Why Invest in Water Now?
One way to identify emerging trends early, is to follow the money . . . and today, many of the world’s leading investors and most successful companies have started to make big bets on water. The facts are that even at current rates of consumption per capita there simply isn’t enough freshwater to go around, and the situation is expected to get worse before it gets better.
“There is only one direction for water prices at the moment, and that’s up,” according to Hans Peter Portner, manager of a $2.9 billion US Water Fund at Pictet Asset Management in Geneva.
About one-third of the world’s population already lives in regions that are experiencing water stress. It has been predicted that fresh water availability will be a critical limiting resource for many regions in the near future, for reasons including:
Over 90 percent of the world’s cities dump raw sewage into rivers and other freshwater sources. Industrial pollution and contamination also affects residual water supplies, further reducing availability along with rapid population growth, adding increasing pressure on the water supply through increased demand.
Even in Asia, where water has always been an abundant resource, per capita availability declined some 50% between 1955 and 1990 and current projections suggest most Asian countries will have severe water problems by 2025, whilst other regions, like Africa, have historically always been comparatively water-poor. Significant water availability problems are predicted as populations of “water-stressed” countries (typically emerging market regions) jump perhaps six fold over the next 30 years. Already, some six billion people of Planet Earth use nearly 30% of the world’s total accessible renewal supply of water, but at anticipated future consumption growth rates, by 2025 that value could likely reach over 70% of total supply. Accordingly, it is reasonable to expect the following effect on fresh water values: “High demand for limited resources”
When it comes to bottled water, the market is growing internationally. Demand is on the rise from China to Mexico, following in the footsteps of the spike in U.S. consumer demand. Estimates suggest that within the last ten years American per-capita consumption of bottled water has doubled – the average American drinks approximately 200 bottles of water a year.
Only five bottlers in South Africa and Namibia currently distribute nationally, with all the other bottling plants supplying relatively small local regions. Sales of bottled water are typically accounted for as follows:
- Retail Outlets 51%
- Service Stations 18%
- Restaurants 17%
- Bulk Wholesalers 14%
Private label bottling for boutique hotels, game lodges and other tourism venues is a new rapidly emerging market sector that promises of significant latent growth potential for innovative producers in addition to existing markets. The global bottled water market is expected to reach than $278 billion in 2020. By volume, the global bottled water market is set to reach 465.12 billion litres in 2020, stimulated by rising population, consumer spending patterns, lifestyle trends and growing levels of health consciousness, among other factors. The Sub-Saharan bottled water market is estimated to be $2.5 billion and growing at 25% per annum.
According to Allied Market Research a new 2017 report shows the global bottled water market could almost double over the next six years reaching $319 billion. It is predicted Asia-Pacific will grow by 10.6% while India’s compound revenue growth is estimated at 15.1% per year. Bottled water as a consumer product in Southern Africa constitutes only 1.3% of the total beverage industry (by volume) while Africa in total constitutes only 3.3% of the global bottled water market. Southern African consumption is already significantly lifestyle-related with bottled water viewed by consumers as not simply water, but as a natural and healthy alternative to other beverages.