Industry currently in growth stage * Major segments are * still water holds 76% of consumption Growth of bottled water will increase intensity (and in ABL enters market as well)ABL strategy to supply across all distribution channels will further increase rivalryHigh exit barriers due to large initial capital investment| The role of government| | New legislation on banning CDS’s advertisements during children’s television showsLow level of regulation to enter industry (Food standards)Policy change to increase price of water | Buyers’ buyers| -| No affect on ABLRetailers are bypassing wholesalers and buying direct from manufacturers(ABL) Industry rivalry is likely to intensify in the future due to the decline in the market for CDS products. This may cause competitors to enter new distribution channels which will intensify the rivalry. Entering the bottled water industry would be the logical approach for most of the competitors with the manufacturing capabilities, this will intensify the rivalry in this industry which is currently experiencing strong growth.
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Threat of new entrants (internationally) is unlikely to change due to the high cost of transportation of heavy weight products, this is despite no tariff on imported water. To keep industry profitability levels relatively high, the industry’s major competitors have tended to dominate one or two distribution channels only. (avoiding strong competition) this is expected to change in the future as future consumption growth begins to slow. Current levels of profitability are expected to continue to continue however, as sakes through supermarket distribution channels increase, so too will buyer powernegative impact on profitability.
Industry experts summarise the following areas as critical to future success in the Australian bottled water manufacturing industry * Product Innovation (Keeping up with consumer trends/fashion/packaging/labelling/convenience) * Brand marketing (Strong advertising, brand names, clear target market or segment) * Distribution and inventory management systems (established comprehensive network, effective cost controls) * Economies of scale and scope (Very important for a low-value product since high volumes must be produced) Time-to-market Strong distribution network by offering a broad product range – large retailers prefer to deal with fewer organisations. Success in convenience store channel is critical for any new product to succeed. Basic Competitor analysis|
