Europes water cooler industry is steaming ahead, with increasing merger and acquisition activity fuelled by sustained unit and volume growth. According to the 2002 West Europe Water Coolers report from leading drinks consultancy Zenith International, the number of machines installed by the end of 2001 had advanced 27% to 1,275,000 and consumption had surged 30% to 920 million litres. The rises in units by 271,000 and volume by 212 million litres were both record uplifts.
Industry consolidation has become a key feature, with 32 separate transactions recorded in 2001 and a further 26 in the first eight months of 2002. "Since last January, there have been mergers and acquisitions in every single West European country apart from Austria," commented Zenith Research Director Gary Roethenbaugh. "Europe now has some major cooler groups that wield influence on the entire bottled water sector."
Water coolers now account for over 2% of total bottled water volume and contributed over 10% of total bottled water growth in 2000 and 2001. The impetus added by the recent entry of Nestlé Waters illustrates the importance of coolers to small pack bottled water players. Already ranked number three, Nestlé is mounting a direct challenge to the European leaders Hutchison Whampoa (Watsons/Powwow) and Vivendi (Culligan), with pressure also being brought to bear by Suez (Chateaud'eau) and Eden Springs.
Despite growing maturity in the office distribution channel and testing economic times, the cooler opportunity remains robust," added Gary Roethenbaugh. "Aggressive marketing and pricing strategies are ensuring market buoyancy. At the same time, an increasing variety of smaller local operators are challenging the multinationals."
The United Kingdom remained by far the largest market in 2001, with 33% of the total units installed, followed by France on 16% and Italy on 10%. Growth was fastest, however, in the less well established markets of southern Europe led by Greece, Switzerland, Spain and Portugal.
Zeniths report concludes with a detailed analysis of the European market by value as well as volume and unit growth forecasts. Balancing out continuing high growth in emerging markets with a degree of maturity in others, Zenith expects the industry to reach the 2 million unit mark by 2004 and 2,000 million litres by 2006.