Zenith Global US Water Dispense Report 2019

Zenith Global Report

US Water Dispense Report A comprehensive analysis of the point of use and water dispense markets.

2019

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Contents Section 1. Introduction and scope 2. Water dispense market overview 3. Bottled water dispense analysis, insights and opportunities 4. Mains fed point of use water dispense analysis, insights and opportunities 5. Integrated tap system analysis, insights & opportunities

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Introduction and Scope

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1.Introduction & scope Introduction

Scope

Commentary

Commentary

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1.Definitions – Water dispense Water dispense: Water dispense units where the primary function is the dispense of filtered & purified water, comprising bottled fed 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) unit: A unit that dispenses bottled purified, spring or mineral water. The unit can be installed under a rental/service agreement or purchased outright by the customer. Water bottles and pouches are delivered direct to the customer by a distributor. and empty bottles taken away. New bottles & pouches are either placed underneath the unit or inverted and placed on top of the machine. 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 bottle 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. Water can be is dispensed either hot, cold or ambient from both top and bottom fed water dispensers. Disposable cups may be provided and are located in a tube on the front or side. Machines are freestanding or table-top and are suitable for larger bottle/pouch formats which are bigger than 10 litres and are therefore larger than those distributed in packaged formats through retail outlets.

Total mains fed dispense units: Mains fed filtered point of use (POU) and mains fed under the sink /counter integrated tap systems (ITS) combined as a total as defined below.

Mains fed freestanding/ countertop point of use unit (POU) dispensing filtered & purified water: A water dispense device that is plumbed into a mains fed water supply, improving the quality of water via filtration or purification methods. Such machines have drip trays and some have drainage systems. The water can be dispensed cold, ambient, sparkling or hot and available as freestanding or table-top units. Typical methods include ultraviolet (UV) and carbon filter however reverse osmosis units are also available.

Under the sink/under the counter mains fed integrated tap systems (ITS) with functionality dispensing filtered & purified water: A water system that filters/purifies mains water and directs the water to the tap. These systems may utilise carbon filtration, combined/staged filtration or reverse osmosis technology to purify or filter the water. These units can provide ambient, chilled, hot or sparkling water. The units are placed either under the sink or under the counter and are referred to as ‘under counter’ or ‘under sink’ systems.

Hybrid mains fed point of use (HPOU) dispense unit: beverage, soda, juice dispense units which can dispense water but whose primary purpose is not water.

Water boilers: whose primary function is to boil water as a source of hot water for making hot drinks such as tea & coffee.

Vending machines: an automated machine that provides ready to drink hot and cold beverages.

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1.Verticals

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Workplace:

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

HoReCa:

Hotels, Restaurants & Catering including bars, pubs, nightclubs. foodservice, cafes etc

Retail:

Shops, hairdressers, showrooms etc

Healthcare:

Public and Private Sector medical centres, hospitals, care homes, nursing homes etc

Transport:

Airports, transport hubs etc

Education:

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

Leisure:

Leisure centres, gyms, tennis and other sports centres, activity centres

Domestic:

Residential homes

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Water dispense market overview

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2.USA Market overview – Water dispense market evolution Commentary

400

80

350

70

300

60

250

50

200

40

150

30

100

20

50

10

0

0 2014

BWD Units

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Million $

Dispense market evolution, 2014-2018

Installed units

•

2015 POU Units

2016

2017

UTS Units

2018 Total revenue ($ mln)

2.USA Volume market evolution - Water dispense (bottled water, point of use and integrated tap) 2014

Bottled Water Dispense (BWD) Units % growth Units per '000 people Million litres % growth Point Of Use (POU) Units % growth Units per '000 people Integrated Tap Systems (ITS) Units % growth Units per '000 people Total Units % growth POU % share BWD % share ITS % share 10

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2015

2016

2017

2018 14-18 % CAGR

2.USA Revenue market analysis - Water dispense (bottled water, point of use and integrated tap) •

Commentary

Water dispense revenue 2014-18 80.0 70.0 60.0

50.0 40.0 30.0 20.0 10.0

2014

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2015

2016

2017

BWD revenue ($ mln)

POU revenue ($ mln)

UTS revenue ($ mln)

Total revenue ($ mln)

2018

2.USA Rental market analysis - Water dispense (bottled water, point of use and integrated tap) Bottled water

2017

2018

Price structure and revenue indicators

Average monthly rental ($)

•

Average bottle price ($)

Price structure and revenue indicators

Total revenue ($)

•

Commentary

Commentary

- revenue from rented units

Price structure and revenue indicators - revenue from sold units

• Mains fed point of use

2017

2018

2017

2018

Average monthly rental ($) Average sales price per unit ($) Total revenue ($) - revenue from rented units - revenue from sold units Integrated tap system Average monthly rental ($) Average sales price per unit ($) Total revenue ($)

- revenue from rented units - revenue from sold units 12

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Commentary

2.USA Units per capita - Water dispense (bottled water, point of use and integrated tap) USA – Units per capita 2018 Dispense type Bottled Water Dispense Point of Use Integrated Tap Systems •

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Commentary

Total Units

Units per ‘000 people

2.USA Mode of commercialisation - Water dispense (bottled water, point of use and integrated tap) Water dispense type

Mode of commercialisation •

Commentary

•

Commentary

Bottled Water Dispense

Point of Use

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Commentary

2.USA Mode of commercialisation - Water dispense (bottled water, point of use and integrated tap) Water dispense type

Mode of commercialisation •

Integrated Tap Systems

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Commentary

Commentary

2.USA Market analysis - Water dispense (bottled water, point of use and integrated tap) Industry innovation •

Commentary

Key acquisitions and market moves •

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Commentary

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2.USA History of key acquisitions and market moves - Water dispense in 2018 Examples of key acquisitions Buyer

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Target

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Type

Date

2.USA History of key acquisitions and market moves - Water dispense from 2014 Examples of key acquisitions Buyer

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Target

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Type

Year

2.USA Innovation and disruption •

Commentary and examples

Avalon – self-cleaning (ozone) POU units, sold DTC

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2.USA Forecast water dispense (bottled water, point of use and integrated tap) 2018 Bottled Water Dispense (BWD) Units % growth Units per '000 people Million litres % growth Point Of Use (POU) Units % growth Units per '000 people Integrated Tap System (ITS) Units

% growth Units per '000 people Total Units

% growth POU % share

BWD % share UTS % Š share 20 Zenith Global Ltd 2019

2019f

2020f

2021f

2022f

2023f

18-23f CAGR

18-23f %

2.USA Future water consumption trends •

Commentary

Overall water consumption, % of million litres 2018

50%

50%

Small pack

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BWD

3

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Bottled water dispense analysis, insights and opportunities

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3.USA Bottled water dispense – Volume market analysis Bottled water dispense units, 2014-18 160 120

120

140

150

60.0

60.0

100

100 80 60

50.0

50.0 40.0

40.0 30.0

30.0

40

20.0

20

10.0 0.0 2014

2015

Market drivers and dynamics

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70.0

70.0

0

•

80.0

Milion litres

BWD installed units

140

130

Bottled water dispense volume, 2014-18

Commentary

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2016

2017

2018

2014

2015

2016

2017

2018

3.USA Bottled water dispense - Market structure Throughput Litres per dispense unit 18.9l bottles per dispense unit per month Throughput •

Commentary

Cancellations •

Commentary

Contract lengths •

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Commentary

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2017

2018

Cancellations Quit rate %

2017

2018

3.USA Bottled water dispense - Market analysis Features and benefits

•

BWD features and benefits %, 2018

25%

25%

Commentary

Chilled Chilled-hot

Chilled-hot-boiling 25%

25%

Other

BWD features and benefits %, 2018

30%

35%

Still Sparkling Still-sparkling 35%

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3.USA Bottled water dispense companies - Units installed Machines in December

Company A Company B

Total market

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2014

2015

2016

2017

2018

% share 2017

% share 2018

% 18-17

3.USA Bottled water dispense companies - Units rented Machines in December Company A Company B

Total market

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2014

2015

2016

2017

2018

% share 2017

% share 2018

% 18-17

3.USA Bottled water dispense companies - Units sold Machines in December Company A Company B

Total market

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2014

2015

2016

2017

2018

% share 2017

% share 2018

% 18-17

3.USA Bottled water dispense companies - Volume in million litres Million litres Company A Company B

Total market

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2014

2015

2016

2017

2018

% share 2017

% share 2018

% 18-17

3.USA Bottled water dispense - Analysis of verticals Verticals •

POU verticals %, 2018

Commentary Workplace 20% 29%

HoReCa Healthcare

5%

Education

2% 4%

Retail Transport Hubs Domestic

10%

20% 10%

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Leisure / Gyms Others

3.USA Bottled water dispense - Analysis of leading verticals Workplace Key features and benefits •

Commentary

Specific drivers •

Commentary

Key players •

Commentary

Overall opportunity •

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Commentary

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HoReCa

Healthcare

3.USA Bottled water dispense – PESTLE analysis

P

E

S

T

L

E

Political

Economic

Social

Technological

Legal

Environmental

Commentary

.

Opportunities •

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Commentary

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Mains fed point of use water dispense analysis, insights and opportunities

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4.USA Mains fed filtered & purified point of use water dispense - Units POU units, 2014-18 160 BWD installed units

140 120

120

130

140

150

BWD to POU conversions

100

100

2017

80 60

Replacement rate %

40 20

Number of units

0 2014

2015

Market drivers and dynamics •

Commentary

Conversion •

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New POU

Units added

Commentary

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2016

2017

2018

2018

2017

2018

4.USA Mains fed filtered / purified point of use water dispense – Units Features and benefits •

Commentary

POU features and benefits %, 2018

Machine types •

Commentary

25%

25%

Chilled Chilled-hot Chilled-hot-boiling 25%

25%

Other

POU features and benefits %, 2018

30%

35% Still Sparkling Still-sparkling 35%

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4.USA Mains fed point of use distributors - Units installed Machines in December

2014

Total market 36

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2015

2016

2017

2018

% share 2017

% share 2018

% 18-17

4.USA Mains fed point of use distributors - Units rented Machines in December

2014

Total market

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2015

2016

2017

2018

% share 2017

% share 2018

% 18-17

4.USA Mains fed point of use distributors - Units sold Machines in December

Total market

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2014

2015

2016

2017

2018

% share 2017

% share 2018

% 18-17

4.USA Mains fed point of use - Verticals Verticals •

POU verticals %, 2018

Commentary Workplace 22% 29%

HoReCa Healthcare

5%

Education

2% 4%

Retail Transport Hubs Domestic

10%

18% 10%

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Leisure / Gyms Others

4.USA Mains fed POU - Analysis of leading verticals Workplace Key features and benefits •

Commentary

Specific drivers •

Commentary

Key players •

Commentary

Overall opportunity •

Commentary

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HoReCa

Healthcare

4.USA Mains Fed POU – PESTLE analysis

•

P

E

S

T

L

E

Political

Economic

Social

Technological

Legal

Environmental

Commentary

Opportunities •

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Commentary

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Integrated tap systems analysis, insights and opportunities

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5.USA Integrated tap systems analysis ITS units, 2014-18 160 BWD installed units

140 120

120

130

140

150

ITS features and benefits %, 2018

25%

100

25%

100

Chilled

80

Chilled-hot

60

Chilled-hot-boiling

40

25%

20

25%

Other

0 2014

2015

2016

2017

2018

ITS features and benefits %, 2018

Market drivers and dynamics •

30%

35%

Commentary

Still Sparkling Still-sparkling 35%

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5.USA Integrated tap systems - Units installed Machines in December

Total market

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2014

2015

2016

2017

2018

% share 2017

% share 2018

% 18-17

5.USA Integrated tap systems - Units rented Machines in December

2014

2015

2016

2017

2018

% share 2017

% share 2018

% 18-17

2015

2016

2017

2018

% share 2017

% share 2018

% 18-17

Total market

Integrated tap systems - Units sold Machines in December

Total market

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2014

5.USA Integrated tap systems- Verticals Verticals •

ITS verticals %, 2018

Commentary 10%

Workplace 10%

HoReCa Healthcare Education

10%

45%

Retail Transport Hubs

10% 10% 5%

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Domestic Leisure / Gyms Others

5.USA Integrated tap systems – Analysis of leading verticals Workplace Key features and benefits •

Commentary

Specific drivers •

Commentary

Key players •

Commentary

Overall opportunity •

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Commentary

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HoReCa

Domestic

5.USA Integrated tap systems – PESTLE analysis

P

E

S

T

L

E

Political

Economic

Social

Technological

Legal

Environmental

Commentary

.

Opportunities •

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Commentary

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