In the modern world, when there is limited access to clean drinking water, packaged drinking water has become necessary. Due to the rising need for clean drinking water, the packaged water sector has been expanding at an exponential rate. The issue at hand is whether or not the bottled drinking water industry is profitable.
The short answer is yes, the packaged water industry is successful. Due to people’s growing health concern, the demand for packaged drinking water is rising daily. Due to the rising demand for bottled water, the industry’s revenue has expanded significantly over time. The market for bottled water was estimated to be worth $217.9 billion globally in 2020, and it is projected to increase at a CAGR of 7.4% from 2021 to 2028.
The packaged drinking water industry does not, however, have a very large profit margin. There are many participants on the market, and there is fierce competition in the sector. The industry average profit margin is between 6% and 10%. The high cost of production, packaging, and delivery has an impact on the profit margin.
Selling tap water is therefore not profitable. The regulatory bodies’ standards are not met by the tap water because it has not been treated. To sell the water on the market, it must first be cleaned, sanitized, and packaged. The bottled water is offered in a variety of shapes, sizes, and packaging options, making it simple for customers to use and carry.
Each year, water bottle manufacturers earn a sizable profit. Nestle, Danone, Coca-Cola, PepsiCo, and Unilever are the leading companies in the market. With a global market share of roughly 20.7%, Nestle Waters was the largest bottler of water in 2020, according to Statista. In 2020, Nestle Waters’ revenue was estimated to be $10,2 billion.
Through the use of reverse osmosis and other purification techniques, spring water can be reproduced. To mimic the flavor and qualities of spring water, the water is filtered and given the minerals. The cleanliness of the spring water is examined, and its flavor is compared to that of the original spring water.
In conclusion, even though the bottled drinking water industry has a low profit margin, it is profitable. The cost of production, packing, and transportation is considerable, and there is fierce competition in the market. Nestle, Danone, Coca-Cola, PepsiCo, and Unilever are the leading companies in the market. Due to people’s growing health consciousness, there is a rising demand for packaged drinking water. Since tap water does not fulfill the requirements set by the regulatory authorities, it must be purified, hygienically cleaned, and packaged before it can be sold on the market. In order to replicate the flavor and qualities of spring water, reverse osmosis and other purification techniques are used.