Bottled Water Market in China answers unmet sanitary needs
As the second largest economy in the world, China has paid a high environmental price for its economic increase: polluted air, contaminated land, uninhabitable areas, desertification and a serious crisis of water drinking. Our focus is on one of the markets which directly shows the impact of these environmental issues: the bottled water market in China.
In early 2013, 7,500 rotten pig carcasses were found floating in the Huangpu River. The event has aroused mass media and people’s attention. Although Shanghai authorities have guaranteed the quality of the city’s drinking water, residents have remained concerned about water safety and many of them have stopped drinking tap water and buy bottled water instead. Furthermore, increasingly more consumers in other areas of China also have been affected by such events and intend to drink bottled water for hygiene and safety. The country has only about 6.5% of the renewable water resources of the planet to sustain one-fifth of the world population. Due to the economic growth faster than freshwater supply, China’s water shortage has become much severer a problem. Market research in China shows that currently water supply in only half of the cities nationwide is able to achieve national standards. Besides, with increasing domestic demand of water, people keep questioning supervisory body’s ability to ensure water quality. Consequently, drinkable water per capita available in the country is corresponding to 1/4 of the world average. As the economy remains bigger and stronger and China is getting exposed more and more to western culture, Chinese consumers see expensive consumer goods as trophies for their successes. They are embracing new economic ideas and habits, devouring goods that previously were unreachable, were impossible to achieve or forbidden. Because of these problems, the personal tastes and preferences in China are changing for bottled water over municipal tap water.
The Chinese bottled water market is overtaking the US
China’s rapid urbanization and economic growth mean that more people are on the move and leading busier lifestyles with a better understanding of health in general. Since the scandal over plasticizer combined with environmental pollution, bottled water has been chosen as an affordable and safer alternative to soft drinks such as fruit juices. According to beverage industry market research data, when it comes to bottled water, the Chinese are drinking their way ahead of the United States. By market research estimates, they’ll surpass water drinking of Americans by the end of the year 2013.
Over the last seven years, China has doubled its share of the global bottled water market. They had around a two billion liter difference between them and the U.S. last year, but now China is forecast to be one billion liters ahead of US. In per capita terms, however, the picture is very different. China is running below the global, per capita bottled water consumption average of 30 liters per person. With over a billion people to count for, China’s per capita consumption is just around one-fifth of that of the U.S. That means there’s plenty of room to grow this segment out in the future. Domestically speaking, the bottled water market grew by 14% in volume in 2012 to 54 billion liters in China. The market value has seen a significant growth of 230% since 2008 and registered over $16 billion in 2012. The market is mainly driven by Master Kong produced by Ting Hsin, Nongfu Spring, Wahaha, C’est Bon produced by Hua Run and Ice Dew produced by Coca-Cola.
Developing a Social and Environmental advantage in your Branding and Marketing strategy
Let’s look at Nestlé and Coca-Cola. Besides their excellent sales networking, accurate identification and branding with social responsibility are definitely contributing to their rising profits in China.
A television ad in China for Nestlé’s Pure Life brand of bottled water shows children making unhappy faces after tasting the water. One child pours his glass into a fish tank instead of drinking it; his face lights up when his mother offers Pure Life instead. Water quality is a big concern for Chinese consumers. They’re turning to bottled water as a safer alternative, and that’s bolstering Nestlé’s bottled water sales. So to identify customers’ need and cater to it is one right move, to present it through multi-media and advertise is another.
In 2014, Coca-Cola Co. is launching a socially responsible bottled-water brand in China that will fund projects to bring clean drinking water to schoolchildren in rural China. It’s Coke’s first initiative of its kind in any market. The brand is called Ice Dew “Chun Yue,” or Pure Joy, and a single serving bottle costs 32 U.S. cents, just slightly more than local products generally sell for. The brand targets Chinese millennials because they’re concerned about societal issues and share their views on social media. For the work in rural areas, Coke paired with prominent local non-governmental aid group One Foundation. Socially conscious brands are not as present in China as in some other markets. Coke saw an opening to do something innovative, especially since the water category is “pretty generic” in China. “This is the right category because water impacts everyone — you can sell it as a commodity, like ‘Water is water, at the end of day,’ or you can say, ‘Water is so precious, some people call it transparent gold”, said Pratik Thakar, Coke’s vice president-Asia Pacific for creative and content excellence. The Chun Yue brand is the first created specifically with the goal of charitably helping communities. The entire brand is designed around a cause. The new brand’s slogan is “Drink Good, Do Good, Feel Good.” The brand will also involve a wearable tech component in several months.
Coca-Cola associates their branding with social responsibility which leads to a good image in society instead of advertising on television.
The big players in the bottled water market have been inventing a way to combine the nature-theme and the industry theme together to introduce the harmony between humans, nature and industry to the market.
Increase of health awareness and Strong investment will lead the bottled water market to keep growing in China
Existing leading players will make continuous efforts and increase investment in the bottled water market in China, which will bring in more consolidation in the forecast period. Increasing consciousness of health among Chinese people and the desire to avoid water born disease has seen the continuous sale increase of bottled water and will be so in the future, which means high-end bottled water will still play a major role in the water market. Leading players are more likely to expand their production capacity and develop more high-quality water sources to match their strategic business plans. Also more soft drinking manufacturers will enter into bottled water market by taking use of their branding effect and loyalty of customers towards their juice and milk drinks and cause more fierce competition in this industry. Meanwhile, more manufacturers are likely to further develop especially in lower-tier cities where the consumption concept of bottled water needs time to penetrate. Furthermore, domestic bottled water brands are facing threats coming from foreign water companies since China’s food security has been a headache and recurring and wearing out people’s trust and confidence, foreign or imported bottled water will be chased after more by local Chinese.
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