A new study by Frost & Sullivan, the international marketing consulting company, observes a growing desire amongst end-users to maximise their efficiency and focus on factors such as the prevention of scale formation and pipe corrosion.
With manufacturers increasingly directing customers' perceptions and raising awareness of the benefits of pipe, equipment and appliance protection, efficiency requirements are likely to act as a major driver behind growth in the European commercial scale water treatment equipment market.
"As suppliers are placing more emphasis on highlighting cost-benefit analyses, the advantages of damage prevention as opposed to repairs are stimulating investment. The protection of boilers, pipes, fittings and process equipment is particularly crucial to almost all commercial and light industrial applications," reports John Raspin, Research Manager at Frost & Sullivan.
The European market for commercial scale water treatment equipment market was valued at $301.8 million in 1999 and will continue to display robust growth, rising to $403.7 million in 2006. Market participants that successfully exploit the abundant opportunities offered by the most buoyant sectors will assume a commanding position in the overall market. However, Frost & Sullivan stress that the high degree of market substitution (newer advanced technologies growing at the expense of traditional equipment) and low customer loyalty will serve to keep the market particularly challenging.
At present, the commercial and light industrial sector is perhaps the most dynamic area of Europe's water and wastewater treatment industry. Fuelled by a combination of legislation, end-users' efficiency requirements, industry standards, environmental concern and awareness of technologies, Frost & Sullivan's study expects this sector to head for further expansion.
Following the rapid consolidation and globalisation of this market's supply base in recent years, competition is growing fiercer. Average unit prices in this market have been decreasing year-on-year during the latter part of the 90s. This trend has been stimulated almost entirely by market competition, with price having emerged as the paramount factor stiffening competition.
John Raspin explains: "This market is largely solution-driven as opposed to product-driven, meaning that customers most commonly approach suppliers for low cost efficient solutions to their problems. Therefore, although brand name is important, product awareness is low in the market and price remains of prime importance."
In the commercial and light industrial applications, a considerable number of processes require water of very high purity. Sectors such as hospitals and laboratories, beverage suppliers and machining factories are frequently in need of water of more enhanced quality than can be supplied directly from the mains. In such cases, the process requirements of companies in these sectors will bolster investment in water treatment systems.
Coupled with the process requirements and protective measures of end-users, national and European legislation is partly responsible for the growth currently experienced in the overall market.
The requirements for ultrapure water monitored in applications such as laboratories, clinics, hospitals, opticians etc., tend to drive demand towards the more advanced--and subsequently more expensive--"premium" end of the treatment spectrum.
The commercial scale water softeners sector currently accounts for the largest proportion of total market sales. However, in spite of the modest growth opportunities attributed to this market segment, it is likely to be overshadowed in future years by the more flourishing markets such as membrane systems and disinfection systems.
The growth potential of the market for filtration systems for use in commercial scale applications, ranking in second place, is somewhat lower than in its fellow contenders' segments.
Growth prospects in the membrane systems segment look particularly rosy. Technological refinement of Reverse Osmosis (RO) systems, along with improving cost-effectiveness of membrane technologies and increased acceptance of membrane products are predicted to inject some vigour into this sector.
Frost & Sullivan have identified three main tiers of competition and a total number of market participants of 300 to 350 across Europe. Also, the market concentration is believed to be relatively high, with the leading two companies--BWT and Culligan--accounting for just below 30.0 per cent of total market revenues.
Frost & Sullivan is an international marketing consulting company that monitors a comprehensive spectrum of high-tech markets, including the water industry, for market trends, market measurements and strategies. This ongoing research is utilised to complement a series of research publications--such as the European Desalination Plants Markets--to support industry participants with customised consulting needs. Free executive summaries of all Frost & Sullivan reports are available to the press.
Research Publication:3822-15 - European Commercial Scale Water Treatment Equipment Markets
Publication Date: June 2000
