“Luxury” Bottled Water Becoming Hot Commodity In China

Will Consumers Turn To Pricey Domestic Bottlers?

"Tibet 5100" is one of the most expensive bottled water brands in China

“Tibet 5100” is one of the most expensive bottled water brands in China

Along with rising living standards in China has come stronger demand for consumer products like quality drinking water. While mass-market brands like Wahaha and Nongfu Spring have dominated the bottled water market in China for years, more recently we’ve seen a spate of companies labeling themselves as “premium” spring up, and as it turns out, they’re finding a market. According to a report published earlier this year by Sinomonitor International, the premium bottled water market in China is estimated to expand at an annual rate of 80 percent over the next five years, reaching annual sales of 10 billion yuan (US$1.56 billion) by 2015.

Despite being priced anywhere from eight to 10 times that of mass-market brands (which range between 0.8-1.3 yuan (US$0.13-0.20), a growing willingness to pay for quality — whether real or perceived — is fueling the “luxury” bottled water market in this current age of food safety controversies. As China Daily writes this week:

Increasing concerns over water safety and the deeper pockets of Chinese consumers have led to a booming market, says Liao Lei, secretary-general of the natural mineral water committee for the China Mining Association.

With the improvement of living standards, more and more people want better quality drinking water, as well as safer options. Unlike in Western countries, tap water in China is undrinkable and has to be boiled before ingested.

Over the past two decades, France’s Evian and Perrier have accounted for nearly half of the premium bottled market in China, but now, consumers can find nearly a dozen new domestic premium bottled water brands, such as Tibet 5100, Qingdao Laoshan, Aershan Mineral Water, and Kunlun Mountains Natural Mineral Water, on the shelves of high-end supermarkets. However, domestic and Hong Kong-based brands aren’t only finding themselves duking it out for market share with their entrenched French rivals, they’re encountering competition from new international entrants as well. Recently, brands like the German mineral water bottler Rosbacher and America’s “Bling H20” (which retails in Shenyang for 800 yuan (US$123)) have made inroads at boutique markets in China, and we can expect other companies with wealthy Chinese consumers in their crosshairs to plow into the market in ever-growing numbers.

 

Categories

Market Analysis