Bottled water industry in Mexico to reach USD 20.24 billion by 2025

The bottled water industry is valued at USD 15.19 billion in 2019 and is estimated to reach USD 15.94 billion by the year 2020.

It is expected to grow at the CAGR of 4.9% within the time horizon of 2020-2025 because of the increasing use of the bottled water as the major source of drinking water

The market value will reach USD 20.24 billion by the end of year 2025.

Definition / Scope
Market Overview
Market Risks
Market Trends
Industry Challenges
Technology Trends
Pricing Trends
Regulatory trends
Market Size and Forecast
Market Outlook
Technology Roadmap
Distribution chain Analysis
Competitive Landscape
Competitive Factors
Key Market Players
Strategic Conclusion
References
Appendix

Definition / Scope

Bottled water is the drinking water packaged in plastic or glass bottles which are available in a variable sizes. In the context of Mexico, in terms of the bottle size, the most popular option available for the consumption and buying is 20-liter garrafones of water.

In terms of the source of the bottled water, it can be fluoridated, mineral water, groundwater, sparkling water, spring water and well water. Bottled water is considered to be appropriate, safe and acceptable for consumption as multi-barrier approach is used to protect the water from physical, chemical and microbiological contamination.

It includes source protection, source monitoring, reverse osmosis, distillation, micro-filtration, carbon filtration, ozonation, and ultraviolent light.

Bottled water industry is concerned with the production, storage, distribution and sale of the water packed in bottles. The bottled water industry can be categorized into the following segments on the basis of the type of product:

Market Overview

Globally, Mexico is the country leading in terms of the consumption of the bottled water per capita. On average, Mexicans consume about 7.2 billion gallons of the bottled water on the annual basis. The total market size of the bottled water industry in Mexico is valued at USD 15.19 billion in 2019 and is estimated to reach USD 15.949 billion in 2020.

This market is expected to grow at the CAGR of 4.9% within the forecasted time period of 2020-2025 because of the increasing consumption of bottled water and poor quality of tap water. It will reach USD 20.24 billion by the year 2025.

On the basis of the type of the product, mineral water is leading the market with the market share of 37.5% of total Mexican bottled water industry. This mineral segment is estimated to value at USD 5.69 billion in the year 2019. Poor quality of the tap water, and consumer willingness to pay for clean water are the major factors driving the growth of bottled water industry in the Mexico.

In this context, increased taxes on the sugary beverages (soda water) is creating the significant opportunity for the development of the bottled water industry. However, issues related to the management of the plastic waste might create the risk for its growth. The key market players engaged in this market are Danone, Coca-Cola, Pepsi, Voss,

Market Risks

Environmental pollution from plastic bottles

In Mexico, the plastic pollution is a major problem as Mexico is a big consumer of plastics and holds the first place in the use of water bottles globally. Almost 90 million of water bottles are disposed in rivers, beaches and streets. It has been estimated that almost 95% of the plastics in the ocean comes from the land.

However, just 9% of the consumed plastic are recycled. So, the issue of the management of plastic bottle might create the risk for the growth and development of the bottle water industry in the Mexico.

Top Market Opportunities

Consumer’s Willingness to pay for clean water and general insecurity towards tap water

In the context of Mexico, the household are willing to pay almost 1.85 to 7.55% of their income for the safe and reliable drinking water services. Mexico is one of the country with low quality tap water services for the population.

For instance, a cross-country valuation study had revealed that about 92% of the respondents were dissatisfied related to the health concern related to the tap water and just 19% of them were consuming the tap water for the drinking purposes. It might be due to the limited public water policies, water quality monitoring and guaranteeing system in Mexico.

The consumer perceived low quality of the tap water and the willingness of the consumer to pay for the safe water is creating the significant opportunity for the growth and development of the bottled water industry.

Taxes on sugared drinks

The government of Mexico has added the excise taxes on any non-alcoholic beverages with added sugar in 2014. According to it, almost 1 peso per liter was added to the price of these products. Because of this, the price of these products was increased by almost 10% while the purchase of the sugary drinks were decreased by 7.6% within a year.

This rising price of the sugary drinks due to taxation and declining consumption of this products are creating the opportunity for the growth of the bottle water market.

Market Trends

Bottled water as primary source of drinking water

In the context of Mexico, almost 81% of the populations has reported that they avoid the tap water for the drinking purpose. Almost 73% of the Mexicans depends upon the bottled water which is increased from 61% in 2010.

It has been estimated nine out of every 10 Mexico city residents consumes the bottled water regularly. On average per capita consumption of the bottled water is 266.9 liters in 2020, which is almost four times higher in comparison to the per capita level of consumption in the context of United States.

The consumption of the bottled water as the major source of the water for the drinking purpose is driving the growth in the market value of the bottled water industry in Mexico.

Low quality of tap water

In accordance to the study conducted by the Mexican National Water Commission, only 20% of the superficial water is acceptable for the human consumption and almost 6% of this water is only not contaminated.

Otherwise, about 51% of water is lightly contaminated, 16% is contaminated and 7% of water is very contaminated including the toxic substances. This declining poor quality of the water is driving the demand for the bottled water in the Mexico, which is ultimately leading to the growth and development of this market.

Economic asymmetry in the consumption pattern

In the context of the Mexican cities, the consumption pattern of the bottled water is often asymmetric in terms of the economic status of the consumer. The pattern of consumption of the bottled water is quite high among the poor people in comparison to the rich one.

The poorest people accounts for almost 90% of the bottled water consumption while it is quite low in the context of the rich people. For instance, in one of the richest municipality of Mexico, San Nicolas de los Garza, about 65% of them consume the bottled water.

This unusual pattern observed across the use of the bottled water might restrain the growth and development of the bottled water in the Mexico.

Industry Challenges

Highly concentrated market

The bottled water industry in Mexico is dominated by the multinational company. The top three major market players of this industry are Danone bonafont brand (47%), Coca Cola (19.4%), and Pepsico Epura 7.1%, which accounts for more than 70% of total bottled water industry market share in Mexico.

In spite of the presence of more than 6,000 companies engaged in the bottle industry, just three multinational companies are leading this market in Mexico. So, it is quite challenging for other bottled water manufacturing companies to establish and develop their industries.

Technology Trends

Adoption of the technological innovations and advances in the sector of the bottled water is widening the scope and the development of this industry. Some of the key technological changes that are adopted in the bottled water industry are discussed as below:

Blow molding machines for PET bottles: This machinery technology is widely used for the production of the plastic bottles of the excellent quality and portability, which are being used for the purpose of the packaging of the water.

Chemical treatment technology : The purification of the water at the large scale level is quite facilitated by the use of the chemical treatment techniques such as pre-chlorination, flocculation, use of the polyelectrolytes, etc.

Novelty packaging: The packaging of the water is changed from the plastic bottles to the reseal abled and recycled aluminum cans. This packaging techniques is quite good for the shelf life increment and production of the eco-friendly products.

Pricing Trends

The price of the bottled water depends upon the type of the products, its brand names, place of sale, and quantity of the content (water) . The retail prices of the bottled water ranges from USD 0.05 to USD 6 per liter.

The cost of the bottled water ranges from USD 450 to USD 650 per 1,000 liters. On average, the price of the bottled water is USD 0.5 per unit in 2020 in Mexico. The annual household expenditure on the bottled water is about USD 72.61 per household.

Regulatory Trends

National water commission is the apex independent federal agency responsible for the water planning, permitting, management and enforcement issues in Mexico. Some of the key regulations related to the production and sale of bottled water are discussed as follows:

Mexican Federal Quality Standard for Drinking Water: According to it, the drinking water must be treated by carbon filtration (either by reverse osmosis or ultraviolent light) prior to the bottling and sealing of the water in the bottles. The drinking water packed in bottles should be free of microorganisms and pathogenic contamination.

Labeling and advertising statements related laws: All the statements mentioned for the labeling and the advertising of the packaged food and beverages including the bottle water mustn’t be in false or misleading matter.

Market Size and Forecast

Globally, Mexico is the country leading in terms of the consumption of the bottled water per capita. On average, Mexicans consume about 7.2 billion gallons of the bottled water on the annual basis.

The total market size of the bottled water industry in Mexico is valued at USD 15.19 billion in 2019 and is estimated to reach USD 15.949 billion in 2020.

This market is expected to grow at the CAGR of 4.9% within the forecasted time period of 2020-2025 because of the increasing consumption of bottled water and poor quality of tap water.

It will reach USD 20.24 billion by the end of the year 2025.

On the basis of the type of the product

The mineral water is leading the bottled water industry with the market share of 37.5% of total Mexican bottled water industry. The market size of this segment is valued at USD 5.69 billion in 2019.
The purified water segment is holding about 33.3% of total bottled water industry in Mexico with the market size of USD 5.06 billion in 2019.
The spring water accounts for almost 16.94% of the Mexican bottled water industry. This segment is valued at USD 2.57 billion in 2019.

Market Outlook

The bottled water industry in Mexico is expected to grow at the CAGR of 4.9% within the forecasted time period of 2020-2025 because of the increasing demand for the bottled water due to the poor quality of the tap water.

The market value of the bottled water industry in Mexico is estimated to reach USD 20.24 billion by the year 2025.

Technology Roadmap

The technological changes such as adoption of new packaging products, disinfections techniques occurring in the bottled water industry are driving the growth of this market.

Along with this, changing distribution pattern in the sales of the bottled water and increasing digitalization are the technological factors creating the favorable environment for the sales of the bottled water through the online system.

So, the market players should be digital technologies for the marketing and sales of the bottled water in the context of Mexico.

Distribution Chain Analysis

The key stakeholders involved in the operation of the bottled water industry are packing equipment manufacturers, water storage & purification plant, bottled water manufacturers, product distributors and sales and consumer.

At first, the packaging materials such as plastic/glass bottles, aluminium cans are manufactured. Then, the water is stored form the possible sources such as well water, ground water and is purified under the purification system.

Now, the purified water in packed sealed in the plastic bottles or cans and is available for the sales in retail shops, supermarkets, and the online system.

Competitive Landscape

In the Mexico, there are about 6,000 bottled water manufactures in which there are 10 large consortiums, 150 large companies, 300 medium companies, 600 small companies and 5,000 micro-companies.

However, more than 70% of the market is dominated by the top three multinational market players i.e. Danone bonafont, Coca Cola, and Pepsico Epura.

The Danone bonafont is the leading bottled water manufacturing company in the Mexican Bottled Water Industry. It accounts for almost 47% of total bottled water industry in Mexico.

The coca cola company accounts for about 19% of total Mexican bottled water industry while the Pepsico Epura holds almost 7% of bottled water industry in Mexico. The remaining market share is held by other multinational companies and local bottled water industries in Mexico.

Competitive Factors

The key market players engaged in the bottled market in Mexico are competing for the production of the bottled water in the most portable size at the possible lowest price. They are also competing to develop the eco-friendly option for the packaging of the water in the bottles.

Besides this, they are focused on the use of the digital media for the marketing and advertisement of the brands of bottled water products.

Key Market Players

The key market players engaged in the bottled water industry in the Mexico are Danone, Coca-Cola, the nestle water, Fiji, and Voss. Short profile of the key market players engaged in the bottled water industry in the Mexico are:

Danone: Bonafont is the most preferred brands of the bottled water in Mexico, produced by Danone. Some others popular water brands owned by this company are Evian, Pureza Aga, etc. Its main plant is located in Toluca valley producing and offering the bottled water of high standards of quality and safety.

Coca-Cola: Ciel and risco are the popularbrand of the bottledwater produced by thecoco-cola company in Mexico. Besides this, two other water brands Nana and Cristal are also produced.

Pellegrino S.P.A.: It produces one of the popular natural mineral water brand Pellegrino. It is also a part of the Swiss company Nestle exporting the bottled water and other products globally in Europe, the Americas, Australia , Asia, and others.

The Nestle water: It produces almost 48 bottle water brands, which are produced from about 87 factories. Perrier is the most popular natural sparkling mineral water produced by the nestle water in Mexico.

Fiji : The Fiji water is the brand of the bottle water produced from the natural artesian water company Fiji, which are exported globally including Mexico.

Voss: It is an American Limited Company, which produces and markets in more than 50 countries. It provides the water in both still and sparkling forms.

Strategic Conclusion

The bottled water industry in Mexico is growing at the rate of 4.9% because of the declining quality of the tap water, increasing consumer preference towards the bottled water and increased taxes on the sugary beverages.

However, the issues associated with the management of the plastic waste of bottles might create the risk for the growth of its market. So, the market players must be focused on the use of the eco-friendly products and recycling of the consumed water bottles.

References

Appendix

PET= Polyethylene terephthalate
USD= United States Dollar
CAGR= Compound Annual Growth Rate