Water & Ice Manufacturing
Description
Companies in this industry produce bottled water and packaged ice. Major companies include Coca-Cola (Dasani, Smartwater), DS Services, Home City Ice, Mountain Valley Spring, PepsiCo (Aquafina), and Reddy Ice (all based in the US), along with Arctic Glacier (Canada), Groupe Danone (France), and Nestlé Waters (Switzerland).
The global market revenue in the bottled water segment amounts to about $330 billion in 2022 and is forecast to reach a compound annual growth rate (CAGR) of about 6% from the 2022-2026 forecast period, according to Statista. Most revenue is generated in the US, accounting for more than $85 billion in 2022. In terms of volume, the bottled water segment is expected to reach about 515.00bn L by 2027.
The US water and ice manufacturing industry includes about 700 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $7 billion.
Bottled water and ice manufacturing companies are part of the nonalcoholic beverage industry, which also includes soft drink manufacturers and is covered in a separate First Research profile.
COMPETITIVE LANDSCAPE
Demand for bottled water and packaged ice is driven by consumer spending, population growth, and weather conditions. Public health concerns also increase demand for bottled water in developing regions with inadequate supplies of clean water. The profitability of individual companies depends on efficient operations, effective product pricing, and geographic concentration of key customers. Large companies have advantages in economies of scale in production and distribution. Small companies compete on service, quality, and price. The US industry is highly concentrated: the 50 largest bottled water manufacturers account for more than 95% of category revenue, and the top 50 packaged ice firms account for about 85% of revenue.
Three companies - Coca-Cola, PepsiCo, and Nestlé - own four of the top five best-selling bottled water brands, according to Beverage Marketing Corp. Similarly, the bulk of the US packaged ice market is controlled by three multi-regional operators, while hundreds of smaller local operators and vending companies compete for the remainder.
Bottled water is increasingly taking market share from soft drinks as consumers seek out healthier beverage options. However, products such as at-home soda makers (SodaStream, for example) and flavored drink mixes offer cheaper alternatives to premium water brands. Almost all of the bottled water sold in the US is sourced and consumed domestically - exports account for about 1% of total production. Imports, primarily from Italy and France, make up about 6% of the US market.
Because packaged ice manufacturers tend to serve customers within a limited range of their production facilities, their success depends largely on access to high-density distribution routes within a region and high customer concentration in a market area. To reduce distribution and delivery costs, many manufacturers install machines that make ice cubes and package them on-site at high-volume stores.
PRODUCTS, OPERATIONS & TECHNOLOGY
Bottled water accounts for about 90% of the US industry revenue, while packaged ice accounts for about 10%. Despite large increases in volume sales of bottled water, the category only accounts for a smaller part of revenue in the broader US nonalcoholic beverage market, which is still led by carbonated soft drinks.
Major bottled water product segments include single-serve plastic bottles, accounting for the majority of the category's volume (more than 4% to almost 10.1 billion gallons), home and office delivery, sparkling water and imports, according to the Beverage Marketing Corporation. Other industry segments include vending stations that dispense water into refillable containers, domestic sparkling water, and imports. Sparkling water - including naturally and artificially carbonated, the latter of which falls into the soft drinks category - is the nonalcoholic beverage industry's fastest-growing segment. Packaged ice products include ice cubes sold in bags ranging from 5 to 50 pounds; blocks sold in sizes ranging from 10 to 300 pounds; and other varieties such as shaved ice sold on a per-pound basis. The most common product is cubed ice in 10-pound bags, which are sold primarily to convenience stores and supermarkets.
The majority of US bottled water companies are small organizations that use local water sources and distribute their products within an average radius of 300 miles from their bottling facilities, according to the International Bottled Water Association (IBWA).
The Food & Drug Administration (FDA) classifies bottled water based on where and how it was collected. Spring water flows naturally to the surface from underground formations. Mineral water also comes from underground sources and contains at least 250 parts per million of dissolved minerals and trace elements, which must come from the natural water source; they cannot be added later. Well water is collected by tapping into aquifers via holes bored or drilled into the ground. Artesian water is a type of well water that flows out of a pressurized aquifer after a well is tapped. While beverage manufacturers traditionally include sparkling water in the bottled water category, the FDA classifies it as a soft drink. Many bottled waters consist of municipal tap water that has been purified using processes such as reverse osmosis, distillation, or ozonation.
Water collected from natural sources is usually transported through pipelines or in stainless steel tankers to manufacturing plants, where technicians take samples to test for signs of contamination. The water is then filtered and temporarily stored in tanks while it undergoes further quality testing before going through activated carbon filtration and microfiltration processes, as well as ozone or UV disinfection. Sparkling water is injected with carbon dioxide gas. The water is then ready for bottling, which is done by automated machinery. Packaging — primarily plastic bottles made with polyethylene terephthalate (PET) — is usually acquired through third-party suppliers or, in some cases, manufactured on-site at the bottling plant. Once the bottles are filled, capped, and sealed, they are sanitized and inspected. Bottled water manufacturers frequently operate their own distribution networks, which include warehouses and fleets of specialized delivery trucks.
Ice is manufactured in two main ways: the vertical plate method and the vertical tube method. In both methods, purified water is circulated over cold vertical surfaces where the flowing water freezes into ice. The freezing process extracts minerals and other dissolved solids still present in the water after the initial filtration process. The thickened ice is then cut into specified shapes and sizes by motorized cutters and transferred to refrigerated holding bins, where it is mechanically raked and dried. Packaging machines then measure and sort the ice into a variety of bag sizes. The finished product is then placed on pallets in cold storage vaults before being delivered to customers.
Packaged ice manufacturers traditionally produce and distribute packaged ice from a central facility through direct store delivery (DSD) using fleets of freezer trucks. As a result of high transportation costs, producers are typically limited to servicing customers within about 100 miles from the production plant, depending on fuel costs, route density, and other factors. Some companies also deliver products through third-party distributors. Automated in-store bagging (ISB) machines produce and package ice on-site at high-traffic retail locations, helping manufacturers save money on delivery costs. Consumers can also buy ice cubes in bulk from self-serve, stand-alone ice vending stations.
The global market revenue in the bottled water segment amounts to about $330 billion in 2022 and is forecast to reach a compound annual growth rate (CAGR) of about 6% from the 2022-2026 forecast period, according to Statista. Most revenue is generated in the US, accounting for more than $85 billion in 2022. In terms of volume, the bottled water segment is expected to reach about 515.00bn L by 2027.
The US water and ice manufacturing industry includes about 700 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $7 billion.
Bottled water and ice manufacturing companies are part of the nonalcoholic beverage industry, which also includes soft drink manufacturers and is covered in a separate First Research profile.
COMPETITIVE LANDSCAPE
Demand for bottled water and packaged ice is driven by consumer spending, population growth, and weather conditions. Public health concerns also increase demand for bottled water in developing regions with inadequate supplies of clean water. The profitability of individual companies depends on efficient operations, effective product pricing, and geographic concentration of key customers. Large companies have advantages in economies of scale in production and distribution. Small companies compete on service, quality, and price. The US industry is highly concentrated: the 50 largest bottled water manufacturers account for more than 95% of category revenue, and the top 50 packaged ice firms account for about 85% of revenue.
Three companies - Coca-Cola, PepsiCo, and Nestlé - own four of the top five best-selling bottled water brands, according to Beverage Marketing Corp. Similarly, the bulk of the US packaged ice market is controlled by three multi-regional operators, while hundreds of smaller local operators and vending companies compete for the remainder.
Bottled water is increasingly taking market share from soft drinks as consumers seek out healthier beverage options. However, products such as at-home soda makers (SodaStream, for example) and flavored drink mixes offer cheaper alternatives to premium water brands. Almost all of the bottled water sold in the US is sourced and consumed domestically - exports account for about 1% of total production. Imports, primarily from Italy and France, make up about 6% of the US market.
Because packaged ice manufacturers tend to serve customers within a limited range of their production facilities, their success depends largely on access to high-density distribution routes within a region and high customer concentration in a market area. To reduce distribution and delivery costs, many manufacturers install machines that make ice cubes and package them on-site at high-volume stores.
PRODUCTS, OPERATIONS & TECHNOLOGY
Bottled water accounts for about 90% of the US industry revenue, while packaged ice accounts for about 10%. Despite large increases in volume sales of bottled water, the category only accounts for a smaller part of revenue in the broader US nonalcoholic beverage market, which is still led by carbonated soft drinks.
Major bottled water product segments include single-serve plastic bottles, accounting for the majority of the category's volume (more than 4% to almost 10.1 billion gallons), home and office delivery, sparkling water and imports, according to the Beverage Marketing Corporation. Other industry segments include vending stations that dispense water into refillable containers, domestic sparkling water, and imports. Sparkling water - including naturally and artificially carbonated, the latter of which falls into the soft drinks category - is the nonalcoholic beverage industry's fastest-growing segment. Packaged ice products include ice cubes sold in bags ranging from 5 to 50 pounds; blocks sold in sizes ranging from 10 to 300 pounds; and other varieties such as shaved ice sold on a per-pound basis. The most common product is cubed ice in 10-pound bags, which are sold primarily to convenience stores and supermarkets.
The majority of US bottled water companies are small organizations that use local water sources and distribute their products within an average radius of 300 miles from their bottling facilities, according to the International Bottled Water Association (IBWA).
The Food & Drug Administration (FDA) classifies bottled water based on where and how it was collected. Spring water flows naturally to the surface from underground formations. Mineral water also comes from underground sources and contains at least 250 parts per million of dissolved minerals and trace elements, which must come from the natural water source; they cannot be added later. Well water is collected by tapping into aquifers via holes bored or drilled into the ground. Artesian water is a type of well water that flows out of a pressurized aquifer after a well is tapped. While beverage manufacturers traditionally include sparkling water in the bottled water category, the FDA classifies it as a soft drink. Many bottled waters consist of municipal tap water that has been purified using processes such as reverse osmosis, distillation, or ozonation.
Water collected from natural sources is usually transported through pipelines or in stainless steel tankers to manufacturing plants, where technicians take samples to test for signs of contamination. The water is then filtered and temporarily stored in tanks while it undergoes further quality testing before going through activated carbon filtration and microfiltration processes, as well as ozone or UV disinfection. Sparkling water is injected with carbon dioxide gas. The water is then ready for bottling, which is done by automated machinery. Packaging — primarily plastic bottles made with polyethylene terephthalate (PET) — is usually acquired through third-party suppliers or, in some cases, manufactured on-site at the bottling plant. Once the bottles are filled, capped, and sealed, they are sanitized and inspected. Bottled water manufacturers frequently operate their own distribution networks, which include warehouses and fleets of specialized delivery trucks.
Ice is manufactured in two main ways: the vertical plate method and the vertical tube method. In both methods, purified water is circulated over cold vertical surfaces where the flowing water freezes into ice. The freezing process extracts minerals and other dissolved solids still present in the water after the initial filtration process. The thickened ice is then cut into specified shapes and sizes by motorized cutters and transferred to refrigerated holding bins, where it is mechanically raked and dried. Packaging machines then measure and sort the ice into a variety of bag sizes. The finished product is then placed on pallets in cold storage vaults before being delivered to customers.
Packaged ice manufacturers traditionally produce and distribute packaged ice from a central facility through direct store delivery (DSD) using fleets of freezer trucks. As a result of high transportation costs, producers are typically limited to servicing customers within about 100 miles from the production plant, depending on fuel costs, route density, and other factors. Some companies also deliver products through third-party distributors. Automated in-store bagging (ISB) machines produce and package ice on-site at high-traffic retail locations, helping manufacturers save money on delivery costs. Consumers can also buy ice cubes in bulk from self-serve, stand-alone ice vending stations.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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