Diverse local conditions demand supplier innovation in EMEA packaged WWTP markets

Aug. 30, 2005
Frost & Sullivan report details packaged wastewater treatment plant markets in Europe, Middle East and Africa. While offering the opportunity for international expansion and product diversification, this situation has also proven to be challenging, compelling suppliers to devise innovative responses. Competitive success will depend on an in-depth understanding of both local-specific requirements, as well as end-user needs...

LONDON, UK, Aug. 30, 2005 -- The markets for packaged wastewater treatment plants present considerable diversity in terms of applications, end-users and demand base across Europe, Middle East and Africa (EMEA). While offering the opportunity for international expansion and product diversification, this situation has also proven to be challenging, compelling suppliers to devise innovative responses. Competitive success will depend on an in-depth understanding of both local-specific requirements, as well as end-user needs.

"Despite attractive revenues and stable demand, a high level of diversity and fragmentation along with increasing price pressures is creating pressures within the market for packaged wastewater treatment plants," remarks Frost & Sullivan industry analyst Suchitra Padmanabhan.

"Suppliers have already responded with a range of strategic options including technology innovation, customization, localization, regional and end-user diversification and strategic partnerships. Sustained profitability will hinge on continually adapting to the changing needs of this dynamic market."

Europe currently generates nearly three quarters of overall market revenues followed by the Middle East and Africa with 20% and 6% respectively. Moreover, Europe accounts for nearly 98% of unit sales. This dominance derives primarily from the significant demand for private residential units.

With treatment capacity in key areas such as Germany (for the residential market, in particular) expected to be met by the end of 2006, however, the future demand for packaged plants in Europe remains uncertain. To thrive in these conditions, equipment manufacturers need to focus on geographical expansion as well as technological innovation.

The emergent Middle East market offers great promise owing to significant municipal, commercial and industrial demand. While the absence of stringent legislation has hitherto limited its growth potential, active government interference and growing public awareness are boosting investments in wastewater treatment.

Complex local conditions and diverse environmental issues are stifling Africa's immense demand and growth potential. While some niche opportunities for packaged treatment plants have existed in North Africa, suppliers will need an active local presence and detailed understanding of market conditions to succeed.

"These regional disparities reinforce the fact while the market for packaged wastewater treatment plants provides plentiful and diverse opportunities, demand is essentially localised and exclusive to the area's particular needs. Accordingly, suppliers need to contend with the challenge of adapting to local needs in each country," says Padmanabhan.

In 2004, the total market for packaged wastewater treatment plants in EMEA was valued at $910 million. Stable demand is poised to underpin a compound annual growth rate of 5.5% from 2004 to 2011.

While municipal and commercial end-user segments offer good prospects, opportunities will be particularly attractive in the industrial and residential segments with the industrial segment expected to lead in revenues and the residential segment in unit terms. In turn, growing demand for industrial applications is likely to put a premium on specialization and innovation.

Easy adaptability and low maintenance requirements have enabled the packaged wastewater treatment plant market to effectively meet the needs of its diverse end-user base. Furthermore, both the cost and process efficiencies offered by plant technology in dealing with environmental concerns have created a "win-win" situation for all.

As revenues and growth opportunities expand, this already fragmented market is set to witness the entrance of a range of new participants including local OEMs and international turnkey plant operators. Due to the market's local-specific nature, however, local equipment manufacturers are set to retain their dominance. Competitive success will hinge on price, local presence, technology and end-user focus.

"Future opportunities will be based on innovative strategies pursued by companies including technological diversification as well as mergers and acquisitions that are already taking place in the market. It is anticipated; therefore, that as the market gets more firmly entrenched, revenues will be increasingly concentrated with a few leading participants," concludes Padmanabhan.

Frost & Sullivan (http://environment.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. It 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.


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