West Europe’s bottled water cooler industry saw unprecedented levels of merger and acquisition activity in 2002 and the first half of 2003 as the market underwent a major restructuring, following the entry of Danone and the expansion of Nestlé’s operations.
Pioneered by entrepreneurs over the past two decades, the market is now led by the world’s two retail bottled water giants, who have increased their share to 45% of all units.
The interest shown by the multinationals is hardly surprising, given the industry’s continued strong growth despite a faltering economy.
According to the 2003 West Europe Water Coolers report from drinks consultancy Zenith International, the number of machines installed during 2002 advanced by 17% to 1 493 500 and consumption rose by a similar amount to break through the 1bn-litre mark and reach 1097M litres.
Water for coolers now account for 2.7% of total West European bottled water volume and contributed 9% of total bottled water growth in 2002.
Consolidation has become a key feature, with 37 transactions announced during 2002 and two pan-European deals among several more in the first half of 2003.
“A string of leading names across Europe have changed hands, including Rent a Cooler, Hygoform, Chateaud’eau, Sun Spring and Opalia,” commented Zenith research director Gary Roethenbaugh.
“The two biggest deals came earlier in 2003 as Nestlé more than doubled its portfolio through the acquisition of Powwow and Danone embarked on a joint venture with Eden Springs.”
Some companies have already been rebranded and Nestlé has started to roll out Aquarel in three markets but it remains to be seen how far the major portfolios will be reconfigured.
The United Kingdom with 36% of cooler volume followed by France and Italy with 15% and 8%, respectively heads the top three countries.
The less developed southern markets continue to record the fastest growth rates with Spain, Switzerland, Austria, Portugal and Greece all achieving 2002 growth of 25% or more.
In contrast, the Scandinavian markets are showing clear signs of maturity, with the first ever volume losses recorded in Norway and Sweden. Balancing out high growth in the southern markets and slower growth in the northern markets, Zenith expects the industry to reach the 3M-unit mark with volume sales in excess of 2bn litres by 2007.