Markets, Trends & Issues in 2007
To better prepare you for a new and successful year, Water Quality Products asked various industry professionals to provide their views on current and upcoming issues that may affect our industry in 2007.
Evolving Water Industry Niches Bring New Opportunities for 2007
-Peter J. Censky, executive director, Water Quality Association
Ask a dozen people to describe the water industry, and you’ll get a dozen different answers. That’s because there really isn’t a precise “water industry.” Each niche market marches to its own drummer and obeys its own set of market rules. The municipal clean water industry is different from the municipal wastewater industry. They even have two different associations, and both are huge. Then there’s industrial water treatment and commercial treatment—two different animals—along with ultrapure. Of course, the household industry is split into two primary niches, retail and dealer-delivered. These are becoming more alike but are still distinctly different.
The best way to understand this complex mix is to try not to study it too hard. Anything you think you have learned will likely be obsolete within a few months anyway. For instance, when the retail do-it-yourself (DIY) market emerged, a lot of dealers panicked. They wondered if they were going to go the way of other dealer-delivered businesses, many of which closed their doors. That didn’t happen, and today we are seeing hints that the DIY channel has discovered it needs the dealer channel to survive. After all, the workhorse products of the DIY and dealer channel are not something that you can do yourself.
While we are talking about DIY, I want to know how many people really are into doing it themselves, especially with the rapid movement of homeowners to larger homes on bigger spreads. I’ve mentioned before that nearly half of all new homes require a septic field, and about half of those homes require wells. These numbers are imprecise, but they tell us something. People are moving out of the suburbs and building “McMansions” on their own little pieces of the country. Are these people do-it-yourselfers? I don’t think so. Besides, now that they have their little piece of the country, they are being introduced to what we call “problem water.” They will be lucky if all they need is a water softener.
In the U.S., this trend toward exurbia—spreading out of the metropolitan areas—is leading to yet another trend. Just as people leave the confines of suburbia, so do commercial enterprises. Guess what, commercial enterprises need water treatment too. WQA has been wrestling with this issue for the past couple of years because the only people who can serve this growing demand are dealers. There are literally millions of these needs across the country, and in many cases, they are going unmet. WQA’s Dealer Section is driving us to meet the educational needs of dealers so they can successfully serve this market.
There is another emerging niche market that we are focusing on, and that is industrial water. The commercial/industrial market used to be lumped together as one, but they really are two fundamentally different markets. Within the industrial market, there are vast differences in scale and technology, so it’s not entirely accurate to speak of an “industrial market.” For the moment, I think the best way to differentiate is to determine who takes the product to market. The really large applications are served directly by the manufacturer. Smaller ones are served by a network of specifying engineers, industrial dealers, plumbing engineers and some large primarily household dealers who have created separate industrial departments. We still don’t have an accurate label for the industrial market that has to be delivered by the middleman water expert. But at least we have begun to figure it out.
So what does the future hold? Change and more change, opportunity and more opportunity. Are there threats? Sure. The recently released World Health Organization statement on calcium and magnesium will present a challenge to the industry. But I suspect there will be opportunities as well. The same holds true for every change we see coming down the road. Change brings opportunities and perhaps a threat now and then.
Expanding Standards in the U.S. and Abroad
-Tom Bruursema, general manager, Drinking Water and Wastewater Treatment Unit Programs, NSF International,
International market activities in 2006 matched reasonably well with my predictions last year. Admittedly though, predicting international market milestones within a one-year window does not achieve anything close to “psychic” status. It is more a measure of how much time one wants to spend engaged in these often slow moving efforts. For NSF, it’s an obvious necessity given our services. On a very analogous subject, and where I’ll focus more of my predictions for 2007, is the area of upcoming expansions and changes to the NSF/ANSI standards.
International Ties to the NSF/ANSI Standards
Both the international activities and the efforts within NSF to develop and revise NSF/ANSI standards go hand in hand. The many markets we remain active in, including all those I reviewed a year ago (Taiwan, Japan, South Korea, China and Europe) have ties back to the NSF/ANSI standards. Some are more tightly associated than others, such as adoption verbatim of the language within the NSF/ANSI standards. Still others result in similar standards that incorporate various changes to meet local needs. Whatever the case, all are important developments for NSF, for our clients, and for the industry at large. Consistent, harmonized standards benefit everyone.
Fortunately, the NSF/ANSI standards have significant recognition and use around the world, due in large part to the broad scope of technologies and contaminants these standards encompass. Rather than reinvent them, it is far easier for countries to draw upon this knowledge and the many years spent on refinement. To facilitate this adoption, NSF makes the standards readily available to foreign countries.
One that came along in 2006, and by the way was not at all in my predictions for 2006, was adoption of the NSF/ANSI standards in the Philippines. As of the writing of this article, we don’t know for certain the outcome of their efforts, but I expect the adopted standards will be very similar to the NSF/ANSI. There is also the potential for this to flow into and impact many of the surrounding countries that are considering adoption of such standards. This could all get interesting in 2007 and beyond, particularly for the many companies operating in these diverse markets.
Changes to the NSF/ANSI Standards
Recognizing the impact the NSF/ANSI standards have on the U.S. and markets worldwide, it is important that these standards keep pace with changes in technology and contaminants. At any time, there is a wide variety of changes being considered. Some are minor adjustments, while others are significant expansions. The nature of the scope could lead to changes in a few months, or occasionally, changes that take a few years. The following are a few that fall more in the latter category, with some expectation that their conclusions will be reached in 2007.
New: Reduction of Microcystin LR
Naturally occurring photosynthetic cyanobacteria (more commonly known as blue-green algae) may be present in surface waters used as sources of drinking water. Microcystis aeruginosa, one of the most common species, produces a potent toxin known as microcystin-LR. Health effects attributed to the ingestion of microcystin-LR include gastrointestinal illness, liver damage/liver failure, and the impairment of kidney and respiratory function. There is also evidence to suggest that repeated exposure to low concentrations of microcystin-LR could increase the risk of liver cancer in humans.
Microcystin-LR can be present in both the particle-associated and free forms. Conventional surface water treatment using coagulation, clarification and filtration is effective in removing the particle-associated toxins; however, this process may not be effective in removing the free toxins.
Proposed requirements for treatment systems claiming reduction of microcystin-LR are in development under NSF/ANSI Standard 53. Once approved by the NSF Joint Committee, multiple laboratories will be used to validate the procedure prior to implementation.
New: Reduction of Haloacetic Acid
Haloacetic acids are disinfection byproducts potentially created during the water treatment process. Five of these compounds are represented in the group HAA5, including monochloroacetic acid, dichloroacetic acid, trichloroacetic acid, bromoacetic acid and dibromoacetic acid. HAA5 is regulated as a group, with a U.S. EPA MCL of 60 parts per billion.
A task group led by NSF is working to develop requirements for activated carbon systems making claims of HAA5 reduction. The group is focused on developing a protocol that requires testing with only one or two of the compounds, with the compound(s) selected based on their relative toxicity, frequency of occurrence and adsorption characteristics to activated carbon.
New: Bacteria & Virus Reduction for Mechanical Filtration
One of the longest ongoing efforts that NSF and the NSF Joint Committee have undertaken is the development of microbiological reduction claims. The effort was simple in concept, i.e., expanding beyond only cyst reduction to encompass also bacteria and virus. Unfortunately, it has been anything but simple to reach a consensus.
After a long process of method development spanning several years, and many ballots through the NSF Joint Committee, a consensus is still not yet achieved; however, support for the new standard is growing. While some have technical issues with the standard, the roadblocks have been more philosophical in nature. Those concerns lie largely in the potential misuse of the products by consumers, and the message it could send regarding the microbiological safety of public water supplies. These concerns are not the same for purifiers that can demonstrate treatment performance under unsafe water conditions, but rather for devices that deliver supplemental treatment to public water supplies.
New: Perchlorate Reduction for Anion Exchange
Perchlorate contamination of groundwater is a growing issue in many states. An NSF task group has been working to establish requirements for anion exchange systems making claims of perchlorate reduction. Two protocols are under development, including one for point-of-entry (POE) systems and one for point-of-use (POU) systems. The task group determined that certain co-occurring ions could cause premature perchlorate breakthrough with anion exchange resin treatment. These ions (nitrate, sulfate and bicarbonate) are being considered in development of the protocol. Nitrate presents a specific concern because of its status as an acute toxin. Requirements are included in the protocol to ensure that perchlorate treatment systems utilizing anion exchange do not result in the early breakthrough of nitrate.
Change: Lead pH 8.5 Test Procedure
Lead reduction requires successful testing at pH 6.5 and 8.5 in order to achieve the claim. The lead pH 8.5 test procedure produces a challenge that has a mixture of the forms of lead, including particulate lead. A task group led by NSF has developed a new test procedure that produces a more consistent level of particulate lead. The new procedure has undergone validation by several laboratories, and is nearing final review and adoption by the NSF Joint Committee.
The coming year will undoubtedly reinforce for many companies that the domestic market remains strong, and attention to global markets is key to long-term growth strategies. Anticipating the direction of change in the NSF/ANSI standards and their use and adoption in the U.S. and abroad is an important step in keeping pace with this fast-moving, changing market.
Public Health Protection
-Paul Overbeck, executive director, Pan American Group, International Ozone Association
In preparing for this outlook article, I thought an analysis of the nearly 20% membership increase the International Ozone Association (IOA) experienced through November 2006 may shed light on future trends.
What I found was across-the-board growth of our student, academic, consultant, manufacturer and end-user membership categories. This indicates an increasing interest in and commitment to the use of ozone technology. Each membership category has specific needs, but all enjoy the primary benefit of shared technical performance experience generated by academic research and real-world operational performance to determine and substantiate the multiple benefits ozone technology delivers.
Driving Force: Protection of Public Health
According to a new and updated technical market research report, Advanced Technologies for Municipal Water Treatment (MST036B) from BCC Research (www.bccresearch.com), the U.S. market for advanced drinking water technologies was estimated at about $1.3 billion in 2006 and growing at a combined average annual growth rate (AAGR) of 10.7% by 2011 to more than $2.1 billion. These technologies include membrane filtration, ozone disinfection, UV irradiation and novel oxidation processes.
These technologies should not be looked at as stand-alone processes. Most applications benefit from the synergistic use of multiple technologies to meet specific treatment goals. That is why the IOA and International Ultraviolet Association will team up to hold a World Congress on Ozone and Ultraviolet Technologies in August 2007 (www.io3a.org/IO3A_IUVA_Congress.pdf).
Governmental agencies have coined terminology for this synergistic approach; examples include EPA’s “Multiple Barriers” in municipal drinking water and wastewater treatment and FDA’s “Multiple Interventions” in the food and beverage and medical industries. These multiple barriers and interventions are designed to maximize protection of public health whether the target pathogen or contaminant is in water, food or the air we breathe. With identification of public health issues and changes in political policy comes regulation that impacts all stakeholders. Regulation and enforcement will clearly increase in coming years as a result of public health issues and concerns raised in 2006.
Enactment of the Long Term 2 Enhanced Surface Water Treatment Rule (LT2ESWTR) and Disinfectant-Disinfection Byproduct Rule (D-DBP2) will require most large and small drinking water utilities to reduce TOC, Cryptosporidium and disinfection by- products such as THMs, THAAs and bromate in tap water.
Storm water treatment regulations in many states will see the addition of disinfection to current suspended solids, oil and grease reduction standards to protect the beach-going public and the environment.
Wastewater treatment will see increased attention on recently identified contaminants such as endocrine disrupting chemicals, personal care products and even Prions, which cause diseases or transmissible spongiform encephalopathies, a family of rare progressive neurodegenerative disorders that affect both humans and animals that can make their way through conventional wastewater treatment and into source waters for many drinking water supplies.
I also expect that many food processors will be moving to “advanced technologies” to protect their businesses and public health even before new regulations are passed as a result of many food-borne E. coli O157:H7 outbreaks in 2006, including the extremely visible spinach contamination that cost producers millions. A well-designed ozone wash system should receive strong acceptance in the restaurant and residential POU markets.
The IOA expects to see continued membership growth as more people look for solutions to current and future public health issues. Ozone, an “advanced technology,” will see strong future acceptance due to the multiple process benefits delivered in combination with other processes.
- Ozone pre-oxidation improves
filtration performance, extends run time, lowers coagulant addition, reduces taste and odor compounds, and makes TOC more bioassimable, which, in conjunction with biologically active filtration, reduces THM and THAA formation.
- Ozone inactivates biological contaminants.
- Ozone, either directly or as part of an advanced oxidation process (AOP), breaks down most natural and synthetic organic contaminants.
It’s no wonder ozone will take a leading role in protecting public health and the environment.
UV Outlook—The Future is Bright
-Myron Lupal, vice president, R-Can Environmental, Inc.
With regards to UV technology, the future definitely looks bright for 2007. UV technology and its use continues to grow at an extremely fast pace and is still one of the fastest growing market segments in the water treatment business.
The residential UV market will continue to see new advances in technology with many companies now incorporating high-output UV lamps or the even more powerful low-pressure amalgam lamp technology. This allows manufacturers to make more compact systems with greater application flexibility. Advancements in electronics and UV sensors will continue to flourish as components such as silicon carbide used in high-end sensor fabrication become increasingly more cost competitive. New and innovative technological advancements continue to push the envelope, and although not yet available in a marketable packaged form, light emitting diodes (LEDs) do currently exist that produce UV light.
With the recent promulgation of the long-anticipated EPA UV Disinfection Guidance Manual, the municipal UV market now has a formal benchmark for a North American based validation protocol. This should make the selection of municipal-based systems somewhat less challenging, as it will allow municipalities to select systems that have been validated under similar circumstances.
Regulation will continue to play a key role in water treatment and especially in UV technology. For those exporting products into the Canadian market, the Canadian Standards Association’s (CSA) new proposed drinking water treatment standard, B483.1, will impose new requirements on all water treatment products that are sold in the Canadian marketplace, regardless of the country of manufacture. Although not yet finalized, B483.1 covers all aspects of both POU and POE products and is closely tied to the standards of NSF International. Although NSF continues to be the dominant force when regulators and individuals look for third-party verification of UV systems, companies looking to do business outside the U.S. will have to undergo further certification and hence increased product costs to compete in other markets such as Canada. Furthermore, for those looking to export products into the European Union, initiatives such as the Restriction of Hazardous Substances Directive (RoHS) and Waste Electrical and Electronic Equipment Directive (WEEE) encumber manufacturers with even more regulatory issues and cost concerns. CSA expects to formally publish this new standard in the spring of 2007.
Manufacturers whose finished products rely heavily on raw metals have all experienced huge price increases in recent times. For those UV manufacturers using stainless steel reactors, this raw material increase obviously represents a huge increase in the cost of their finished goods. Unfortunately, it is projected that cost increases from all UV manufacturers will be seen this year as a result of the abnormally high cost of raw materials. Having said this, it is important to remember that UV disinfection is still the safest, most environmentally friendly and still the least expensive way to provide bacteriologically safe water.
Water Industry Issues—A Laboratory Perspective
-Stephen Tischler, director of sales and marketing, National Testing Laboratories, Ltd.
As a supplier of laboratory services to the water treatment and bottled water industries, our organization does not face the same list of issues, opportunities and threats that these water industries face. Having said that, we do have one critical area of common ground on which to stand. Every day, our organization receives dozens of calls from consumers asking questions about the quality of their tap or bottled water. We see an increasing trend in the number of these calls.
We get calls from consumers concerned about the quality of their well water and the quality of their municipal water. Consumers considering the purchase of treatment equipment call us for independent testing. Consumers under a “boil alert” advisory have questions about the safety of their water and want us to test its quality. New mothers call us out of concern for their children’s health. People of all ages call us with health concerns and want to rule out water contamination. Lots of folks call over concern for their pets, and others ask us if “bottled water is better than tap water.” Each and every one of these calls is an opportunity to educate, educate, educate the consumer about some aspect of water quality. This is the common ground on which we stand with water industry organizations.
People who get their water from private wells are increasingly concerned about contaminated groundwater and excessive withdrawals that could compromise their supplies. We get calls from people who are concerned that their supply of clean drinking water is going to “dry up.” Private well owners are increasingly aware of the potential for microbiological contamination and the need to test more frequently. We get more calls about testing for synthetic and volatile organic chemicals due to industrial or agricultural activity.
Municipal water quality is increasingly in the news. A case-in-point is the recent boil-water advisory issued by the Greater Vancouver Regional District as a result of recent torrential rains in the area. Several reservoirs were found to have elevated turbidity levels. Consumers have lots of questions, including, “What’s turbidity?” People are reading consumer confidence reports and asking questions about such things as disinfection byproducts and chlorination. Our lab is doing more testing because people have seen or heard stories about lead contamination, or the potential for bioterrorism. Stories about bromate and perchlorate contamination have sparked questions about the quality of drinking water.
Laboratories are working with the EPA to investigate currently unregulated contaminants. Sophisticated instruments are able to detect things at lower and lower levels—parts per billion or parts per trillion. This is a trend that is sure to continue.
Our experience with most consumers confirms the fact that they don’t know that much about water (tap or bottled), but they have plenty of educated questions that need answers. Honest answers to those questions lead to opportunities for all of us.
Looking Ahead to 2007
- Joseph Doss, president, International Bottled Water Association
For the past few years, bottled water consumption has been growing at a very healthy pace. According to the Beverage Marketing Corp., bottled water consumption in the U.S. increased more than 10%, to 7.5 billion gal, from 2004 to 2005, and wholesale dollar sales exceeded $10 billion in 2005, a 9.2% increase over the same time period. In addition, since 2003, bottled water has been the second-most consumed packaged beverage in the U.S., behind only carbonated soft drinks. This leads me to believe that 2007 will again be a banner year for the bottled water industry. That doesn’t mean, however, that the upcoming year will be without its challenges.
As a result of the November 2006 elections, Democrats now have majority control in U.S. House of Representatives and the U.S. Senate. If past experience is any indication, the industry can expect to see more legislative activity surrounding bottled water in the upcoming session.
In the Senate, Senators Hillary Clinton (D-NY), Harry Reid (D-NV) and Barbara Boxer (D-CA) will become more influential with the new Democratic majority, and all three senators have previously considered introducing legislation that was unfavorable to the bottled water industry. Sen. Reid is set to become the new Majority Leader; Sen. Boxer will become the Chairwoman of the Senate Environment and Public Works Committee; and Sen. Clinton is in line to chair the Environment and Public Works Subcommittee on Fisheries, Wildlife, and Water.
In addition, Senator Edward Kennedy (D-MA), who is not a proponent of the bottled water industry, will likely become Chairman of the Health, Education, Labor, and Pensions (HELP) Committee. The HELP Committee has jurisdiction over The National Uniformity for Food Act, which will provide national, uniform food safety standards and warning requirements. Though the committee may not view that legislation favorably, it remains a priority issue for the International Bottled Water Association.
The House Ways and Means Committee and the Transportation and Infrastructure Committee will have jurisdiction over proposed Clean Water Trust Fund legislation, which seeks to improve the nation’s aging water and wastewater infrastructure systems. Of particular concern to the bottled water industry will be the reemergence of a beverage tax proposal to fund public water infrastructure improvements. That legislation may receive more consideration in the upcoming session than it did previously.
The shift from Republican to Democratic control is not limited to the federal government. Democrats have taken power in many state legislatures as well. This means that there may be increased activity on groundwater resource management issues. For example, in the Great Lakes Basin, our critics may seek to classify bottled water as a “diversion” and not a “consumptive use,” which would prevent the transfer of bottled water to outside jurisdictions.
The growing sales of the bottled water industry have also made it a bigger target for tax issues. Both parties have introduced legislation for bottled water excise, sales or severance taxes in the states. We can expect legislators to continue their focus on the bottled water industry as they search for ways to fund various programs and projects.
I expect 2007 to be a busy year for the bottled water industry. Many challenges lie ahead, but I have no doubt that the bottled water industry will continue its unprecedented growth and success by delivering a high-quality product that consumers choose because of its consistent quality, safety, good taste and convenience.