Water Cooler Market Value up 5%

Market data highlights for 2015

  • The total market is valued at £123 million, with a 5% revenue growth compared with the previous year.
  • After bouncing back last year, the growth in volume and value has continued for bottled water coolers (BWCs) compared with mains-fed (POU) units. 
  • For health reasons, consumers and employers continue to turn to water for calorie-free hydration.

New market research shows continuing positive growth of 1.5% for UK water cooler numbers, the British Water Cooler Association (BWCA) annual conference heard in today (17th March 2016).

Karen Wells, Senior Commercial Consultant from Zenith International Ltd*, told the conference that the total number of cooler units had grown in 2015 by 1.5% compared with 2014. There is now a total of 645,000 coolers.  Of these, Bottled Water Coolers (BWCs) are up 1.8% to 341,000 units whilst Point of Use (POU) coolers have grown by 1.2% to 304,000 units.  Bottled water sales have increased by 5% y.o.y. to 296 million litres.

The volume split between the two segments of the market continues to be weighted towards bottled water which now has 53% of units, with 47% of the total number of units being held by POU machines.

The respective value is, unsurprisingly, more marked: although the POU sector has increased in the past three years to hold nearly 50% of the installed units, in revenue terms its share of market has declined to less than a quarter.

BWCs have seen a slight increase in terms of margin and prices. Water costs and rental values are either stable or slightly increasing.

By contrast, Ms Wells said: “POU remains cut-throat. The key customers are usually the public sector and so this is a tricky area for companies dealing with their customers’ cost-cutting and head-count reductions. There are large, best price tenders to compete for and so the need to compete on price makes revenue generation ever more difficult in this segment”.

Karen Wells told delegates:  “The return of business confidence in the private sector boosted bottled water cooler sales. This is excellent news for the industry”.

Healthy hydration trend continues

She went on to say: “Consumers have continued to move towards water for regular hydration – and this is true in the small pack and cooler segments of the market. In fact, we believe that small pack growth has helped fuel the growth of the cooler industry. It has encouraged regular hydration”. There seems to have been a gradual shift, often through lighter beverages and light packaged drinks towards water, rather than a direct switch from a sugary latte to water.

Effect of the weather

Ms Wells added: “We reported last year that the market is less dependent upon weather as a direct indicator of performance and this trend continues.”

She points out that, in 2013 and 2014 when this apparent trend began, it was difficult to see if this would be a long term pattern as both summers were warm. Karen Wells said: “By contrast, in 2015, although the summer was poor, the market still grew. It now seems that consumers switching into water because of warm summers has translated into a water habit through the year, regardless of whether the summer weather is warm”. She confirmed that, in addition, it is clear that the unseasonably warm start to winter at the end of 2015 helped sales further.

Customer base

POU distribution outlets were revealed in the Zenith International data, with offices unsurprisingly taking nearly two thirds (64%) of the POU cooler segment. Institutions were the second largest single category with a 19% share. HORECA stood at 8% and factories at 6%. Zenith notes that there were no significant changes in the outlet distribution as compared to 2014.

Mergers & Acquisitions

Another key factor affecting the market was the mergers and acquisitions which occurred in 2015. “The market is growing, so people are seeing that it is worth investing in, which is positive. In terms of acquisitions, consolidation will continue,“ predicts Ms Wells. “The water cooler market has a high turnover rate, meaning that there are a lot of small companies appearing and transforming,” she added.  In the past 3 years, the sector has seen 15 important acquisitions.

Comment from the BWCA Chairman

The BWCA Chairman, John Dundon, welcomed the news about market growth. He said “In 2013, the market was up 3% by value over the previous year – the first year of growth since 2007. Then in 2014, we saw 9% revenue growth and now, for 2015, 5% growth.  We expected continued growth and it is excellent to see it confirmed. The market expansion was, as predicted, not just a ‘blip’ but a trend.

“We thank Karen Wells and her team for delivering this data to the BWCA conference. We are immensely grateful to her – and especially so as she has brought such positive news for our industry”.