Zenith Global US Water Dispense Market Report 2020

Zenith Global Report 2020

US Water Dispense Market Report

Š Zenith Global Ltd 2020

Copyright All copyright in this document is reserved.

Liability This document contains information and may contain conclusions and recommendations. Every effort has been made to ensure that the information is accurate and that the opinions expressed are sound. However, Zenith Global Ltd cannot be made liable for any errors or omissions or for any losses or consequential losses resulting from decisions based on the information.

Important notice on distribution This report should not be quoted, referred to or transmitted to another party, in whole or in part, without the prior written consent of Zenith Global Ltd. Should you desire to release a copy of this report to another party for information purposes, we request you and the requesting party to indemnify Zenith Global Ltd from any liability related to the report distribution. Such readers however will not be considered “users� of this report.

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Contents Section 1. Introduction and scope 2. Water dispense market overview 3. Water dispense market forecast 4. Bottled water dispense analysis, insights and opportunities 5. Point of use water dispense analysis, insights and opportunities 6. Integrated tap system analysis, insights and opportunities

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Introduction and scope

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Introduction and scope Introduction

Scope

Zenith Global has actively reported on the US water dispense market since 2008, providing unparalleled insights into the market’s dynamics and evolution.

The 2020 report for the US covers water dispense units where the primary function is the dispense of filtered/purified water. Specifically bottled water dispense units, mains fed point of use dispensers and under the sink integrated tap systems dispensing cold, hot, boiling still and sparkling water are within the scope of this report. The addition, since 2019, of integrated tap systems represents the most significant revision of scope in the last decade and was revised in collaboration with industry leading companies to reflect the evolution and innovation of this market.

To reflect the evolution of water dispense, Zenith Global revised the report in 2019 to include specific coverage on integrated tap systems alongside more traditional point of use and bottle fed dispense units. The report, now in its 7th edition, also features increased focus on market insights and opportunities with channel-specific commentary and innovation reporting.

In producing our reports, we aim to contact every significant company active in the appropriate sector and to provide as complete a picture as possible at a price accessible to any business with a serious commercial interest. We are particularly grateful for the help we have received from these companies in compiling this report. Where direct company figures are unavailable, best estimates have been provided.

The US Water Dispense Report 2020 contains text, charts and tables providing analysis of recent market developments and innovations and forecasts to 2024. This report represents exceptional coverage of the US water dispense market for your business planning. As our research is updated on a regular basis, we always welcome any comments or suggestions about possible improvements.

Whilst beverage and soda dispense units can dispense water, this is not their primary purpose and as such these “hybrid” machines are referenced, where applicable, in the market innovation section but are not quantified in the report. Equally, vending machines and water boilers are not in the scope of this report.

In addition to the water dispense report for the US, reports are also available for West and East Europe.

Amy Lathrop Category Research Director

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Definitions Unit types Water dispense: Water dispense units where the primary function is the dispense of filtered and purified water, comprising bottled water dispense units, mains fed freestanding/countertop point of use units and under the sink/counter integrated tap systems dispensing as defined below.

Bottled water dispense (BWD) units: A unit that dispenses bottled mineral, spring or purified water that can be cold or hot, depending on machine functionality. Most commonly, water bottles or pouches are delivered direct to the customer by a distributor and empty bottles taken away. New bottles and pouches are either placed underneath the unit (bottom fed) or inverted and placed on top of the machine (top fed). For top fed coolers, a feed tube spike from the machine penetrates the watertight cap in the bottle and opens the valve within the cap, thereby allowing water to flow into the machine (or valve where just a pump is used). The same process is used with bottom fed water coolers with a pump to transfer the water to the point of dispense. The unit can be installed under a rental/service agreement or purchased outright by the customer. Disposable cups may be provided and are located in a tube on the front or side. Bottle fed machines can be freestanding or table-top and are suitable for larger bottle or pouch formats greater than 10 liters and are therefore larger than those distributed in small packaged formats through retail outlets.

Point of use units (POU): A device that is plumbed into a mains fed water supply, improving the quality of water via filtration or purification methods.

Typical methods include ultra violet (UV), carbon filter and reverse osmosis. Dispensed water can be cold, hot or sparkling, depending on machine functionality. Such machines have drip trays and some have drainage systems. Machines can be available as freestanding or table-top units.

Integrated tap systems (ITS): A mains fed water system that filters or purifies mains water and directs the water to the tap. These systems may utilize carbon filtration, combined/staged filtration or reverse osmosis technology to treat the water. Dispensed water can be cold, hot, boiling or sparkling, depending on machine functionality. The units are placed either under the sink or under the counter and are often referred to as ‘under counter’ or ‘under sink’ systems.

Hybrid point of use (HPOU) dispense unit: These units dispense soft drinks and juices as well as mains fed water, but whose primary purpose is not water.

Water boilers: The primary function of these units is to boil water as a source of hot water for making hot drinks such as tea and coffee, but not chilled dispensed water.

Vending machines: An automated machine that provides ready to drink hot and cold beverages, but whose primary purpose is not water vending.

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Definitions Channels Workplace:

Public and Private sector offices and workplaces including municipal, government, factories, armed forces, police, fire, prisons.

HoReCa:

Hotels, Restaurants and Catering, including bars, pubs, nightclubs, foodservice, cafĂŠs.

Healthcare:

Public and Private sector medical centres, hospitals, care homes, nursing homes.

Education:

Public and Private sector schools, sixth form colleges, universities, nurseries.

Retail:

Shops, hairdressers, showrooms.

Transport hubs: Airports, stations, transport hubs.

Leisure:

Leisure centres, gyms, sports centres, swimming pools, activity centres.

Domestic:

Residential homes.

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Water dispense market overview

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Water dispense market overview Market evolution •

Commentary

Dispense market evolution, 2014-2019

2,000

1,200

1,800 1,000

1,400 800 1,200 1,000

600

800 400 600

400 200 200 0

0

2014

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2015

2016

2017

2018

2019

BWD Units

POU Units

ITS Units

Total revenue (US$ mln)

US$ million

Installed units

1,600

Water dispense market overview Market evolution 2014 Bottled water dispense (BWD) units % growth Units per '000 people Million liters % growth Point of use (POU) units % growth

Units per '000 people Integrated tap systems (ITS) units % growth Units per '000 people Total units % growth BWD % share POU % share ITS % share

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2015

2016

2017

2018

2019

14-19 CAGR

14-19 growth

Water dispense market overview Revenue evolution •

Commentary

Water Dispense Revenue, 2014-19 1,200

1,000

US$ million

800

600

400

200

0 2014

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2015

2016

2017

2018

2019

BWD revenue (US$ mln)

POU revenue (US$ mln)

ITS revenue (US$ mln)

Total revenue (US$ mln)

Water dispense market overview Price structure and revenue indicators Bottled water dispensers

2018

2019

2018

2019

2018

2019

Average monthly rental (US$) Average sales price per unit (US$) Average 5 gallon bottle price (US$) Total revenue (US$ mln) - revenue from rented units - revenue from sold units - revenue from 5 gallon water sales Point of use Average monthly rental (US$) Average sales price per unit (US$) Total revenue (US$ mln) - revenue from rented units - revenue from sold units Integrated tap systems Average monthly rental (US$) Average sales price per unit (US$)

Total revenue (US$ mln) - revenue from rented units - revenue from sold units 12

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•

Commentary

Water dispense market overview Key acquisitions and market moves •

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Commentary

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Water dispense market overview Key acquisitions and market moves Key acquisitions Buyer

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Target

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Type

Date

Water dispense market overview Innovation and disruption •

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Commentary

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Water dispense market overview PESTLE analysis

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P

E

S

T

L

E

Political

Economic

Social

Technological

Legal

Environmental

Commentary

Commentary

Commentary

Commentary

Commentary

Commentary

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Water dispense market overview PESTLE analysis expanded Political analysis in focus: Water extraction rights • Commentary

Legal analysis in focus: Municipal water quality •

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Commentary

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Water dispense market overview Business market overview Small Businesses in the US, 2017

US Self-Employment Rates by County, 2017

25% Employees: 1-19 Employees: 20-499

50%

Non-employer firms 25%

Source: SBA Office of Advocacy, “United States Small Business Profile 2019”

•

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Commentary

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Source: SBA Office of Advocacy, “United States Small Business Profile 2019”

Water dispense market overview Business market overview NORTH CENTRAL • Commentary

MIDWEST • Commentary

NORTHEAST

• Commentary

WEST

SOUTH

• Commentary

• Commentary

Purchasing trends by region 19

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Water dispense market overview Business market overview •

Commentary

Small Business 1 to 19 Employees

Commentary

Commentary

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Commentary

Commentary

Commentary

Small Medium Business 20 to 499 Employees

Commentary

Commentary

Large Business 500+ Employees

Commentary

Commentary

Water dispense market overview Modes of commercialisation Water dispense type

Bottled water dispense

Mode of commercialisation

•

Commentary

•

Commentary

•

Commentary

•

Commentary

Point of use

•

Commentary

•

Commentary

Integrated tap systems

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Commentary

•

Commentary

•

Commentary

•

Commentary

•

Commentary

•

Commentary

•

Commentary

•

Commentary

•

Commentary

•

Commentary

Water dispense market overview Market perspectives

“Quotation.”

“Quotation.”

- Major manufacturer /importer

- Regional Distributor, Western Region

“Quotation.”

- National Distributor

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Water dispense market forecast

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Water dispense market forecast Forecast approach for 2020 and context of COVID-19 •

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Commentary

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Water dispense market forecast Three market projections - Product unit growth Dispense Market Forecasts, 2019-24f 20

10

BWD

Percentage (%) Growth

0

BWD - Covid Mid Range BWD - Covid Worst Case POU -10

POU - Covid Mid Range POU - Covid Worst Case ITS ITS - Covid Mid Range

-20

ITS - Covid Worst Case

-30

-40 2019

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2020f

2021f

2022f

2023f

2024f

Water dispense market forecast Market forecast - without COVID-19 market disruptions Forecast model 1 - Standard model •

Dispense Market Forecast, 2019-24f: Scenario 1

Commentary 16

14 CAGR %

Percentage (%) Growth

12

10 CAGR %

8

6 CAGR %

4

2

0 2019

2020f BWD

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2021f POU

2022f

2023f ITS

2024f

Water dispense market forecast Market forecast - without COVID-19 market disruptions Forecast model 1 - Standard model Bottled water dispense (BWD) units % growth Million liters % growth Point of use (POU) units % growth Integrated tap systems (ITS) units

% growth Total units % growth BWD % share POU % share ITS % share

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2019

2020f

2021f

2022f

2023f

2024f

19-24f CAGR

19-24f growth

Water dispense market forecast Context of COVID-19 market disruptions •

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Commentary

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Water dispense market forecast Market forecast - with moderate COVID-19 market disruptions Forecast model 2 - Coronavirus moderate case model •

Dispense Market Forecast, 2019-24f: Scenario 2

Commentary 20

15

Percentage (%) Growth

10

5

CAGR %

0 CAGR %

-5

-10

CAGR %

-15 2019

2020f

2021f

BWD - Covid Mid Range

ITS - Covid Mid Range

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2022f

2023f

2024f

POU - Covid Mid Range

Water dispense market forecast Market forecast - with moderate COVID-19 market disruptions Forecast model 2 Coronavirus moderate case model Bottled water dispense (BWD) units % growth Million liters % growth Point of use (POU) units % growth Integrated tap systems (ITS) units

% growth Total units % growth BWD % share POU % share ITS % share

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2019

2020f

2021f

2022f

2023f

2024f

19-24f CAGR

19-24f growth

Water dispense market forecast Market forecast - with significant COVID-19 market disruptions Forecast model 3 - Coronavirus significant case model •

Dispense Market Forecast, 2019-24f: Scenario 3

Commentary 20

10

Percentage (%) Growth

0

CAGR %

-10

-20

CAGR %

-30 CAGR %

-40 2019

2020f

BWD Units

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2021f

2022f

POU Units

2023f

2024f

ITS Units

Water dispense market forecast Market forecast - with significant COVID-19 market disruptions Forecast model 3 Coronavirus significant case model Bottled water dispense (BWD) units % growth Million liters % growth Point of use (POU) units % growth Integrated tap systems (ITS) units

% growth Total units % growth BWD % share POU % share ITS % share

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2019

2020f

2021f

2022f

2023f

2024f

19-24f CAGR

19-24f growth

Water dispense market forecast Product unit growth - Three forecast models, 2019-2024f Point of use

15

20

10

15 Percentage (%) Growth

Percentage (%) Growth

Bottled water dispense

5 0 -5 -10 -15

10 5 0 -5 -10

-20 -25

-15 2019

2020f

2021f

2022f

2023f

2024f

2019

2020f

2021f

Integrated tap systems

Percentage (%) Growth

20 10

Key

0 -10 -20 -30 -40 2019

33

2020f

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2021f

2022f

2023f

2024f

2022f

2023f

2024f

4

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Bottled water dispense analysis, insights and opportunities

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Bottled water dispense analysis, insights and opportunities Volume market analysis Bottled Water Dispense Volume, 2014-19

Bottled Water Dispense Units, 2014-19 160

1,200

120

800

100

Milion litres

BWD installed units

140 1,000

600

40

200

20 0 2014

2015

Market drivers and dynamics

35

60

400

0

•

80

Commentary

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2016

2017

2018

2019

2014

2015

2016

2017

2018

2019

Bottled water dispense analysis, insights and opportunities Units by company Units in December Company 1 Company 2 Company 3

Others Total market

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2014

2015

2016

2017

2018

2019

% share 2018

% share 2019

% 19-18

Bottled water dispense analysis, insights and opportunities Units rented by company Units in December Company 1 Company 2 Company 3

Others Total market

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2014

2015

2016

2017

2018

2019

% share 2018

% share 2019

% 19-18

Bottled water dispense analysis, insights and opportunities Units sold by company Units in December Company 1 Company 2 Company 3

Others Total market

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2014

2015

2016

2017

2018

2019

% share 2018

% share 2019

% 19-18

Bottled water dispense analysis, insights and opportunities Volume by company Million liters Company 1 Company 2 Company 3

Others Total market

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2014

2015

2016

2017

2018

2019

% share 2018

% share 2019

% 19-18

Bottled water dispense analysis, insights and opportunities Market structure Throughput Liters per dispense unit 5 gallon bottles per unit per month Throughput •

Commentary

Cancellations •

Commentary

Contract lengths •

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Commentary

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2018

2019

Cancellations Quit rate %

2018

2019

Bottled water dispense analysis, insights and opportunities Unit analysis Machine functionality •

BWD Machine Functionality, 2019

Commentary

25% Chilled 50%

Chilled + hot Chilled+ hot + boiling

25%

BWD Still-Sparkling Functionality, 2019 Still-sparkling functionality •

Commentary

50%

50%

Still Still + sparkling

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Bottled water dispense analysis, insights and opportunities Channel analysis •

Commentary

BWD Channel Distribution, 2019

13%

12% Workplace HoReCa

13%

12%

Healthcare Education Retail Transport hubs

13%

12%

Leisure Domestic Others

13%

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12%

5

43

Point of use analysis, insights and opportunities

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Point of use analysis, insights and opportunities Volume market analysis Point of Use Units, 2014-19 600

Units added POU installed units

500

2018

400

Replacement rate %

300

Number of units

200 100 0 2014

2015

Market drivers and dynamics •

Commentary

Conversions •

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BWD to POU conversions

Commentary

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2016

2017

2018

2019

2019

New POU 2018

2019

Point of use analysis, insights and opportunities Units by company Units in December Company 1 Company 2 Company 3

Others Total market

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2014

2015

2016

2017

2018

2019

% share 2018

% share 2019

% 19-18

Point of use analysis, insights and opportunities Units rented by company Units in December Company 1 Company 2 Company 3

Others Total market

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2014

2015

2016

2017

2018

2019

% share 2018

% share 2019

% 19-18

Point of use analysis, insights and opportunities Units sold by company Units in December Company 1 Company 2 Company 3

Others Total market

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2014

2015

2016

2017

2018

2019

% share 2018

% share 2019

% 19-18

Point of use analysis, insights and opportunities Unit analysis Machine functionality •

POU Machine Functionality, 2019

Commentary

25% Chilled 50%

Chilled + hot Chilled+ hot + boiling

25%

POU Still-Sparkling Functionality, 2019 Still-sparkling functionality •

Commentary

50%

50%

Still Still + sparkling

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Point of use analysis, insights and opportunities Channel analysis •

Commentary

POU Channel Distribution, 2019

13%

12% Workplace HoReCa

13%

12%

Healthcare Education Retail Transport hubs

13%

12%

Leisure Domestic Others

13%

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12%

6

50

Integrated tap systems analysis, insights and opportunities

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Integrated tap systems analysis, insights and opportunities Volume market analysis Integrated Tap System Units, 2014-19 300

UTS units

250 200 150 100 50 0 2014

2015

Market drivers and dynamics •

51

Commentary

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2016

2017

2018

2019

Integrated tap systems analysis, insights and opportunities Units by company Units in December Company 1 Company 2 Company 3

Others Total market

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2014

2015

2016

2017

2018

2019

% share 2018

% share 2019

% 19-18

Integrated tap systems analysis, insights and opportunities Units rented by company Units in December Company 1 Company 2 Company 3

Others Total market

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2014

2015

2016

2017

2018

2019

% share 2018

% share 2019

% 19-18

Integrated tap systems analysis, insights and opportunities Units sold by company Units in December Company 1 Company 2 Company 3

Others Total market

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2014

2015

2016

2017

2018

2019

% share 2018

% share 2019

% 19-18

Integrated tap systems analysis, insights and opportunities Unit analysis Machine functionality •

ITS Machine Functionality, 2019

Commentary

25% Chilled 50%

Chilled + hot Chilled+ hot + boiling

25%

ITS Still-Sparkling Functionality, 2019 Still-sparkling functionality •

Commentary

50%

50%

Still Still + sparkling

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Integrated tap systems analysis, insights and opportunities Channel analysis •

Commentary

ITS Channel Distribution, 2019

13%

12% Workplace HoReCa

13%

12%

Healthcare Education Retail Transport hubs

13%

12%

Leisure Domestic Others

13%

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12%

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