Zenith Global 2015 China Bottled Water Report

zenithinternational specialist consultants to the food and drink industries worldwide

Zenith Report China Bottled Water 2015

STRATEGY & MANAGEMENT  MERGERS & ACQUISITIONS  COMMERCIAL & MARKET  OPERATIONS & TECHNICAL  WATER & GEOTHERMAL  ENVIRONMENT & CARBON  PACKAGING & DISTRIBUTION

Methodology Research note In undertaking its research for this latest series of reports, Zenith depends upon the goodwill and co-operation of operators active in the marketplace and, as such, achieves a high level of accuracy. Throughout its ongoing research, Zenith has also utilised its internal data library and global databases, alongside other third party sources.

Liability Whilst every effort has been made to ensure that the information presented in this document is accurate and that the opinions expressed are sound, Zenith International Ltd cannot be made liable for any errors or omissions or for any losses or consequential losses resulting from decisions based on its contents.

Zenith International Ltd 7 Kingsmead Square Bath BA1 2AB United Kingdom t +44 (0) 1225 327900 f +44 (0) 1225 327901

www.zenithinternational.com

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Contents CHINA BOTTLED WATER MARKET ------------------------------------------------- 5 Bottled water volume ---------------------------------------------------------------------------------------- 6 Market volume trends 2010-14 --------------------------------------------------------------------------------------------------------------------------------- 7 Volume segmentation 2010-14 --------------------------------------------------------------------------------------------------------------------------------- 8 Market volume forecast 2015-19f ------------------------------------------------------------------------------------------------------------------------------ 9

Bottled water value----------------------------------------------------------------------------------------- 10 Market value trends 2010-14 ----------------------------------------------------------------------------------------------------------------------------------11 Market value forecast 2015-19f -------------------------------------------------------------------------------------------------------------------------------12 Average value per litre 2010-14 -------------------------------------------------------------------------------------------------------------------------------13

Key manufacturers ----------------------------------------------------------------------------------------- 14 Leading manufacturers by volume 2010-14 ---------------------------------------------------------------------------------------------------------------15

Key brands --------------------------------------------------------------------------------------------------- 16 Leading brands by volume 2010-14 -------------------------------------------------------------------------------------------------------------------------17

Channel distribution---------------------------------------------------------------------------------------- 18 Distribution split by volume 2010-14 -------------------------------------------------------------------------------------------------------------------------19

Packaging ---------------------------------------------------------------------------------------------------- 20 Packaging size split by volume (litres) 2010-14 ----------------------------------------------------------------------------------------------------------21

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CHINA REGIONAL BOTTLED WATER MARKETS ---------------------------- 22 REGION A --------------------------------------------------------------------------------------------------- 23 Region A Bottled Water Volume ------------------------------------------------------------------------ 24 Market volume trends 2010-14 --------------------------------------------------------------------------------------------------------------------------------25 Volume segmentation 2010-14 --------------------------------------------------------------------------------------------------------------------------------26 Market volume forecast 2015-19f -----------------------------------------------------------------------------------------------------------------------------27

Region A Bottled Water Value -------------------------------------------------------------------------- 28 Market value trends 2010-14 ----------------------------------------------------------------------------------------------------------------------------------29 Average value per litre 2010-14 -------------------------------------------------------------------------------------------------------------------------------30

Region A Key Manufacturers ---------------------------------------------------------------------------- 31 Leading manufacturers by volume 2012 & 2014 ---------------------------------------------------------------------------------------------------------32

Region A Key Brands ------------------------------------------------------------------------------------- 33 Leading brands by volume 2012 & 2014 -------------------------------------------------------------------------------------------------------------------34

Region A Channel Distribution -------------------------------------------------------------------------- 35 Distribution split by volume 2014 -----------------------------------------------------------------------------------------------------------------------------36

Region A Packaging --------------------------------------------------------------------------------------- 37 Packaging size split by volume (litres) 2010-14 ----------------------------------------------------------------------------------------------------------38

Appendix------------------------------------------------------------------------------------------------------ 39 Definitions -----------------------------------------------------------------------------------------------------------------------------------------------------------40 Acronyms -----------------------------------------------------------------------------------------------------------------------------------------------------------42

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CHINA BOTTLED WATER MARKET

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Bottled water volume

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China bottled water Market volume trends 2010-14 China Bottled Water Market - Volume

Million litres

2010

2011

2012

2013

2014

12,000 10,000

10,000

10,000

10,000

10,000

Bottled water (mln litres)

10,000 8,000

% Change

6,000

Small pack (mln litres)

4,000

Bulk (mln litres) 2,000

Total per capita consumption (litres)

0 2010



Commentary



Commentary



Commentary

2011

2012

2013

2014

7

China bottled water Volume segmentation 2010-14 Volume % share 2014 Volume % share Bulk 33.0%

Still packaged 33.0%

2010

2011

2012

2013

2014

Still packaged Sparkling packaged Bulk

Sparkling packaged 34.0%



Commentary



Commentary



Commentary

8

China bottled water Market volume forecast 2015-19f Million litres

China Bottled Water Market – Volume Forecast

12,000 10,000

10,000

10,000

10,000

10,000

10,000 8,000

2015f

2016f

2017f

2018f

2019f

Bottled water (mln litres) % Change

6,000

Small pack (mln litres)

4,000

Bulk (mln litres)

2,000

0 2015f

2016f



Commentary



Commentary



Commentary

2017f

2018f

2019f

Total per capita consumption (litres)

9

Bottled water value

10

China bottled water Market value trends 2010-14 CNY million 12,000

Bottled water value 10,000

10,000

10,000

10,000

10,000

10,000

2010

2011

2012

2013

2014

CNY million % growth

8,000

€ million

6,000

% growth

4,000

US$ million 2,000

% growth 0 2010



Commentary



Commentary



Commentary

2011

2012

2013

2014

11

China bottled water Market value forecast 2015-19f CNY million

12,000 10,000

10,000

10,000

10,000

10,000

10,000

Bottled Water Value Forecast

2015f

2016f

2017f

2018f

2019f

CNY million

8,000

% growth

6,000

€ million

4,000

% growth

2,000

US$ million % growth

0 2015f



Commentary



Commentary



Commentary

2016f

2017f

2018f

2019f

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China bottled water Average value per litre 2010-14 Average value per litre CNY 1.10 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00

1.00

1.00

1.00

1.00

1.00

2010

2011

2012

2013

2014

Bottled water (CNY) Small pack (CNY) Bulk (CNY) Bottled water (€) Small pack (€) Bulk (€) Bottled water (US$)

2010

2011

2012

2013

2014

Small pack (US$) Bulk (US$)



Commentary



Commentary



Commentary

13

Key manufacturers

14

China bottled water Leading manufacturers by volume 2010-14 Manufacturer volume % share 2014 Manufacturer 5 20.0%

Manufacturer 1 20.0%

Volume sales (mln litres) Manufacturer 1 Manufacturer 2

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

Manufacturer 3 Manufacturer 4 Manufacturer 5 Others

Manufacturer 4 20.0%

Manufacturer 2 20.0%

Manufacturer 3 20.0%

Volume % share Manufacturer 1 Manufacturer 2 Manufacturer 3 Manufacturer 4 Manufacturer 5 Others

The order of manufacturers is based on 2014 ranking.

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Commentary

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Commentary



Commentary

15

Key brands

16

China bottled water Leading brands by volume 2010-14 Brand volume % share 2014 Brand 5 20.0%

Volume sales (mln litres)

Brand 1 20.0%

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

Brand 1 Brand 2 Brand 3 Brand 4 Brand 5

Volume % share Brand 4 20.0%

Brand 2 20.0%

Brand 1 Brand 2 Brand 3 Brand 4

Brand 3 20.0%

Brand 5 The order of brands is based on 2014 ranking.

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Commentary

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Commentary

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Commentary

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Channel distribution

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China bottled water Distribution split by volume 2010-14 Channel volume % share 2014 HOD 20.0%

Channel – Volume % Share

Modern trade 20.0%

2010

2011

2012

2013

2014

Modern trade Discounters Traditional stores OOH

OOH 20.0%

Discounters 20.0%

HOD Total

Traditional stores 20.0%



Commentary



Commentary

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Commentary

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Packaging

20

China bottled water Packaging size split by volume (litres) 2010-14 Packaging size volume % share 2014 Volume % share >10 litres 35.0%

0-2 litres 35.0%

2010

2011

2012

2013

2014

0-2 litres >2 to 10 litres >10 litres Total

>2 to 10 litres 30.0%



Commentary



Commentary



Commentary

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CHINA REGIONAL BOTTLED WATER MARKETS      

Guangdong Sichuan Hunan Hubei Yunnan Shanghai

22

REGION A

23

Region A Bottled Water Volume

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Region A bottled water Market volume trends 2010-14 Million litres

Bottled Water Market Volume

12,000 10,000

10,000

10,000

10,000

10,000

10,000

2010

2011

2012

2013

2014

Bottled water (mln litres)

8,000

% Change

6,000

Small pack (mln litres)

4,000

Bulk (mln litres)

2,000 0 2010



Commentary



Commentary



Commentary

2011

2012

2013

2014

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Region A bottled water Volume segmentation 2010-14 Volume % share 2014

Bulk 33.0%

Still packaged 33.0%

Volume % share

2010

2011

2012

2013

2014

Still packaged Sparkling packaged Bulk water

Sparkling packaged 34.0%



Commentary



Commentary



Commentary

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Region A bottled water Market volume forecast 2015-19f Million litres 12,000 10,000

Bottled Water Market – Volume Forecast

8,000

Bottled water (mln litres)

6,000

% Change

4,000

Small pack (mln litres)

2,000

Bulk (mln litres)

10,000

10,000

10,000

10,000

10,000

2015f

2016f

2017f

2018f

2019f

0 2015f

2016f



Commentary



Commentary



Commentary

2017f

2018f

2019f

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Region A Bottled Water Value

28

Region A bottled water Market value trends 2010-14 CNY million 12,000 10,000

10,000

10,000

10,000

10,000

10,000

Bottled water value

2010

2011

2012

2013

2014

CNY million

8,000

% growth

6,000

€ million

4,000

% growth

2,000

US$ million % growth

0 2010



Commentary



Commentary



Commentary

2011

2012

2013

2014

29

Region A bottled water Average value per litre 2010-14 CNY 1.40 1.20

1.20

1.20

1.20

1.20

1.20

Average value per litre 1.00

1.00

1.00

1.00

1.00 0.80

0.75

0.75

0.75

0.75

0.75

0.60 0.40 0.20 0.00 2010

2011

Bottled water (CNY)



Commentary



Commentary



Commentary

2012 Small pack (CNY)

2010

2011

2012

2013

2014

1.00

2013

2014 Bulk (CNY)

Bottled water (CNY) Small pack (CNY) Bulk (CNY) Bottled water (€) Small pack (€) Bulk (€) Bottled water (US$) Small pack (US$) Bulk (US$)

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Region A Key Manufacturers

31

Region A bottled water Leading manufacturers by volume 2012 & 2014 Manufacturer volume % share 2014 Manufacturer 5 20.0%

Manufacturer 1 20.0%

Volume sales (mln litres)

2012

2014

2012

2014

Manufacturer 1 Manufacturer 2 Manufacturer 3 Manufacturer 4 Manufacturer 5

Others Volume % share Manufacturer 4 20.0%

Manufacturer 2 20.0%

Manufacturer 3 20.0%

Manufacturer 1 Manufacturer 2 Manufacturer 3 Manufacturer 4 Manufacturer 5

Others The order of manufacturers is based on 2014 ranking.



Commentary

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Commentary

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Commentary

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Region A Key Brands

33

Region A bottled water Leading brands by volume 2012 & 2014 Volume sales (mln litres)

Brand volume % share 2014 Brand 5 20.0%

2012

2014

2012

2014

Brand 1 Brand 2 Brand 3 Brand 4 Brand 5

Brand 1 20.0%

Others Volume % share Brand 4 20.0%

Brand 2 20.0%

Brand 3 20.0%

Brand 1 Brand 2 Brand 3 Brand 4 Brand 5 Brand 1 The order of brands is based on 2014 ranking.



Commentary

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Commentary

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Commentary

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Region A Channel Distribution

35

Region A bottled water Distribution split by volume 2014 Channel volume % share 2014 2014 HOD 20.0%

Modern trade 20.0%

Million litres

Volume % share

Modern retail Traditional Discounters OOH

OOH 20.0%

Discounters 20.0%

HOD Total

Traditional stores 20.0%



Commentary



Commentary



Commentary

36

Region A Packaging

37

Region A bottled water Packaging size split by volume (litres) 2010-14 Packaging size volume % share 2014 Volume % share

>10 litres 35.0%

0-2 litres 35.0%

2010

2011

2012

2013

2014

0-2 litres >2 to 10 litres >10 litres Total

>2 to 10 litres 30.0%



Commentary



Commentary



Commentary

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Appendix

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Appendix Definitions Zenith’s market figures capture the total sales to end consumers through every distribution channel over the period of a full calendar year.

Bottled water market volume reflects the total annual bottled water volume sales to consumers from 1st January to 31st December of a given year. Total market volume also indicates the total consumption for the same period.

Value trends are also measured on the basis of value sales to end consumers and hence reflect the total expenditure by consumers through a calendar year.

Bottled water market value is the total amount that consumers pay for bottled water products through all channels during 1 st January-31st December of a given year.

Value per litre (vpl) measures the average price over the period of a calendar year paid for by consumers for bottled water through all channels.

Bottled water: all kind of plain water (purified drinking, spring, mineral, etc.) in all packaging size formats sold to consumers. Enhanced waters and flavoured waters are excluded in the scope of this definition.

Small pack (packed) water: bottled water packed in up to 10 litres pack formats.

Bulk water: bottled water packed in over 10 litres formats.

Modern trade: mainly organised retail, predominantly supermarkets and hypermarkets (e.g. Wal-mart, Carrefour, Tesco), but also smaller suboutlets of multiple grocers (for example, Tesco express, Sainsbury’s local). Also includes government owned stores and co-ops.

Discounters: includes both hard and soft discounters (e.g. Aldi, Lidl, Penny, Netto, Plus, Denner, Dia). Discount retailers usually have basic merchandising, a limited product range and often a limited role of manufacturer brands (although this is now changing to some extent, with increasing number of discounters offering a wider range of branded goods). Every day low priced goods is the core model of discounters.

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Appendix Definitions Traditional stores: generally smaller outlets including mom and pop stores and traditional (independent) grocers. Also includes kiosks, street stalls and sales through vending machines.

Out of home (OOH): on premise and on the go consumption, through both chains (McDonald's, Shell etc.) and independent outlets. Includes HoReCa (Hotels, Restaurants and Catering).

Home and office delivery (HOD): sales directly to end users through delivery service offered by producer and/or via distributors.

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Appendix Acronyms        

CAGR CNY HOD Horeca mln OOH PCC VPL

compound annual growth rate Chinese Yuan home and office delivery hotels, restaurants, catering sector million out-of-home per capita consumption value per litre

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Zenithinternational specialist consultants to the food and drink industries worldwide Zenith’s market reviews aim to give a quick and easy understanding of food and beverage markets worldwide.

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