Still plenty of growth in UK water coolers
to mature, but the entry of major players Danone and Nestlé in the
last year should give a major boost to the sector, according to
Zenith International.
The UK water cooler industry continues to tread a high growth path, despite a gradual slowdown in percentage increases as the market matures.
According to European drinks consultancy Zenith International, the number of additional units placed in 2002 was comparable with previous years at 70,000 - a rise of 16 per cent to a total of 495,000 machines installed. Consumption rose at a similar rate to reach 390 million litres.
As we have reported frequently on this site, the two global bottled water giants Danone and Nestlé have made significant inroads into the water cooler market over the past year.
Out of over 150 acquisitions and mergers across Europe since 1998, the last quarter of 2002 and first quarter of 2003 saw the biggest transactions to date, according to Zenith. First, Danone entered the UK market with the purchases of Chateaud'eau UK and Nature Springs to challenge leader Powwow and second ranked Nestlé Watercoolers UK. Then in February 2003, Nestlé agreed to buy the entire European Powwow network, subject to regulatory approval.
Coolers continue to contribute substantially to overall UK bottled water market growth, accounting for 31 per cent in 2002. Cooler water volumes have more than trebled during the past five years, surging to 22 per cent of total bottled water consumption.
Zenith research director Gary Roethenbaugh explained: "A strong service culture and growing consumer awareness of the importance of hydration are the most important factors helping to drive this market. Innovation and strong branding have also been instrumental in reinforcing the benefits in customers' minds."
With the presence of global players such as Nestlé and Danone, the UK cooler market is expected to maintain consistent high growth rates for the coming five years. According to Roethenbaugh, "it remains to be seen how these two bottled water giants will incorporate their newly acquired portfolios and how they will be branded, but the total UK portfolio is forecast to hit 850,000 units by the end of 2007".
For more information about the 2003 Zenith Report on UK Water Coolers and other Zenith reports, click here.
