Bottled Water Industry

Running Head Competition in the bottled peeing sedulousness in 2006. The intent of this paper is to provide vi qualified course of action according to analysis made for this case. Table of confine Title Page Table of contents. 2 Executive synopsis. .. .. 3 Macro-Environmental Analysis .. . . 3 effort and competitive analysis . 6 Economic traits of the constancy.. . . 6 Five forces analysis. . . 6 St sum upgic chemical group mapping. . . 6 Key Competitors analysis.. . . 6 Key success factors .. . . 6 Is this manufacture attractive or untempting?.. . . 6 Company situation analysis.. 13 EXECUTIVE SUMMARY The interpret Case Analysis is the result of the rapid suppu runth of the bottled piddle Industry in the last decade. Many authors and analysts believe that this Industry has become a very important part of the economy, thitherfore the importance of the analysis of the sector, its rivals and its strategies. With globose revenues exceeding $62 zillion in 2005, bottled p eeing was among the human? just about attractive beverages categories (Gamble, John E. Thompson younger , Arthur A. , 2007, p. 254) and an expected growth of 30 per centum between 2005 and 2010 the companies in the sector have noniced the importance of vertical strategies to compete not save in local provided in global commercializes. History and statistics show us that strategies and the products by themselves can imbibe the difference between success and failure. This Case Analysis provides coverage of requisite data that al unhopeful us to foresee the evolution of the Bottled Water Industry, its competitors, commercialises, forecasts, strategies and doable alternative courses of action.We also analyze the situation and performance of Coca-Cola as a key competitor in the Industry. And finally we present some recommendations that companies in the sector can use to have competitive advantages in st vulgar man their competitors. MACRO ENVIRONMENTAL ANALYSIS Technolog y Almost 50% of bottled piss consumed in US in 1990 was delivered in returnable five-gallon containers and dispensed through with(predicate) coolers, called HOD due to home and office delivery. At that time, exactly 186 million gallons of irrigate were interchange in one-liter or weeer single-serving polyethylene terephthalate (PET) bottles.In 2005 at that place were tall-density polyethilene (HDPE) containers for 1-2. 4 gallons. (Gamble, John E. Thompson Jr. , Arthur A. , 2007, p. 257) Technology needed in this industry is not cutting edge engineering, so it is considered as medium technology since quality controls must be pretty high due to health problems might appear and sink a company. Legislation & Regulations Bottled water producers in the unite States were required to meet the standards of both the Environmental Protection mission (EPA) and the Food and Drug Administration (FDA).Like some other nutrient and beverage products sold in US, bottled water was subje ct to such food safety and labeling requirements as nutritional labeling provisions and general good manufacturing practices (GMPs). Bottled water GMPs were mandated under the 1962 Kefauver-Harris Drug Amendments to the Federal Food, Drug and Cosmetic Act of 1938 and found specifications for plant construction and design, sanitation, equipment design and construction, production and process controls, and record keeping.Bottled water producers could also voluntarily become members of the International Water Association (IBWA) and condition to comply with its model code, which went beyond the standards of the EPA, FDA, or state agencies (Gamble, John E. Thompson Jr. , Arthur A. , 2007, p. 258) Societal values & Lifestyles Convenience and portability were two of a variety reasons US consumers were increasingly attracted to bottled water. A heightened emphasis on healthy lifestyles and improved consumer cognisance of the need for proper hydration led many consumers to shift traditio nal beverage preferences toward bottled water.A certain amount of industry growth was attri plainlyable to change magnitude concerns over the quality of tap water provided by municipal water reference works (Gamble, John E. Thompson Jr. , Arthur A. , 2007, p. 257). Religion in most of the countries wont be a big influence for this industry since it is a primary need. Similar situation with General scotch conditions and population demographics, water is a basic need and tables below shows poor countries like Mexico be in the top places consuming bottled water, actually near 100% of the water consumed in Mexico is bottled.INDUSTRY AND COMPETITIVE ANALYSIS Market Size and growth rate Global revenues exceeding $62 meg in 2005, bottled water was among the worlds most attractive beverage categories. Industry revenues were forecast to grow by an additional 30 share between 2005 and 2010 to range of mountains or so $82 zillion. Bottled water had long been a widely consumed produc t in Western Europe and Mexico, where annual per capita consumption approached or exceeded 40 gallons in 2005, but until the mid-1990s bottled water had been somewhat of a novelty or prestige product in the unite States.In 1990, approximately 2. 2 billion gallons of bottled water were consumed in the fall in States and per capita consumption approximated 9 gallons. U. S. per capita consumption had pornographic to more than 25 gallons by 2005. The rising popularity of bottled water in the United States during the late 1990s and early 2000s had allowed the United States to become the worlds largest market for bottled water, with annual volume sales of nearly 7. 5 billion gallons in 2005.In 2006, emerging-country markets in Asia and South America seemed to be replicating the baronial growth of bottled water in the United States, with annual growth rank exceeding 20 percent. Even though it was the worlds largest market for bottled water, the United States remained among the faster- growing markets for bottle water according to per capita consumption evaluate. Whereas the bottled water market in the United States grew by 10. 7 percent between 2004 and 2005 to reach 7. 5 billion gallons, the U. S. carbonated soft drink market declined by 0. percent. Beginning in the late 1990s, consumers began to appreciate the convenience and portability of water bottled in single-serving PET containers that could be purchased chilled from a convenience store and drunk immediately. By 2005, bottled water sold in two-liter or smaller PET containers accounted for 60. 8 percent of industry volume. The unit sales of bottled water packaged in PET containers grew by 22. 5 percent between 2004 and 2005. Water sold in five-gallon containers used in the home and office delivery(HOD) market accounted for entirely 17. percent of industry volume in 2005 and grew by only 0. 2 percent between 2004 and 2005. Similarly, water sold in 1-or 2. 5-gallon high-density polyethylene containers acco unted for just 16. 5 percent of industry volume in 2005 and grew by only 1. 0 percent between 2004 and 2005 (Gamble, John E. Thompson Jr. , Arthur A. , 2007, p. 254-257). Number of rivals Although there might a lot of local brands, this case is focused in 4 main giants nestle Waters, crowde Danone, The Coca-Cola Company, and PepsiCo Inc. , a) Economic traits of the industry.The segment of bottled water is not only the one with the faster growth of the industry of soft drinks, but the most receiptsable. The best of all, from the point of view of the bottled water industry, is that people is paying for water, a product that used to be free. Now, the consumers accept the damage not only as fair, but as preferable. Consumers all around the ground have shown their desire to spend money in bottled water. We can see a fast growth rate of bottled water sales in the United States, Mexico, China, Brazil, Indonesia, and some countries of Europe.From 2003 to 2008 we have seen compound an nual growth rates of 15. 6 % in China, 9. 6% in Indonesia, 8. 3% in Mexico, and 6. 7% in United States ( viewing 4. 1). GLOBAL BOTTLED WATER MARKET Leading Countries expending and Compound Annual Growth Rates 2003 2008 2008 Millions Of Gallons CAGR* Rank Countries 2003 2008 2003/08 1 United States 6,269. 8 8,665. 6 6. 7% 2 Mexico 4,357. 6 6,501. 5 8. 3% 3 China 2,523. 6 5,207. 7 15. % 4 Brazil 2,842. 0 3,775. 7 5. 8% 5 Italy 2,734. 2 3,140. 5 2. 8% 6 Indonesia 1,834. 7 2,899. 5 9. 6% 7 Germany 2,628. 2,863. 1 1. 7% 8 France 2,352. 9 2,218. 4 -1. 2% 9 Thailand 1,303. 4 1,705. 6 5. 5% 10 Spain 1,346. 8 1,291. 3 -0. 8% Top 10 Subtotal 28,193. 5 38,268. 9 6. % All Others 9,917. 3 14,427. 9 7. 8% WORLD follow 38,110. 8 52,696. 8 6. 7% * Compound annual growth rate Source drink Marketing Corporation Exhibit 4. The revenues exceeded $62 billion in 2005, and industry revenues were forecasted to grow by an additional 30 percent between 2005 and 2010, to reach a pproximately $82 billion. With averages prices of $5. 00 for a 24-pack of bottled water in 2005 and a consumption of gallons per capita shown in exhibit 4. 2, we can say that the economic reality of the Bottled Water Industry is really promising. GLOBGLOBAL BOTTLED WATER MARKET Per Capita wasting disease by Leading Countries 2003 2008 2008 Gallons Per Capita Rank Countries 2003 2008 1 Mexico 41. 5 59. 2 Italy 47. 1 54. 0 3 United Arab Emirates 25. 4 39. 7 4 Belgium-Luxembourg 35. 1 39. 0 5 Germany 31. 9 34. 8 6 France 39. 1 34. 6 7 Spain 33. 5 31. 9 8 Lebanon 25. 30. 5 9 Hungary 16. 2 29. 2 10 United States 21. 6 28. 5 11 Switzerland 25. 4 26. 3 12 Austria 22. 7 26. 1 13 Thailand 20. 26. 0 14 Slovenia 20. 5 26. 0 15 Czech Republic 22. 2 25. 6 16 Qatar 19. 6 25. 6 17 Saudi Arabia 23. 3 25. 2 18 Croatia 16. 4 25. 19 Cyprus 22. 8 24. 0 20 Bulgaria 11. 4 23. 1 GLOBAL AVERAGE 6. 0 7. 9 Source Beverage Marketing Corporation Exhibit 4. 2 b) Fi ve Forces Analysis. 1. The threat of veer products or services.The buyer propensity to substitute products is a reality in the bottled water industry, people is looking for healthier and innovative products, such as flavored water, non calories water, and vitamin added water. Other substitute products are tea, coffee, milk, and beer, but bottled water has surpassed these beverage categories in term of consumption in the United States since 2003. And there is no charge the relative price performance of substitutes is going to be better than the price of the bottled water. 2. The threat of the entry of new competitors. Profitable markets that yield high returns bequeath draw firms.This results in many new entrants, which eventually exit precipitate profitability. Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level. But in this case, the biggest competitors have the majority of the global market, only a some small co mpetitor are capable of maintain their consumers. Just a competitor who is able to offer big quantities of bottled water at a low price is going to enter this industry. Such is the case of beer producers who have the technology and infrastructure, but that according to some experts, they are just waiting for the industry to reach its maturity. . The intensity of competitive dis mystifyation. For most industries, the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. There are a few global competitors in the industry, such as Nestle Waters, Groupe Danone, The Coca-Cola Company, and PepsiCo Inc. , but or so in all country there are small competitors who only have part in a specific segment of the industry, and the consumers are loyal to the brand because of its exclusiveness and quality of the water. 4. The talk terms power of customers.The bargaining power of customers is also described as the market of outputs the ability of cust omers to put the firm under pressure, which also affects the customers esthesia to price changes. The price sensitivity of buyers around the globe is big concern for the leading sellers of the industry, but consumers will not stop buying bottled water just because a high price, they may only change from one brand to another or in the best scenario form one flavor to another, because bottled water instantly is considered as a basic product.The uniqueness of the industry products lies in the enkindle of the consumers to have a healthier lifestyle this is a benefit that no other soft drink can provide to the buyer. 5. The bargaining power of suppliers. The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm, when there are few substitutes. Suppliers may disown to work with the firm, or, charge excessively high prices for unique res ources.The suppliers to the bottled water industry include municipal water systems spring operators bottling equipment manufactures deionization, reverse osmosis, and filtration equipment manufactures manufactures of PET and HDPE bottles and moldable caps label printer and secondary packing suppliers. Sellers of purified water are able not only to pay less for a bottle of water, but also to avoid spring water? s inbound exaltation costs since water arrives through the municipal water system. c) Strategic Group Mapping. d) Key competitors analysis.The leading sellers in the industry of bottled water in the world are just a few, beginning with Nestle waters, Groupe Danone, The Coca-Cola Company, PepsiCo, CG Roxanne, Fiji, Voss, Penta and Trinity Springs. Since bottled water gained wide spread acceptance in the United States, most sellers introduced in 2006 a variation of products that included flavoring, vitamins, carbohydrates, electrolytes, and other supplements. The competitors in the industry have not only bottled water but intensify waters or functional waters available in every single market. The top four U. S. bottled water marketers for 2003-2004 are shown in exhibit 4. . SOURCES 1. Bolman, L. G. & Deal, T. E. (2008). Reframing organizations Artistry, Choice, and Leadership. San Francisco, CA Jossey-Bass. 2. Gannon, Martin J. (2004). Understanding Global Cultures. London, UK SAGE Publications. 3. Neulip, James W. (2009). Intercultural Communication. London, UK Sage Publications. 4. Pugh, D. S. & Hickson, D. J. (1997). Writers on organizations. London, UK Penguin Books. 5. Jabil Circuit Co. (2009). Retrieved March 15, 2009 at http//www. jabil. com 6. Jabil Circuit de Mexico (2009). Retrieved March 15, 2009 at http//jabilweb intranet.