Route delivery critical in HOD segment of North American bottled water market

While the overall market continues to grow at double-digit rates, the single-serve or PET market in the bottled water industry manages to edge out the home and office delivery (HOD) market in terms of revenues as a result of dissimilar dynamics in the two segments, according to new research by Frost & Sullivan. For example, the PET market conducts business mainly with large, national companies, whereas the HOD market deals mostly with regional players with local presence...

PALO ALTO, CA, Aug. 10, 2005 (BUSINESS WIRE) -- The single serve (or polyethylene terephtalate (PET)) market in the bottled water industry has managed to edge out the home and office delivery (HOD) market in terms of revenues as a result of the dissimilar dynamics in the two segments. While the PET market conducts business mainly with large, national companies, the HOD market deals mostly with regional participants that have local presence.

New analysis from Frost & Sullivan, "North American Bottled Water Industry: Investment Analysis and Growth Opportunities" reveals that the $13.20 billion market estimates to grow at 13% annually to reach $19 billion by 2007.

Because HOD companies operate at the regional level, it is more logistically feasible for them to operate locally with a dense customer base, rather than with an extensive and scattered one.

Oftentimes, the cost of transporting water from the warehouse to the consumer is almost three times the cost of water itself. Due to the impact of logistics on operating profit, HOD companies have to look for increased customer density, rather than a large base, when planning a potential merger or acquisition.

"The HOD market, which has huge potential for integration, is likely to experience intensified regional consolidation with companies trying to decrease their logistics expenses," says Frost & Sullivan Research Analyst Santosh K Ejanthkar. "Participants have to strategize to cut down logistics costs through centralized logistics management using efficient delivery routes."

Industry participants, especially the smaller ones, can improve revenues by taking advantage of the promotional campaigns conducted by major companies. These campaigns advertise bottled water as a healthier and safer option to municipal water.

There is also a greater demand for safe water with a rise in the standard of living and the awareness of the practicality of bottled water. Increasingly mobile lifestyles are also likely to hike industry revenues.

Apart from the advantages of portability, consumers' health concerns and an aversion toward chemically treated water are very influential industry drivers.

North American Bottled Water Industry: Investment Analysis and Growth Opportunities, a part of the Financial Benchmarking & Analysis in the Water Industry, provides an overview into the various segments in the industry, including single serve, home and office delivery, and enhanced water markets. This research service includes detailed market opportunities and industry trends evaluated following extensive interviews with market participants. Analyst interviews and executive summaries are available to the press.

Frost & Sullivan's Business and Financial Services group serves clients around the world in all aspects of financial analysis, market research and monitoring, due diligence, idea generation, opportunity analysis, investment valuation, and other proprietary research.

Frost & Sullivan, 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. For more information, visit www.frost.com.

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