By Michael Deneen
Demand for water treatment equipment and supplies in residential and commercial applications is projected to increase 5.3 percent per year to $3.5 billion in 2009. Advances will result from increases in the number of commercial and institutional establishments, especially in developing regions. Gains will also result from the growing popularity of easy-to-install home filtration kits in nations such as the U.S. where manufacturers market their products as an alternative to bottled water. The use of more sophisticated filtration systems in residential and commercial pools and spas will also boost gains. However, the market will remain smaller than the industrial and municipal markets since home water treatment products are not considered a necessity by many consumers, especially in developing regions where incomes are low.
Growth in Asia
The best prospects for water treatment product suppliers will continue to be found in the developing regions, especially Asia, where India and China are expected to enjoy strong growth. Gains in Asia will result from a growing middle class and their concerns over the quality of municipal water systems. Demand will also benefit from the addition of 90 million households through 2009, by far the largest number of any region. China offers the most exciting growth market, as the nation’s rising industrial output has spurred concerns over water pollution levels. Members of that nation’s growing middle class will increasingly turn to home filtration kits to improve water quality.
Latin American projections
Gains in Latin America will also exceed global levels. Prospective gains will result from a rather sturdy recovery from recent economic difficulties (particularly in Argentina). A favorable cyclical climate, combined with economic liberalization in most of the major South American countries, will attract further investment, which will boost income levels. In addition, oil production in Venezuela (the world’s ninth largest producer in 2004) is expected to grow strongly as a result of high prices and ever-increasing demand in China and India, which will positively impact Venezuelan consumers. The recovery of U.S. tourism from low, post-9/11 attack levels has also created opportunities for water treatment suppliers in Latin America. Mexico and the Caribbean have become major destinations, benefiting both from their favorable climates and from geographical proximity. Mexico, for example, has become the eighth leading tourist destination in the world. Further expansion of the hotel industry, in particular the resort hotel segment, will increase the number of pools and spas in use.
Infrastructure lacking in some areas
Prospects are also favorable in Eastern Europe, where income growth will be strongest among regions. The Africa/Mideast region will also register growth above the world average, as the region has the fastest rate of household growth in the world. However, advances will trail gains expected in parts of Asia due to the lagging state of industrial infrastructures in those regions, which will dampen growth in income levels.
Recreational use spurs U.S. growth
Gains will continue to be solid in the U.S. market as well. North America, the United States in particular, will remain the largest market, mainly due to widespread use in recreational water treatment applications such as residential pools and spas. The U.S. resident population is forecast to grow slightly less than one percent annually through the end of the decade, with the fastest growth in older age groups (45 and older). The recreational segment of the residential water treatment market is strongly affected by trends within the population. For example, all age groupings over 25 provide good market prospects for home renovation, repair and improvement projects (including the addition of swimming pools and hot tubs/spas) and existing homeowners of all ages are excellent candidates to trade up to larger, higher-valued homes, which are more likely to have (or be able to accommodate) pools, hot tubs and other residential luxuries. While slow growth in the 25- to 34-year-old segment of the population may hinder demand growth for recreational water treatment, high growth in the baby boomer (45- 64-year-old) segment may offset such declines, as residential pool and spa owners, on average, are between 40 and 50 years old. Persons in this group have reached an age where some accumulation of wealth is more likely, allowing them to make such purchases.
Residential treatment and pool and spa alternatives
Water treatment in the residential market consists of filtering and softening household water and treating water used for recreational purposes, such as in swimming pools and hot tubs/spas. Pool and spa filtration equipment and supplies are established products and will continue to register growth as pool and spa owners increasingly turn to higher value systems that offer improved performance and greater ease of use. As a result, sand and cartridge systems are widely used in the residential pool and spa segment. Filtration and separation equipment and supplies are also registering growth in the residential market, boosted by the growing popularity of home filtration kits. Disinfection of pool and spa water is done for the most part by chemicals such as calcium hypochlorite, chlorinated isocyanurates or brominated hydantoins, although non-chemical disinfection is establishing a small niche in this segment. Several alternatives to traditional pool disinfection (including ozone, enzyme and magnetic treatment) have been introduced to the residential market. Among these alternatives, ozone treatment is likely to become a key component of the recreational market, due to its performance advantages (foremost among them is that it does not create the odors associated with other pool and spa disinfectants). However, if adequate equipment is not in place, ozone’s short life span complicates water distribution, as it usually breaks down before an entire pool can be properly treated and its ineffectiveness against algae necessitates the addition of an algicide. Outside of pools, spas and other recreational water treatment, residential and commercial water treatment equipment demand in the U.S. is generally limited to home filtration systems. More involved equipment, such as distillation equipment, is generally restricted to use in areas with problematic source water or for use by people with particular health concerns, as these kinds of treatment equipment treat water slowly and are very energy-intensive. Fortunately for most residents, source water in most parts of the U.S. is good, eliminating the necessity for expensive and energy intensive treatment equipment. Gains for residential filtration systems, including both point of use (POU) and point of entry (POE) systems, will be driven by rising consumer interest in water treatment equipment, particularly after a series of well publicized incidents of water contamination. Moreover, there are rising consumer concerns about lead from old water delivery pipes and about disinfection by-products. Many types of POE and POU systems are designed to limit the amount of these contaminants that ultimately get to the end user. Unit sales of these systems have grown as consumers who are concerned with these contaminants realize that they can improve their drinking water quality by using a water treatment device at their home.
Economics driving choices
Commercial establishments, such as hotels/motels, amusement parks and health clubs, are the primary end users of water treatment equipment and supplies in the commercial segment. Many of these establishments are highly dependent on the state of the macroeconomy, as a healthy economy generally stimulates consumer confidence and, in turn, encourages consumer spending on vacations and other leisure-time activity. Chemicals will remain the dominant disinfection technique, although non-chemical alternatives are beginning to establish a market presence.
About the survey
The above is a brief look at World Water Treatment Products (published 03/2006, 343 pages) available from The Freedonia Group, Inc., 767 Beta Drive, Cleveland, Ohio 44143-2326. For further details, please contact Corinne Gangloff by phone (440) 684-9600, fax (440) 646-0484 or e-mail pr@freedonia group.com. Information may also be obtained through www.freedoniagroup.com.