China to overtake US as biggest packaged water consumer

China looks set to become the world’s biggest consumer of packaged water and is predicted to overtake the US in terms of water consumption by the end of the year, according to a new report by Canadean.

While China is forecast to be one billion litres of packaged water ahead of the US by the end of 2013, China’s per capita consumption is well below the global packaged water average of 30 litres per head - around one-fifth of that of the US. According to Canadean, this highlights the huge potential for the future growth of China’s packaged water market.

China vs USA packaged water consumption. Source: Canadean.

China’s surge in packaged water consumption is due in part to the mineral water and mineralised water (table water with added minerals) segments. Increasing consumer health consciousness has seen mineralised water accelerate over the decade to claim a 42% market share.

More recently, a shift to mineral water is emerging as consumers become more aware of the health benefits of consumption. Producers are increasingly mindful of this new trend and are seeking out high-quality natural mineral water sources in order to boost their brands’ images.

Jingtian, a leading domestic player, even invested in a production base in Scotland in 2012 to ensure quality.

According to Canadean, producers of the leading brands will be instrumental in driving future category growth. These producers include Kangshifu (Tingyi Holding Corp), Nongfushanquan (Zhejiang Nongfushanquan Water Co Ltd), Ice Dew (Coca-Cola) and Yibao (China Resources Enterprises).

Canadean predicts the focus is likely to be increasingly on value-added mineral products, which offer a better profit margin. Competitive energy in the packaged water market will be fuelled by continued investment in production expansion and the improvement of distribution networks.

From a consumer perspective, packaged water’s affordability will be highly attractive, particularly in a climate of slowing economic growth, Canadean predicts.

These findings are outlined in the Canadean report, ‘China Soft Drinks Market Insight’, which was published in June 2013.