Competition in the Bottled Water Industry Essay

Decent Essays

Competition in the Bottled Water Industry

1. List and describe the dominant economic characteristics of the bottled water industry.
• Market size and growth rate – The industry is size is worldwide with a growth rate averaging nearly 9% from 1996-2001 (with a U.S. per capita growth from 20 gallons per year in 2001 to 26 gallons per year in 2005.)
• Number of buyers – There is a significant number of buyers in the U.S. and internationally. No one buyer accounts for a significant fraction of overall market demand.
• Buyer needs and requirements – Buyer needs have been changing recently due to an increase of people being more health conscious and also due to increased concerns over the quality of tap water after scares in Milwaukee …show more content…

I believe that there are exceptions in the office/home delivery market where the large companies do not operate.
• Learning and experience curves -

2. What does a six-force analysis of competition in the bottled water indicate?
• Firms in other industries offering substitute products – The main substitute is tap water. Until consumers become less concerned about the quality of their location's tap water, the bottled water industry will remain. The large companies are also the companies that offer the substitute products. Soda, coffee, any drinkable liquids are more than likely sold by pepsi or coca-cola. This force is not only weak for this reason but also because it appears that consumers are on a trend to remain health conscious and therefore will steer away from soda.
• New entrants – new entrants do not pose a strong threat to bottled water companies that exist in the industry. To be successful, a new company must have a distributor that can distribute their product and pepsi and coca-cola have exclusive contracts with many retailers.
• Supplier bargaining power – a strong force may be supplier bargaining power. A company that leases the land where it draws its supply from may decide to up the lease price. A water company may also decide to raise its rates and therefore cause a company to raise its prices. Supplier bargaining power may be quite strong due to the fact

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