State abbreviations

37 37 38

Company profiles Key company profiles NestlĂŠ Waters North America DS Waters of America Culligan Quench Onesource Water Vertex Waterlogic Other company profiles

40 41 42 43 44 45 46 47

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Introduction Bottled water coolers and point of use  Since 2010, the point of use (POU) concept has increasingly stolen territory from bottled water coolers. This has been mainly on the back of its ‘green’ credentials and increased convenience. In addition, the POU segment benefitted from the popularity and ubiquitous nature of coolers, paving the way for the transition from bottled coolers to POU.  Nevertheless, the overall cooler market is highly competitive and presents a challenging environment in which to operate. On the bottled cooler side, the market is extremely consolidated in the USA with 3 major companies having significant national presence. On the POU side, the market remains highly fragmented with most companies having only regional presence.  Note: For the purpose of this report, the term 'POU' represents a free-standing unit which is not integrated into any other furniture or mounting. The unit may be either floor-standing or counter-top. Zenith excludes from this definition units which may include POU purification technology but are installed within a cupboard, termed under-the-counter or under sink units and generally feature a pipe connection from the unit to a separate tap which is generally located over a sink, alongside the standard mains water tap. To the contrary, many players within the US market will consider the whole gamut of units equipped with a filtration or reverse osmosis purifying device, whether free-standing or not, to be ‘point of use’. In its contacts with US distributors, Zenith has attempted to ensure that only free-standing POU units have been included in the total market estimates.

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Methodology Bottled water coolers and point of use  In undertaking its research, Zenith depends upon the goodwill and co-operation of firms in the marketplace to provide accurate figures on their activities. Every effort has been made to include as broad a range of players active in the industry as possible. However, as water delivery or POU are not a central or actively marketed product for certain players and thus finalised figures may not be available, Zenith has, in certain instances, had to produce a ‘best estimate’ from industry sources. This is certainly the case for all 2015 figures where finalised figures are not available yet. Since comparisons tend to be based on the size of cooler portfolios, overstatement of installation numbers is a risk inherent in a detailed analysis of the industry. Ultimately Zenith has had to make its own judgement and therefore all unit numbers should realistically be regarded as Zenith estimates.  In its contact with companies offering water purification, water delivery and POU services within the US market, in addition to suppliers to the industry and other organisations linked to water purification, Zenith is confident that it has identified and contacted the leading cooler players across the country. However, the US market is characterised by a high level of fragmentation and it is believed that there are more than 500 small players across the country. For the most part, however, these players service portfolios of just a handful of units, of as few as 50 or 100 in total. Zenith has adjusted its market totals for the collection of small operators with the inclusion of an ‘Others’ category.  The cooler unit totals presented in this report represent the cumulative number of units in place at the end of each given year, taking into account any drop-off of old units. The reason that cumulative totals are applied is that each active unit generates revenue, either through rental or servicing or water delivery. Generally, any growth expressed, either historic or forecast, applies to the growth of the cumulative total. Zenith would like to express its sincere gratitude for all help and assistance received from the cooler industry during this report’s research process.

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Market overview BWC and POU in context - West Europe evolution, 2010-2014 ď ˇ Commentary 2010

2011

2012

2013

2014

2015e

Bottled water coolers (BWC) Units % change Units per thousand people % share of total cooler market Point of Use (POU) water coolers Units % change Units per thousand people % share of total cooler market Total coolers Units % change Units per thousand people

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Market overview BWC and POU in context - West Europe evolution, 2010-2015e 

Commentary

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Commentary

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Commentary

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Market overview US Overview & industry developments 

Commentary

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Commentary

Country: Cooler Market Evolution 2010-2015e 15

Commentary

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Commentary

4 5

Million USD



Thousand Units

0 2010

2011

2012

2013

2014

2015e

Years

. BWC units

POU units

Coolers revenue (mUSD)

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ď ˇ

Market overview US Overview & industry developments 2010

2011

2012

2013

2014

2015e

Bottled water coolers Units % growth Units per '000 people Million litres % growth Point of Use Units % growth Units per '000 people Total coolers Units % growth POU % share BWC % share

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Market overview US Overview & industry developments

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Commentary

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Commentary

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Market overview US BWC and POU overview & industry developments S

Strengths

Weaknesses

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Commentary

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Commentary

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Commentary

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Commentary

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Commentary

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Commentary

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Commentary

Opportunities

Threats

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Commentary

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Commentary

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Market overview US Overview & industry developments Industry developments  Commentary  Commentary  Commentary  Commentary

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Market overview US Overview & industry developments Industry consolidation 

Commentary.

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Commentary .

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Buyer

Target

Type

Year

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Bottled water coolers market

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Market structure Bottled water coolers Bottled water cooler volume 2010 -15e

Bottled water cooler units 2010 -15e 70

60000

50,000

40000 30000 20000

2010

2011

2014

2015e

50 40 30 20

10000 0

60 60

Million litres

BWC Installed units

50,000 50000

10 0 2010

   

2011

2012 2013 Years

2014

2015e

2012 2013 Years

Commentary Commentary Commentary Commentary

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Market structure Bottled water coolers Throughput  Commentary  Commentary

Throughput

2014

2015e

2014

2015e

Litres per cooler

Cancellations  Commentary  Commentary

18.9l bottles per cooler per month

Cancellations Quit rate %

Contract lengths  Commentary  Commentary.

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Market structure Bottled water coolers

Outlets, 2015e

Outlets  Commentary  Commentary

Commercial

50.0%

50.0% Domestic

Machine types 

Commentary



Commentary

Machine types, 2015e

Hot-cold 50.0%

50.0% Cold-ambient

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Market structure Bottled water coolers Water types, 2015e

Water types 

Commentary



Commentary

25.0%

Eau de boisson Mineral Purified Spring Other water type

25.0%

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Market structure Bottled coolers Legislation  Commentary  Commentary Maintenance and additional services  Commentary  Commentary

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Point of use water coolers market

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Market structure Point of use water coolers 

Point of use cooler units 2010-15e

POU Installed units

12,000 10,000 8,000 6,000

Units added 4,000 2,000 0

BWC to POU conversions

New POU

2014

2015e

Replacement rate % 2010

2011

2012 2013 Years

2014

Number of units

2015e 

Conversion 

Commentary



Commentary

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Market structure Point of use water coolers Outlets  Commentary  Commentary  Commentary

Outlets, 2015e 16.7% 16.7%

Offices 16.7%

Factories Institutions

Shops Domestic

16.7%

Others

Machine types

16.7% 16.7%



Commentary Commentary Machine types, 2015e 25.0%

25.0% Hot-cold Cold-ambient Carbonated Others

25.0%

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Market structure Point of use water coolers Rented vs. Sold units, 2015e

Rented/sold  Commentary  Commentary

Rented Sold 50.0%

50.0%

Maintenance and additional services  Commentary  Commentary

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Bottled water coolers and Point of use market

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Price structure and revenue indicators Bottled water coolers and point of use Point of use

2014

2015e

Bottled water coolers

Average monthly rental ($)

Average sales price per unit ($)

Total revenue ($)

2014

2015e

 Commentary  Commentary  Commentary

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Bottled water coolers Companies Machines in December

2010

2011

2012

2013

2012

2013

2014

2015e

% share 2015e

% 15-14

2015e

% share 2015e

% 15-14

Company 1 Company 2 Company 3 â&#x20AC;Ś Others Total Market

Million litres

2010

2011

2014

Company 1 Company 2 Company 3 â&#x20AC;Ś Others Total market

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Bottled water coolers Brands

Million litres

2010

2011

2012

2013

2014

2015e

% share 2015e

% 15-14

Brand 1 Brand 2 Brand 3 …

Others Total market

 Commentary  Commentary

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Point of use Distributors Machines in December

2010

2011

2012

2013

2014

2015e

% share 2015e

% 15-14

Company 1 Company 2 Company 3

Others Total market

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Bottled water coolers and point of use Forecasts Units in December

2015e

2016f

2017f

2018f

2019f

2020f

CAGR 2015-2020

% growth 2020 - 2015

Bottled water coolers Units % growth Million litres % growth Point of Use Units % growth Total coolers Units % growth POU % share BWC % share  

Commentary Commentart

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Bottled water coolers and point of use Forecasts 

Commentary



Commentary.



Commentary

50.0%

BWC/POU split, 2020

BWC/POU split, 2015e

BWC/POU split, 2010

POU

BWC

50.0%

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Appendix

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Bottled coolers and point of use 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 f BLWA BPA EPA HOD IBWA NRDC NSF OCS PET POU RO ROI UV WQA

Estimate Forecast Bottleless Water Association Bisphenol A Environmental Protection Agency Home and Office Delivery International Bottled Water Association Natural Resources Defense Council NSF International, known as National Sanitisation Foundation until 1990 Office coffee service Polyethylene terephthalate Point of use Reverse osmosis Return on investment Ultra violet Water Quality Association

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Bottled coolers and point of use Appendix US State abbreviations Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas

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AL AK AZ AR CA CO CT DE DC FL GA HI ID IL IN IA KS

Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina

KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC

North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY

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Top company profiles

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COMPANY NAME Category: Address: Tel: Website:

Fax:

1-203-531-4100

Company Structure: Ownership: Senior management: Related activities:

Brand

Description

Pack type

Sizes (litres)

Marketing Analysis Sales Volume Million Litres

2010

2011

2012

2013

2014

2015

Production Poland Spring NestlĂŠ Pure Life Others Sales

Units Serviced Units placed on market by year end (total of units through current rental contracts, plus number sold directly)

Unit Numbers

2010

2011

2012

2013

2014

2015

Total units Total BWC units Total POU units

Marketing Analysis Packaging (2015) R Polycarb PET/PVC

Outlets (2015)

Advertising, 2015

Homes Offices

Unit type % Hot-cold Cold-ambient Cold

Commentary & Short company description .

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Other significant company profiles

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Company Name Category: Address: Tel: Website:

Fax:

Company Structure: Ownership: Senior management: Related activities: Non-related activities:

Marketing Analysis Unit type % Hot-cold Hot-cold-ambient Cold-ambient

Outlets (2015)

Advertising, 2015

Away from Home Offices Others Homes

Commentary:

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