Quality, cost, legislative concerns push water reuse in Europe's food & beverage industry
Environmental and health concerns continue to govern the quality process in the food and beverage industry in Europe, according to a new report from market analyst and strategic consultant Frost & Sullivan entitled "Water and Wastewater Management in the European Food & Beverage Industry" (B563-15). In the near term, though, the industry will be primarily influenced by a need to comply with EU legislation governing the discharge of industrial effluents...
LONDON, UK, Feb. 28, 2006 -- Environmental and health concerns continue to govern the quality process in the food and beverage industry in Europe, according to a new report from market analyst and strategic consultant Frost & Sullivan entitled "Water and Wastewater Management in the European Food & Beverage Industry" (B563-15).
In the near future, the food and beverage industry will be primarily influenced by the need to comply with EU legislation governing the discharge of industrial effluents. Demand for water and wastewater treatment equipment is poised to soar as food and beverage manufacturers move to build infrastructure compliant with directives such as the Integrated Pollution Prevention and Control (IPPC), Water Framework and the Landfill Directive.
"These legislation are likely to have a strong impact on this industry in the future as it is unlikely that the food and beverage industrial sites would have complied with necessary infrastructure in time before these regulations are rolled out," says Frost & Sullivan Environmental Analyst Suchitra Padmanabhan.
"Expected to be in effect from October 2007, the IPPC requires industries to install equipment that meet the requirements under the Best Available Technology (BAT) directive, which provides a fairly rigorous test for all treatment equipment, thereby guaranteeing success to suppliers providing technologies that meet these criteria."
A high and constant requirement for water in the production process as well as related functions is presenting stable demand for water treatment equipment across the food and beverage industry. Also, the desire for process efficiencies and cost reductions is encouraging the reuse of water, especially in secondary processes such as boilers, steam generation, washing and cooling towers, among others.
Furthermore, food industry standards specifying that spent process water intended for reuse, even if it is for cleaning purposes, must be at least of drinking quality are resulting in demand for treatment equipment and is encouraging technological innovations that provide suitable reuse solutions as well.
From $500.0 million in 2005, the water and wastewater treatment equipment market for the food and beverage industry is expected to reach $654.5 million in 2012. Despite such growth, an increasingly maturing market will throw up major challenges.
The traditional strongholds for the food and beverage industry such as Germany, France and the United Kingdom are experiencing signs of maturity, thereby restricting demand for treatment equipment in the long-term. This is forcing equipment suppliers to explore newer regions such as southern Europe to sustain future demand.
Innovative solutions including diversified products, advanced technological options and efficient operational processes such as outsourcing contracts will also help maintain profit margins in a mature market. The challenge lies in being able to cater to the changing needs of the food and beverage industry such as the shift in investment towards replacements, up-grades and services with greater focus on cost efficiencies.
As opportunities decline, the competition among water and wastewater treatment equipment suppliers is increasingly being based on prices and innovative business strategies. Reducing the impact of price-based competition calls for solutions such as meeting specific technological requirements and the ability to undertake outsourcing projects.
In addition, a chief characteristic of the food and beverage industry remains its highly localised base. "The wide regional variations in the food and beverage industry will require an overall understanding of the market conditions as well as specialist knowledge of local conditions to be able to respond in a meaningful manner to the growing complexities of this market," notes Ms. Padmanabhan. "Therefore region-specific information and expertise will be critical in being successful in this diverse market."
Moreover, the food & beverage water and wastewater treatment market is characterised by highly fragmented competition with concentration levels in terms of equipment supply being very low at 18%. Not surprisingly then, large water companies such as Veolia Water have already entered into agreements with local participants to create strategic growth opportunities in this market.
Frost & Sullivan (water.frost.com), a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community, by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics.