Growth in the packaged water market across Africa has outstripped that in developed Western economies, due to the combined effects of concerns over the safety of drinking water and rising consumer incomes.
According to the latest soft drinks research from market analyst Canadean, in the last five years, growth levels have remained “consistently high” across the African continent, with double-digit increases posted in a number of countries.
A compound average growth rate (CAGR) of 10% in Africa has largely been driven by the Nigerian market, the company says, with Nigeria making up two-thirds of the region’s packaged water contribution.
Although growth in Nigeria has slowed in recent years, per capita consumption continues to increase and is still “well above” the regional average.
Canadean draws its conclusions from its four recently released reports: ‘Nigeria Soft Market Insights Report 2013’, ‘Tanzania Soft Market Digest Report 2013’, ‘Ethiopia Soft Market Digest Report 2013’ and ‘Global Packaged Water Report 2013’.
“Although many African states are now benefiting from rising levels of GDP and an expanding middle class, the availability of fresh drinking water continues to be a problem,” says Canadean analyst Chris Strong.
“Rising prosperity and increasing health concerns have helped drive consumers towards packaged water options.”
Canadean points out that cheaper sachet packaging has tended to dominate the market, with a market share of 54% recorded for the pack type in 2013, most of which was contributed by Nigeria and Ghana.
“Sachet packages are generally more affordable for consumers on low incomes and are very cheap to produce, which has enabled soft drinks companies to build market share in these countries,” the company says.
Limited or unreliable public water supplies mean that the African packaged water market is expected to continue its growth in the coming years.
However Canadean forecasts the rate of growth to slow between 2013 and 2018 to a CAGR of 5%.
“This reflects concerns over the quality of infrastructure across the continent, as well as uncertainty about the introduction of more expensive PET bottles in the key Nigerian market,” Canadean states.
Balancing consumer demand with the right price point will, the company adds, be “critical” for African packaged water companies in the near future.
