ASIA March 2019
 
Bottled Water could be the only recession-proof industry in Asia
 
Of all the industries in the food and beverage industry, only the bottled water segment seems to be able to sustain and continue to grow despite challenging periods of economic growth in many countries in Asia over the past 10 years.
Bottled water, that almost ‘tasteless’ drink which can either be mineral, distilled, slightly flavored, functional or sparkling water, have enjoyed continuous high-single or double-digit growth in many emerging Asian countries like Indonesia, Vietnam and China.
One can only attribute the success of bottled water, particularly still bottled water, to its ‘staple diet’ positioning, as water is an important constituent in our daily food intake, and many countries in Asia still lack the infrastructures to offer clean drinking water to the public. Many consumers also associate water with ‘health’ as water is considered to flush our body from intoxicants and also to transport food nutrients within our body. Bottled water is certainly a healthier option to carbonated and sugar-sweetened beverages of which consumption are strongly discouraged by many Asian governments due to the growing problems of obesity and diabetes in their populations.
It seems obvious that one industry which is recession-proof and without much obstacles is the Bottled Water segment. The reality, however, there are hidden barriers to entry as there are many large MNCs like Nestle, Danone, Ting Hsin, Nongfu Spring and F&N (Thai Beverage Plc) already dominating this industry, each with their own ditribution network of suppliers that have already built decades old relationship with supermarket chains and retail store operators. A new manufacturer without having this relationship will face major barriers to entry in terms of getting a supermarket to stock its product, getting a shelf space in the supermarket, going through a more rigorous test on product safety, and getting final consumer acceptance. However, it will not be difficult for existing beverage manufacturers to make that switch to producing bottled water and entering that market.
Euromonitor International ranks China as the biggest market for bottled water in the Asia Pacific with volume estimated to reach 41 billion litres and value at Rmb 154.4 billion (US$23 billion) in 2018. Meanwhile, Vietnam and Indonesia are the fastest growing markets for bottled water in Asia Pacific and will enjoy double-digit growth in value terms over the next 5 years (see Table 1.0). In terms of product category, still bottled water continued to dominate the market in 2018 with more than 90% of overall growth in the bottled water market coming from this category whereas flavored, functional and sparkling water hold the remainding 10% (see Chart 2.0).
Asia Pacific region has the highest consumption of bottled water with the highest annual growth compared to other regions like North America or MENA. This huge growth potential in the Asia Pacific is further confirmed with the region having the lowest per capita consumption (see Chart 3.0).
 
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