Thirsty Thoughts - Bottled Water

CATEGORY ANALYSIS

May 17th 2011, 06:46

From 1998 through to 2007, the bottled water market averaged a volume growth rate of 27.0% per annum. This was a function of the category being fairly new and becoming established within the South African market. The growth in popularity of bottled water was exceptional.

However, following this boom, category growth plummeted. From an exceptional growth of 30.4% in 2007, the volume increase recorded for 2008 was a limited 4.9%. The years to follow were much the same, with increases of 3.3% and 4.2% recorded for 2009 and 2010 respectively.

It is believed that the tapering off of the growth rate was a function of a few collective issues. Firstly, the recession translated into a decline in demand for bottled water as it is generally viewed as a non-essential item. Secondly, a few players who had entered the market were forced to close as the market became more competitive. The low barriers to entry to this market resulted in a plethora of suppliers who could not all maintain their turnover targets. Thirdly, with the growth in variant offerings to the market coupled with the saturation level, the user-pool stagnated. Lastly, it is believed that the extreme growth rates could not be maintained once the category became established and, with bottled water volumes reaching market saturation, volume growth naturally leveled off.
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