Thriving bottled water business attracts thirsty vendors

Financial Standard

By Patrick Githinji

Unscrupulous vendors are making a foray into the lucrative Sh12 billion bottled water business. These vendors are bottling water in filthy bottles that have bogus seals, counterfeiting the mineral and spring water processing companies.

The trade now puts these vendors in direct competition with soft drink giant Coca-Cola, which entered the market eight years ago with the Dasani brand, as well as other big players such as Keringet, H2O, Quencher and Aquamist.

The fast growing water market presents a good opportunity of returns. The sector became attractive after lifestyle changes fueled the perception that tap water was unclean, as notion that the Ministry of Water and Irrigation has denied.

"The ongoing reforms in the water sector have ensured that the quality of water supplied to Kenyans is clean. Last year we didn’t have a scenario where anyone died because they drank unclean water," Water Ministry PS Eng David Stower told Financial Journal.

A year ago, the quality of some bottled water came into question, forcing KEBS to test all the brands in the market to ascertain their authenticity.

Bring sanity

Stower said the Ministry would soon publish regulations that would bring sanity to the sector. The new regulations, he added, would affect both large-scale and small-scale players in the water business.

"Some players draw water from rivers and claim it is mineral or spring water… The draft is meant to entrench discipline to the sector. The rules are stringent and will stipulate on standards of water for consumption, pricing and ensure there is a fair play," he explained.

Moreover, the PS feels the ministry is best suited to regulate the water sector, which falls in the jurisdiction of KEBS.

Commenting on the issue, KEBS Director of Quality Assurance and Inspection John Abongs’ admitted that is a crisis that needs to be investigated to determine how deep the ill is.

"It is bad anyone can get tap water or draw water from well and sell it," he said.

Exhausted steam

The intended measures come after sugar producer Mumias Sugar Company announced plans to venture into mineral water processing. The company said it would package water that collects from exhausted steam.

Last year’s prolonged drought is estimated to have accelerated growth in the 314 million litre bottled water market by at least three percentage points, making it even more attractive to thirsty soft drink makers looking for new avenues of growth.

The growing interest in the bottling water business, has grown tremendously in the last decade.

Robert Gakubia, CEO, Water Service Regulatory Board said the business is thriving, since Kenyans lack confidence in the water they drink directly from taps. He said that there is a need to create awareness.

A litre of water costs an average of Sh50, slightly lower than a litre of kerosene, which costs Sh67. Kenya’s bottled water market is dominated by the 300ml plastic bottles that are sold at an average of Sh20.

It is projected that the country’s bottled water market will grow 42 per cent between 2007 and 2012 to over 314 million litres, growing the market value, estimated at Sh11.8 billion as of 2007.

Statistics show that the bottled water segment represents only 0.4 per cent of the total commercial value of water consumed, while conventional water represents 41 per cent of total beverage consumed in Kenya today in terms of volume.

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