UK Water Coolers Report

Zenith Report on

UK Water Coolers

February 2010

REPORT SAMPLE

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Zenith Report on

UK Water Coolers

February 2010

Zenith Report : February 2010

© Zenith International Ltd 2010

UK water coolers 2010

2010 ZENITH REPORT ON UK WATER COOLERS

CONTENTS

Introduction 1

Brief summary 2

PART 1: 2009 total UK water cooler market 3 Total water cooler market overview 3 Total UK cooler market, 2004-2009 3 Bottled water cooler and POU cooler unit growth, 2009 4 Bulk bottled water versus small pack bottled water volume growth, 2004-2009 5 Bulk water category volume shares, 2009 5 Bulk water packaging split, 2009 5 Bottled water cooler throughput levels, 2009 6 Strategies for increasing water consumption in the POU and bottled cooler industries, 2009 7

PART 2: 2009 total UK water cooler industry structure 8 Industry concentration 8 Top 5 UK cooler companies, 2009 8 2009 changes to industry structure 9 Bottled water cooler industry operators, 2004-2009 9 POU water cooler industry operators, 2004-2009 9 Leading cooler operators' activities 10 Annual acquisitions: bottled water and POU units that changed hands 11 UK water cooler mergers and acquisitions, 2009-10 12 Leading bulk water brands 12 Industry soundbites 13

PART 3: 2009 UK water cooler services and the service offering 14 The service offering 14 POU cooler machine types, 2009 16 Pricing 17 Sanitisation and maintenance 19 Bottled water cooler units placed by outlet type, 2009 21 POU cooler units placed by outlet type, 2009 21 Consumer attitudes and behaviour 24 External factors influencing the market 26 Legislative factors 30

PART 4: Total UK water cooler market forecast 33 Forecast to 2014 33 Features and trends for the short-term future – survival of the fittest 33 Market potential for industry investors 34

SECTION 2 - CHARTS

1 Total UK cooler market, 2004-2009 36

2 UK cooler share of bottled water, 2004-2009 37

3 UK cooler water types, 2009 38

4 UK cooler bottle sizes, 2009 39

5 Top 5 UK cooler companies, 2009 40

6 UK bottled cooler industry concentration, 2004-2009 41




7 UK POU industry concentration, 2004-2009 42

8 Top 5 UK water cooler brands, 2009 43

9 POU machine types, 2009 44

10 Average annual cooler revenues, 2006-2009 45

11 POU company units per employee, 2009 46

12 Dual providers‟ units per employee, 2009 47

13 UK bottled cooler outlets, 2009 48

14 UK POU cooler outlets, 2009 49

15 Fuel and oil prices by month, 2009 50

16 UK mean temperature, 2004-2009 51

17 UK sunshine hours, 2006-2009 52

18 UK rainfall, 2007-2009 53

19 Total UK cooler market, 2009-2014 54

20 UK bulk water market, 2009-2014 55

SECTION 3 - TABLES

1 UK bottled water market, 2004-2009 56

2 UK water cooler market, 2004-2009 56

3 UK water cooler market breakdown, 2004-2009 57

4 Total UK cooler market outlet splits, 2004-2009 58

5 UK water cooler companies and groups by own units, 2004-2009 59

6 UK water cooler companies' market shares, 2004-2009 60

7 UK POU cooler companies and groups by own units, 2004-2009 61

8 UK water cooler brands by volume, 2004-2009 62

9 UK water cooler brands market share, 2004-2009 63

10 UK water cooler bottlers by sales volume, 2004-2009 64

11 UK water cooler bottlers' market share, 2004-2009 65

12 UK water cooler distributors by volume, 2004-2009 66

13 UK water cooler distributors‟ market share, 2004-2009 67

14 UK water cooler throughput by bottler-distributor, 2004-2009 68

15 UK water cooler units supplied by bottlers, 2004-2009 69

16 UK water cooler distribution by bottlers, 2009 70

17 Revenue Indicators, 2007-2009 71

18 Total UK cooler industry indicators, 2004-2009 72

19 Total UK cooler industry indicators, 2009-2014 73

19B Total UK cooler industry indicators, 2009-2014 74

SECTION 4 – PROFILES

Distributor profiles 75

Manufacturer profiles 123

SECTION 5 - APPENDICES

APPENDIX 1: Supplementary information on regulation 136

APPENDIX 2: Glossary 138 APPENDIX 3: Acronyms and abbreviations 140




Introduction

This report on the UK Water Cooler Market in 2009 is the nineteenth in the series of Zenith International‟s

UK Water Coolers reports.

This report includes equal insight into both the bottled cooler and point of use (POU) cooler industries.

An updated companion Zenith Report on UK Bottled Water has now also been issued, together with

reports on the European water cooler and POU markets.

We are particularly grateful for the help we receive from the bottled water cooler and POU cooler

companies we interview. With each report, our aim is to make contact with every significant company active

in the relevant sector and to produce as complete a picture as possible at a price accessible to any business

with a serious commercial interest.

As our research is updated on a regular basis, we always welcome any comments or suggestions about

possible improvements.

The full range of Zenith International‟s reports are available from www.zenithinternational.com/2010reports

Thank you for your purchase. Should you have any questions, please contact

[email protected] for further details.

Mark Groves Charmaine Holmes

Director Senior Analyst

Zenith International Zenith International

1

http://www.zenithinternational.com/2010reports

mailto:[email protected]




Brief summary

1. xx bottled water cooler units were in place at the end of 2009, a decline of xx%, and down from xx

units in 2008. However, the decline has lessened from xx% in 2008. The xx unit loss can be attributed

to a number of contributing factors; continuing point of use (POU) encroachment, a third year of

poor summer weather and the impact of the recession on clients.

2. The estimated annual revenue of the water cooler industry is just under £xx million.

3. Reaching xx units, the POU installed base grew by xx% in 2009, the equivalent of xx new POU units

placed.

4. Water sales through coolers stood at xx million litres from xx million litres, a xx% drop. Overall, the

total bottled water market registered a xx% increase, in contrast to a xx% decline the previous year.

Bulk water's share of the total market fell from xx% in 2007 to xx%, continuing the downward trend

seen since 2003.

5. Throughput decreased to xx bottles per cooler per month, down from xx in 2008.

6. In 2009 xx overtook xx c to become the leading operator in the UK water cooler market. Xx

maintained third place, ahead of xx, with the fifth position claimed by xx. The top five cooler

distributors held a xx% share of the total UK cooler base.

7. Bulk water volume classified as purified/other accounted for xx% in 2009, down from xx% in 2008.

Spring water has continued to grow, now accounting for a xx% market share, with natural mineral

water taking a xx% share of total sales.

8. 18.9 to 19.2 litre bulk water represented xx% of total volume sales in 2009. The 17.5 litre R PET

bottle format accounted for xx%; whilst the 11/11.3 and 22/22.7 litre formats represented xx% and

xx% respectively. 15 litre NR PET took xx%.

9. xx% of all bottled water cooler units and xx% of POU units were placed in commercial environments

in 2009. Offices accounted for xx% of bottled cooler placements and xx% of POU. The residential

market accounted for less than xx% of all coolers installed in the UK.

10. The cold-ambient model accounts for xx% of the POU machines installed in the UK. Carbonated units

take an increasing xx% share.

11. Zenith forecasts that by 2014 the total market will have grown to xx units. POU placement is

anticipated to reach xx units, a xx% share of the market, with bottled water coolers standing at xx

units.




PART 2: 2009 total UK water cooler industry structure

The UK cooler industry has witnessed many changes since its inception in 1989. Starting as a highly

concentrated core of small players, it is now estimated that there are in the region of xx companies, large

and small alike, vying for market share.

Between 1993 and 1996, new entrants enticed by the low barriers to entry and high return caused a

fragmentation and regionalisation of the market. The growing popularity of POU in the UK during the

late 1990s opened the door to a huge influx of entrepreneurs gaining easier access to the cooler industry,

without the need for the complex logistical water delivery network associated with the bottled cooler

market. Fragmentation at the top end of the market was short lived as the new major players embarked

on a period of heavy acquisition activity, although this has slowed considerably over the past three years.

Industry concentration

In 2009:

the top five cooler companies held xx units

the top ten accounted for xx units

the top five bottled cooler companies held xx bottled cooler units

the top five POU cooler companies held xx POU units

the top ten bottled cooler companies accounted for xx bottled cooler units

the top ten POU cooler companies accounted for xx POU units

For bottled cooler players, xx units are held by those outside the top ten and for POU operators, xx

machines are serviced by non-top ten firms.

Top 5 UK cooler companies, 2009

In 2009 xx displaced xx to become the leading operator in the UK water cooler market, with an installed

base of xx. Between 2004 and 2009, xx has increased its installed base by xx%. xx has seen a xx% decline

in its total number of units since 2004, with particular heavy declines in its bottled installed base.

However, the acquisition of xx at the beginning of 2010, may help xx to recapture first position by the

end of the year. xx maintained third place in 2009, although its installed base has declined by xx% over

the past five years. xx, standing in fourth position with xx units has increased xx% since 2004, whilst xx

has grown by xx%. Gains have been heavily influenced by the installation of POU units, whilst equally,

those with large bottled cooler portfolios have suffered the greatest declines.

The top five cooler distributors held a xx% share of the total UK cooler base, down slightly from xx% in

2008.

Zenith Report - UK Water Coolers February 2010

1: UK BOTTLED WATER MARKET, 2004-2009

Million litres 2004 2005 2006 2007 2008 2009e

All bottled water

% change

Packaged water

absolute volume change

% change

% share

Water cooler

% change

absolute volume change

% share

Source: Zenith International

2: UK WATER COOLER MARKET, 2004-2009

Million litres 2004 2005 2006 2007 2008 2009e

Production

Exports

Imports

Consumption

Production % increase

Exports as % of production

Imports as % consumption

Consumption % increase

Bottled cooler machines

(000 units in December)

POU cooler machines

(000 units in December)

Average throughput

(18.9 litre bottles per month)

Source: Zenith International

© Zenith International Ltd 2010 59

Purified/other

xx%

Spring

xx%

Mineral

xx%

Total consumption: xx million litres

3: UK COOLER WATER TYPES, 2009

Zenith Report: February 2010



APPENDIX 2: Glossary

Bottled water cooler A unit that dispenses bottled purified, spring or mineral water. Units are usually

either free-standing or table-top. Free-standing units have dominated the market for some years and account

for about 95% of units placed in the UK; they usually take 18.9 litre bottles and are about 1.4 metres in

height (including the bottle). Table-top units are most commonly placed in offices and residential settings

where space is limited; they take smaller bottle formats than their free standing counterparts (5 litre, 7.5

litre and 11.4 litre).

Bottled water cooler units are further categorised by the number of taps and the nature of the water they

dispense – single (cold water) tap; two tap (hot and cold or cold and ambient); or three tap (hot, cold and

ambient).

Bottler Bottlers supply water to distributors in tankers or bottles. They have

no cooler units of their own.

Bottler-distributors Bottler-distributors have their own water source, fill bottles under

their own brand, install their own cooler units and run their own

distribution service. They may also fill bottles under contract for

other distributors, either under their own brand or under distributor

brands.

Distributor Distributors service their own machines using water supplied by

bottlers or bottler-distributors. The water may be marketed under

the bottler’s, bottler-distributor’s or the distributor’s brand name.

Horeca Hospitality sector (concatenation of hotel, restaurant and café).

Natural mineral To qualify for natural mineral water status, the water must:

come from a specified underground source that is protected from

any kind of pollution,

be stable in its chemical and physical composition,

satisfy microbiological criteria and be free of any harmful bacteria,

receive no treatment other than filtration (to remove items such

as sand particles) or carbonation by the addition of carbon dioxide

(although some waters are naturally carbonated),

be bottled at source and fitted with a tamper-evident seal,

undergo regular analyses after recognition by an approved

laboratory to ensure that these exacting standards are maintained.

Approval for natural mineral water status requires scientific analysis

over time to ensure freedom from pollution and a consistent mineral

composition. It is subject to the Natural Mineral Water, Spring Water

and Drinking Water Regulations 1990 (SI 1540) and must comply with

the Natural Mineral Water, Spring Water and Bottled Drinking Water

Regulations 1999 as amended by The Natural Mineral Water, Spring

Water and Bottled Drinking Water (Amendment) (England)

Regulations 2003 and The Natural Mineral Water, Spring Water and

Bottled Drinking Water (Amendment) (England) Regulations 2004.

These regulations implement in England the provisions of the parent

138




European Directives 98/83/EC and 80/777/EEC (as amended by

96/70/EC and 2003/40/EC.

POU cooler A water cooler device that is plumbed into a potable water supply

and improves the quality of the water through some method of

filtration or purification. Such machines rarely have a drainage system,

unless the method of filtration is reverse osmosis or individual

country legislation requires it, otherwise the water is either

consumed at the point of release or enters the drip tray. The water is

usually chilled, heated or carbonated. Units can be under-sink,

faucet/tap, free-standing or table-top. Under-sink units are housed in

the cupboard/cabinet below the sink area. They lower the amount of

heavy metals such as copper, lead, cadmium and barium in the water

as well as magnesium, fluoride and sediment prior to delivery via a

mains or secondary source; filtration methods include reverse

osmosis, ultra violet (UV) and carbon filter. Faucet/tap units typically

utilise carbon and combined staged filtration to deliver filtered water

– a ‘diverter’ may be incorporated to bypass the filtration process for

dishwashing, etc.

Purified water Mains or other water subjected to further processing and treatment.

Sometimes called ‘drinking water’ or ‘table water’. It may come from

more than one source or from a single underground source. It may

include the public water supply or be transported from the source to

the bottling plant. Bottling companies may carry out filtration and

treatment processes on the water to amend its constituents before

the water is distributed for sale. Some companies may also add

mineral salts and carbon dioxide to their water. It is subject to the

Natural Mineral Water, Spring Water and Drinking Water

Regulations 1990 (SI 1540) and must comply with the UK and EU

texts outlined in ‘Natural mineral water’.

Spring water Any water from a spring or well may qualify if it meets the same

standards as domestic tap water. Impurities may be removed by

processing and treatment. Spring water must:

be bottled at source unless it was being tankered before 23

November 1996,

be safe without disinfection and not treated in any way which will

alter the natural microbiology,

be bottled under only one name as the largest item on the label

(the name of source or place of exploitation),

be untreated except to remove unstable elements (sediment,

precipitating iron and manganese),

meet the parametric requirements of the Drinking Water

Directive 80/778/EEC.

Unlike natural mineral water, spring water does not have to have a

characteristic composition, be free from all traces of pollution or be

from a recognised (as opposed to registered) source. It is subject to

the Natural Mineral Water, Spring Water and Drinking Water

Regulations 1990 (SI 1540) and must comply with the UK and EU

texts outlined in ‘Natural mineral water’.

139




APPENDIX 3: Acronyms and abbreviations

... Negligible, less than 0.05

cl Centilitre

e Estimate

f Forecast

na Not available, not applicable

ACS Auto cleaning and sanitisation solution

BATTRT Best available treatment recovery and recycling techniques

BSDA British Soft Drinks Association

BWC Bottled water cooler

BWCA British Water Cooler Association

BWIO Bottled Water Information Office

CAGR Compound annual growth rate

DEFRA Department for Environment, Food and Rural Affairs

DFID Department for International Development

DTI Department of Trade & Industry

DWI Drinking Water Inspectorate

EA East/East Anglia

EC European Commission

EFBW European Federation of Bottled Waters

EPDWA European Point of use Drinking Water Association

EU European Union

EVA European Vending Association

FSA Food Standards Agency

HET Health Education Trust

HOD Home and office delivery

Mid Midlands

140




MRSA Methicillin resistant Staphylococcus aureus

MSD Muskoskeletal disorder

NHS National Health Service

NI Northern Ireland

Nor North

NR Non returnable packaging

ONS Office of National Statistics

PBB Polybrominated biphenyl

PBDE Polybrominated diphenyl ether

PET Polyethylene terephthalate

PDA Personal digital assistants

POU Point of use

R Returnable packaging

R&D Research and development

RoHS Restriction of hazardous substances

Sco Scotland

SE South East

SME Small- and medium-sized enterprise

SSTI Self-sanitising technology system

UNESDA Union of European Beverages Associations

UV Ultra violet

VAT Value-added tax

Wal Wales

WEEE Waste Electrical and Electronic Equipment Directive

WRAP Waste Resources Action Programme

WRAS Water Regulations Advisory Scheme

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UK Water Coolers Report

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