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China gushes over high-end bottled water

Updated:2014-08-27 15:20:45Source:http://en.sbwexpo.comClick:
Core prompt:The premium bottled water market is booming on concerns over water safety and as consumers have more money Provided to China Daily

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A crowded market is not quenching The thirst of newcomers for profit 

 
The days of French brands Evian and Perrier having a hold on half the premium bottled water market in China may be over. 
 
Consumers can now find plenty of domestic high-end bottled water at any medium-sized supermarket, ranging from glacier mineral water from Tibet to spring water from Qingdao Laoshan. 
 
 
The bottled water comes in different sizes, different shapes and different brands, but they have one thing in common: High-end water - whether from China or overseas - is eight times to 10 times more expensive than the cheapest domestic versions. 
 
Increasing concerns over water safety and the deeper pockets of Chinese consumers have led to a booming market, says Liao Lei, secretary-general of the natural mineral water committee for the China Mining Association. 
 
"Around 70 percent of rivers have been polluted. And the pollution isn't getting any better. Water sources that haven't been contaminated are very scarce, which are usually located in remote areas," he says, adding the high transport costs is one reason for the high prices of high-end bottled water. 
 
With the improvement of living standards, more and more people want better quality drinking water, as well as safer options. Unlike in Western countries, tap water in China is undrinkable and has to be boiled before ingested. 
 
The increasing demand for quality drinking water has made more companies jump into the high-end bottled water market, transporting the finest water over a long distance. 
 
According to Liao, the size of the bottled water market has grown at an average of 20 percent a year over the past decade. 
 
"With more people starting to care about the quality of their drinking water, the growth for high-end bottled market will be even faster." 
 
A report published this year by Sinomonitor International, a Beijing market research company, estimates that the premium bottled water market will expand at an annual rate of 80 percent over the next five years, reaching annual sales of 10 billion yuan ($1.56 billion, 1.17 billion euros) by 2015. 
 
Tibet 5100 Water Resources Holdings Ltd, one of the earliest Chinese premium bottled water providers, reported a net profit of 148 million yuan in the first half of this year, surging 232 percent compared with the same period last year. 
 
The company, founded in 2005, says it provides glacier water from Tibet, which is 5,100 meters above sea level. 
 
Fu Lin, chief executive officer of Tibet 5100, says that Chinese demand for premium mineral water has been growing rapidly, significantly outpacing the mass-market segment. 
 
"We've sold 28,000 tons of water in the first half of this year, which is a very nice performance. And we'll continue to expand our sales network, strengthening our market share in premium bottled water market in the second half of this year." 
 
The success of the company, which listed on the Hong Kong stock exchange in June, has made more Chinese companies believe that the earlier they step in, the more market share they will get. 
 
A dozen new brands have mushroomed in China over the past couple of years. 
 
Following the steps of Tibet 5100, Hong Kong-based JDB Group, which produces and sells specialty beverages, launched Kunlun Mountains Natural Mineral Water in some 30 provinces and cities last year. 
 
Aershan Mineral Water, produced in Arshaan city in the Inner Mongolia autonomous region, announced plans to expand into the southern China market last month. 
 
However, getting a piece of the pie in the market that has long been dominated by Western premium bottled water giants is not an easy task, analysts say. 
 
Statistics from CIC industry research center, a Shenzhen consulting company, shows that about 50 percent of the premium bottled water market in China is held by Western players such as Evian and Perrier. 
 
"Evian entered the Chinese market in 1986 and only started to turn a profit in 2007. The market is not quite developed yet. The majority of the domestic brands in this field are losing money and it will take a long time and a huge amount of money for them to establish their brands," says Zhou Siran, an analyst of food and beverage industry with CIC. 
 
Tibet 5100 is one of the few exceptions in China. It started making money two years after the company was founded by selling its water to organizations such as China Railway Express and Air China, making up a large chunk of its sales figures. 
 
Despite the success, Tibet 5100's Fu says one of the challenges his company faces in China is from international competitors. 
 
"Some international brands have been here for a very long time, in some cases more than 20 years, so they've already established a group of loyal and stable customers." 
 
Wang Cuiyun, a saleswoman at a BHG Food Market in Beijing, says the market's top three sellers in bottled water are Nongfu, Nestle and Evian. 

 
One bottle of Evian costs about 9 yuan, while Nongfu and Nestle are around 1 yuan, which probably makes Evian the most profitable option out of a dozen domestic and international premium bottled water brands in Wang's market. 
 
With an eye on the strong foreign competitors that are already established in China, an increasing number of international brands are entering the county, looking at the market potential in the high-end bottled water industry. 
 
Pinlive Shanghai Foods Co Ltd, one of the biggest food importers and distributors in China, introduced Rosbacher, a German mineral water, to the Chinese market last year. 
 
Yang Liuqing, who is in charge of Rosbacher's marketing in China, says the sales of the mineral water at about 8 yuan for 500ml increased steadily in China, but she refused to give figures. 
 
"High-end bottled water is an emerging market in China. We are seeing more and more domestic brands entering the market, but we don't think they will make much difference because the low-end image of domestic brands is already well-established." 
 
Wu Yun, a 30-year-old businessman, recently bought a bottle of LaCroix sparkling water, imported from the United States for 12 yuan for 375 ml. 
 
Apart from boiling water at home, he only drinks high-end bottled water. He says he has bought various brands of bottled water over the past couple of years, but only sticks to international brands because he thinks they are better than domestic ones. 

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