The recent hurricanes coupled with increased water quality concerns is driving immediate demand for residential water treatment equipment. A new report from Frost & Sullivan, “North American Residential Water Treatment Equipment Markets: Investment Analysis and Growth Opportunities,” reveals that the residential water treatment equipment market earned revenue of $1.48 billion in 2004 and estimates to reach $2.29 billion in 2011 with a seven-year CAGR of 6.5%.
Increased consumer awareness is contributing to the additional projected market revenues. Also, the end-user composition is set to shift from basic treatment equipment to high-end sophisticated products. This shift toward the high-end treatment equipment denotes higher profit margins from these markets, as these equipments carry a higher margin when compared to the basic treatment equipment filters like pitchers. Thus, with the seven-year CAGR of 6.5%, the profit margin for this market expects to be a notch higher, almost around 100 to 150 basis points higher, which makes this a good investment destination.
"The residential water treatment equipment market faces direct competition from the bottled water market," said Frost & Sullivan research analyst Santosh Ejanthkar, "Most participants try to outweigh this with the cost advantage that these equipments hold over the bottled water industry in long run."
Increasing market saturation is currently limiting growth. Participants need to look for ways to attract new customers to the residential water treatment equipment market.
"Americans are concerned about the quality of drinking water, but drastic measures have to be taken to attract these customers to shift from bottled water to residential water treatment equipment," Ejanthkar said.
The residential water treatment equipment market is a matured market in North America with a good penetration base throughout its potential customers. Increased awareness of drinking water contamination is a key to market growth. Companies need to educate individuals more about the water contaminants and the effectiveness of their products in treating contaminants.