us point of use coolers report

Zenith Report on

US Point of Use Coolers

October 2010

SAMPLE

Zenith Report : October 2010

© Zenith International Ltd 2010

US Point of Use 2010

2010 ZENITH REPORT ON US POINT OF USE COOLERS

Page Brief summary 1 SECTION 1 - MARKET ANALYSIS 2 US Overview Introduction 2 US POU overview 2 Quantifying the POU market 2 History of POU in the US 3 Bottled water culture 4 Bottled water coolers 5 Tap water culture 6 POU cooler concept 7 Competitive forces: point of use vs bottled water coolers 9 Conversion from bottled water cooler to POU 10 National regulations 11 Competition to POU 12 Geographic penetration of POU in the US 13 Industry structure 13 Industry consolidation 15 Market characteristics 17 Hot/cold/ambient/carbonating 17 RO vs filtration 18 Distillation 20 Outlets 20 Counter-top vs floor-standing 21 Pricing structure 22 Rental charges 22 Purchase price 23 Service and maintenance 24 Key market developments 24 Outlook to 2014 28 SECTION 2 – TABLES 30 US bottled water cooler and point of use market analysis, 2005-2009 30 US bottled water market, 2005-2009 31 Leading US point of use companies, 2007-2009 32 Leading US point of use manufacturers, 2007-2009 33 Leading US point of use suppliers, 2007-2009 34 US point of use distributors, 2007-2009 35 US and West European point of use characteristics, 2009 36 US and West European point of use revenue indicators, 2009 37 US point of use market forecast, 2010-2014 38 SECTION 3 – PROFILES 39




SECTION 4 – APPENDICES 70 Definitions, Symbols, Abbreviations


US OVERVIEW

© Zenith International Ltd 2010 12


Some POU manufacturers have sought Canadian Standards Association (CSA) certification, which is also recognised within the US. Competition to POU Point of Entry (POE) is commonplace both in domestic and commercial settings. It is a water treatment unit which treats water at the point of entry. This ensures that all water used within the entire building is treated, regardless of which tap it comes from. However, where cost is a concern, an under sink POU unit with a separate tap offers a more economical alternative in that it treats only the water intended for direct consumption (drinking and cooking) typically at a single tap or a limited number of taps, thus reducing operating costs of the treatment device. The existing untreated water tap can then be used for all other cleaning and washing purposes. The costs savings achieved through selective treatment offers consumers the chance to have better quality water than they otherwise might be able to afford. Filter jugs or ‘pitchers’ are widely used and represent the easiest and cheapest means of improving the quality of tap water. Two companies dominate this sector, market leader Brita and Procter & Gamble. Brita pitchers range in price from between US$20 and US$35. A single replacement cartridge starts at US$8 apiece, falling to US$6 when sold as part of a multi-pack. Procter & Gamble also produces a range of filter jugs and filter cartridges under the PUR brand. PUR jugs come in a range of sizes, priced at between US$15 and US$32. Jugs and filters are readily available through large retailers across the country. However, within the residential sector, one of the biggest sources of competition to the POU unit are refrigerators that incorporate a water filtration and chilling facility. These units are becoming particularly popular as they offer a two-in-one solution for both refrigeration and purified, chilled water. Some units also include an icemaker. The filtration unit is readily accessible at the base of the fridge and filter changes can be easily carried out by the consumer, whilst a filter indicator light alerts consumers to the need to change the filter, based on either the length of time the filter has been installed or the gallonage of water filtered, typically every six months or 100 gallons. Whilst the wide array of filtration options available are a source of competition to POU, at the same time the marketing initiatives of filter companies such as Brita and Procter & Gamble have helped boost consumer awareness and acceptance of the concept of water filtration, which has benefited the POU industry as a whole. The other main source of competition to both the POU and bottled water cooler industries is the retail packaged water market, which has been enjoying strong growth in recent years. The 50cl bottled water format is particularly appreciated by consumers who want a convenient source of water whilst on the move throughout the day. Another significant source of purified water, and consequently a competitor to POU, is the dispensing stations, often found in retail centres or water stores. These stations enable consumers to refill their own bottles at very low cost. Atmospheric water generators, which collect and purify water from the atmosphere are also available in the US. Companies producing these include WaterPure International, EcoloBlue and Air2Water. They represent a very small niche at present and are not included within the scope of this report. The unit itself, which is not dissimilar in appearance to a standard POU unit, requires simply an electrical connection, without any water inlets or outlets. It is marketed as an ideal choice for homes, boats, recreational vehicles (RVs) and even small offices.


US TABLES



1. US BOTTLED WATER COOLER AND POINT OF USE MARKET ANALYSIS, 2005-2009

Units in December 2005 2006 2007 2008 2009e

000 units POU

% growth

Units per '000 people

% share of total market

000 units BWC

% growth


% share of total market

000 units

% growth


Point of use

Bottled water coolers

Total coolers

PHSI PURE WATER TECHNOLOGY USA

Company StructureAddress: 120 East Lake Street, Suite 401, Sandpoint, Idaho 83864, USATel: +1 208 265 8408 Fax: +1 208 265 8670Website: www.purewatertech.com Email: Via website

Senior management: Alan Crosby, President and CEORelated activities:Non-related activities:

Point of Use Unit AnalysisUnits placed on market by year end (total of units through current rental contracts, plus number solddirectly or indirectly)

2007 2008 2009

Indirect supply USA

Total POU units USA

Marketing AnalysisUnit type %, 2009 Outlets %, 2009

Cold-ambient %Hot-cold %

Away From Home %

CommentaryIn 1996 Craig Story formed two incorporated companies - Pure Health Solutions, Inc (PHSI) and Pure WaterTechnology, Inc with the purpose of developing, manufacturing and selling water purification systems. In1998 PHSI launched a six-stage water purification system. The company operates an exclusive dealer basethroughout the US and overseas. Originally point of use skeleton units were sourced from Oasis andequipped with purification equipment by PHSI. The contract was switched in late 2004 to South Korea'sENstar Co, which produced a premium range of point of use units, under the brand name BONaqua. InSeptember 2005, PHSI acquired ENstar Co. In January 2010 PHSI was itself acquired, by private equityfund ClearLight Partners. Alan Crosby was named CEO, replacing Craig Story.

Zenith Report - US Point of Use Coolers October 2010





APPENDIX

DEFINITIONS Manufacturer: Company that manufactures and/or assembles POU units for sale to suppliers and/or distributors. Supplier: Company that purchases POU units from manufacturers before reselling them to distributors and/or

end-users. Distributor: Company that sells or rents POU units direct to end-users. SYMBOLS e Estimate f Forecast na Not available, not applicable AWWA American WaterWorks Association CSA Canadian Standards Association EPA Environmental Protection Agency EPDWA European POU Drinking Water Association FDA Food and Drug Administration GSA General Services Administration HOD Home and Office Delivery HORECA Hotels, restaurants and catering establishments IBWA International Bottled Water Association NRDC Natural Resources Defense Council NSF National Sanitisation Foundation OCS Office coffee service POE Point of entry POU Point of use PWS Public Water Source RO Reverse osmosis ROI Return on investment




UV Ultra violet WQA Water Quality Association US STATE ABBREVIATIONS Alabama AL Alaska AK Arizona AZ Arkansas AR California CA Colorado CO Connecticut CT Delaware DE District of Columbia DC Florida FL Georgia GA Hawaii HI Idaho ID Illinois IL Indiana IN Iowa IA Kansas KS Kentucky KY Louisiana LA Maine ME Maryland MD Massachusetts MA Michigan MI Minnesota MN Mississippi MS Missouri MO Montana MT Nebraska NE Nevada NV New Hampshire NH New Jersey NJ New Mexico NM New York NY North Carolina NC North Dakota ND Ohio OH Oklahoma OK Oregon OR Pennsylvania PA Rhode Island RI South Carolina SC South Dakota SD Tennessee TN Texas TX Utah UT




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