In the packaged water market, China will overtake the USA as the biggest consumer globally by the end of 2013, according to a new report from Canadean.
The FMCG market research company’s report, China Soft Drinks Market Insight, published in June 2013, confirms that China has doubled its share of the global packaged water market in the last seven years.
While the difference between overall consumption volume figures for the two giant markets was “less than 2 billion litres” in 2012, by the end of 2013 China is forecast to be 1 billion litres ahead of the US, Canadean says.
While the pace of growth has slowed in both countries for the year 2012/13, China’s year-on-year growth rate for packaged water consumption remains significantly higher than that of the US: the growth figure for China fell from nearly 18% in 2011/12 to about 16.5%, while the US equivalent figure fell from nearly 6.5% in 2011/12 to about 5.5%.
In per capita terms, however, consumption in the US is still very much higher than in China.
Canadean’s latest research shows that China is running well below the global packaged water consumption average of 30 litres per head, and at around one-fifth of that of the US, which continues to rise towards the 100-litre mark.
Canadean describes the position as one that “strongly highlights the huge potential for the future growth of China’s packaged water market”.
According to Canadean, the main thrust behind the surge in packaged water consumption in China lies in the mineralised water (table water with added minerals) and mineral water segments.
“Increasing consumer health consciousness has seen mineralised water accelerate over the decade to claim a 42% market share,” the market researcher states.
“More recently, a notable shift to mineral water is emerging as consumers become more aware of the health benefits of consumption.”
Producers are increasingly mindful of this new trend and are seeking out high quality natural mineral water sources in order to underline the image of their brands, Canadean adds. A leading Chinese domestic player, Jingtian, has gone to the lengths of investing in a production base in Scotland in 2012.
Canadean’s research highlights that the producers behind the leading brands such as Kangshifu (Tingyi Holding Corp), Nongfushanquan (Zhejiang Nongfushanquan Water Co Ltd), Ice Dew (Coca-Cola) and Yibao (China Resources Enterprises) will be instrumental in driving future category growth.
“The focus is likely to be increasingly on value-added mineral products, which offer a more favourable profit margin,” the company predicts.
“Continued investment in production expansion and improvement of distribution networks can be expected to fuel the competitive energy in the packaged water market.
“From a consumer point of view, aside from the health benefits of packaged water, its affordability, particularly in a climate of slowing economic growth, will be highly attractive.”
