The entry of French food and drink group Danone into the market, coupled with the expansion of arch rival Nestlé, over the last 18 months has given added impetus to the western European water cooler sector, according to a new report from Zenith International
A market which was created over 20 years ago by just a handful of pioneering companies is now led by the world's two retail bottled water giants, who have increased their share to 45 per cent of all units, the report claims.
Nestlé is the largest player and has operations in 11 countries, while Danone, which operates in 12, is a close second in terms of total volumes. Culligan is the third largest group, operating in eight countries, followed by Well Well Well (in three) and Elis (in five).
But the smaller players being snapped up by Danone - which owns Evian and Volvic - and Nestlé - owner of Perrier and Vittel - have essentially been victims of their own success, the market research company claims.
The water cooler market has shown consistent growth, managing to expand sales even in times of economic difficulty. For example, the number of coolers installed during 2002 grew by 17 per cent to 1,493,500, according to Zenith, with consumption rising by a similar amount to break through the billion litre mark and reach 1,097 million litres.
Water for coolers now accounts for 2.7 per cent of total west European bottled water volume and contributed 9 per cent of total bottled water growth in 2002, the report claims.
While Danone and Nestlé have been the most active players in an increasingly consolidating market, they are by no means the only one. Zenith reports 37 transactions during 2002 and two pan-European deals among several more in the first half of 2003.
"A string of leading names across Europe have changed hands, including Rent a Cooler, Hygoform, Chateaud'eau, Sun Spring and Opalia," commented Zenith research director, Gary Roethenbaugh. "The two biggest deals came earlier in 2003 as Nestlé more than doubled its portfolio through the acquisition of Powwow and Danone embarked on a joint venture with Eden Springs."
Some companies have already been rebranded and Nestlé has started to roll out Aquarel in three markets, but it remains to be seen how far the major portfolios will be reconfigured, Roethenbaugh added.
While the top three countries for water coolers remained unchanged last year - the market is led by the UK with 36 per cent, followed by France and Italy with 15 and 8 per cent respectively - the fastest growth was seen in some of the smaller markets.
Spain, Switzerland, Austria, Portugal and Greece all achieved growth of 25 per cent or more in 2002, but the Scandinavian markets are showing clear signs of maturity, with the first ever volume losses recorded in Norway and Sweden.
Balancing out high growth in the southern markets and slower growth in the northern markets, Zenith expects the industry to reach the 3 million unit mark with volume sales in excess of 2 billion litres by 2007.
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