Bottled water bucks the trend
Despite most beverage companies underperforming in the past few months, bottled water producers have instead been experiencing steady growth, according to the latest survey by investment research and management firm Morningstar Inc.
The survey also pointed out that carbonated soft drinks will likely continue to underperform while bottled water and enhanced still beverage consumption are expected to experience positive growth.
According to the China Consumer Report 2016, which was co-released by global market consulting firms Bain & Co and Kantar Worldpanel, the growth rate of beverages dropped to 3.2 percent in the first half of this year, down from 5.6 percent a year earlier.
Experts from Bain & Co explained that the decline in growth is mainly due to the central government’s push for upgrading in the traditional manufacturing industry which has resulted in some manufacturers shifting their operations to Vietnam and Bangladesh where wages are lower.
According to Jason Yu, general manager of Kantar Worldpanel China, bottled water has been experiencing positive growth because all consumers, and not just the rich, are becoming increasingly concerned about their health.
“The market is becoming more divided as some products are taking the slow track and some are taking the fast track. Products that can meet the demands of the emerging middle class, such as bottled water, will register faster growth,” said Yu.
Based on the findings of Shenzhen-based market consulting service provider Ocn. com.cn, the Chinese bottled water market has grown by 20 percent in the past decade. It expects the market to maintain this momentum over the next five years and expand by 15 percent annually, bringing the total annual consumption of bottled mineral water to 49 million tons by 2020.
Wang Rong, a headhunter in Shanghai, has been consuming bottled mineral water since three years ago when his son was born. Despite the higher price, Wang is more than happy to pay.
“Children are more vulnerable to illnesses so parents are naturally willing to provide the best for them. Ever since my son was born, we have started to use bottled mineral water in his daily diet,” said Wang.
“Although we have already installed a water purifier in the house, we still think bottled mineral water is better for his health. We grown-ups also find tea made with bottled mineral water tastes better. We don’t think buying bottled water will be a huge burden for the family. Anything good for the health is a wise investment.”