Shilpa Tiku is the chief research officer & partner for Verify Markets. Tiku can be reached at [email protected] or 210.595.9687.
The global residential water treatment market reached estimated revenues of more than $15 billion in 2020. The market for point-of-use (POU) systems was the largest segment with an estimated 50.8% of the total market. Increasing consumer awareness about water treatment systems, poor drinking water quality, a growing health and wellness trend, and measures to boost consumer spending are key drivers for POU systems. Overall, the COVID-19 pandemic hampered growth in the global residential water treatment market in 2020.
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Global Residential POU Water Treatment Market – Key Drivers & Restraints
The global residential water treatment market is fragmented with several large companies competing against many local and regional competitors. China was the largest market for residential water treatment systems by revenue, accounting for an estimated 31.4% of the global market in 2020. China is expected to reach almost half the global market share in 2027. The rise of China’s middle class, increasing disposable incomes, poor water quality concerns and innovation are expected to drive the market in China. The U.S. was the second largest market in 2020, with estimated revenues of more than $2.2 billion in 2020.
There are many similar drivers across the world. Overall, there has been an increase in consumer awareness about the need for residential water treatment systems. This is directly linked to wide-spread media coverage and news reports, coupled with extensive marketing from top-tier and local brands. For countries like China and India, poor water quality and increasing spending power are major drivers. In addition, companies are catering to multiple demographics by offering a diverse product line with multiple price points. Hard water is also a major driver in areas like Germany, China, Ukraine and the U.S.
Both large and local companies compete in almost every market, leading to price wars. There is confusion among consumers due to many brands offering different technologies and price points. Another restraint is price sensitivity, especially in China and India. While consumers are looking up reviews online, many do not know what type of system is best for them and tend to buy the least expensive product. The bottled water market is also considered a restraint since many consumers choose bottled water over buying a system in countries like Mexico, South Korea and Japan.
Increased Focus on Health & Hygiene Post COVID-19
In the wake of the pandemic, health and safety have emerged as important customer concerns. Companies are increasingly positioning their products to provide enhanced safety and hygiene. Alkaline ionizers are seeing an increasing demand in some countries such as Singapore, Taiwan, Hong Kong and Japan. Companies in South Korea promote the use of stainless-steel pipes in order to reduce internal rust, corrosion and contamination, and feature a push button that sterilizes the flow pipe over a given period of time.
Trends by Country
China
The COVID-19 pandemic has significantly influenced consumer demands and purchasing behavior. Consequently, companies have devised creative marketing strategies such as livestreaming, microblogging and social commerce. Companies in China are promoting smart and innovative residential water treatment systems. Domestic brands are leading the way in The Artificial Intelligence of Things (AIoT) enabled home appliances and consumer durable products. Reverse osmosis (RO) is the predominant water treatment technology used in POU systems in China. Several companies place emphasis on their compact, space saving and tankless designs.
U.S
The COVID-19 pandemic has had a positive impact on the U.S. residential water treatment market. Amazon’s growing presence in the market has had an overall positive impact on the growth of the U.S. residential water treatment market by providing an increased level of customer exposure. COVID-19 has spurred shifts in customer buying behavior from retail stores to online channels. Additionally, the dealer channel was considered to be an essential business and remained open in many states to serve customers throughout the pandemic. Systems that require permanent installation, for example, are best distributed through dealers where appropriate after sales service is available. While end users in the past mainly purchased point-of-entry (POE) and under-the-sink water treatment systems from dealers, it is now common to purchase these systems via e-commerce. Furthermore, end users are becoming comfortable with installing systems themselves. Carbon is the predominant water treatment technology used in POU systems in the U.S. Many new developments have been concentrated on incremental improvements of existing technologies, such as greater product efficiencies, higher flow rates, lower pressure drop, longer filter life and quicker dispensing.
South Korea and Malaysia
The market for residential water treatment system rentals has been grown rapidly in South Korea and Malaysia. Companies are increasingly offering cost-effective and economical rental schemes in several Asia Pacific countries such as Singapore, Japan, Thailand and Indonesia. The rental model is an excellent example of how to make an expensive product and brand accessible to end users who would not be able to afford those systems. Additionally, these companies offer installation and regular services as part of the rental scheme. Companies are increasingly launching intelligent, connected products — which are radically reshaping companies and competition. Companies in South Korea and Malaysia place emphasis on compact and space saving designs. Carbon and RO are the predominant water treatment technologies used in POU systems in Malaysia. RO is the predominant water treatment technology used in POU systems in South Korea.
Singapore
Alkaline ionizers are popular in Singapore. Most market players offer alkaline ionizers in their product portfolio. Most of the companies provide options to choose between alkaline and non-alkaline water within the same water filtration system.
Indonesia
The market is still evolving and is in infancy. Potential customers in Indonesia need to be educated about the features and benefits of water treatment systems. Carbon is the predominant water treatment technology used in POU systems in Indonesia.
Japan
The Japanese residential water treatment market is extremely competitive, well-established and saturated. Companies offer heavy discounts on water treatment systems, which increases sales and drives demand. Companies in Japan are increasingly offering water treatment systems that are compact, sleek and space saving. Alkaline ionizers are extremely popular in Japan. Most of the market players offer alkaline ionizers in their product portfolios.
India
The key drivers in the Indian residential water treatment market include poor water quality, rising disposable incomes and marketing initiatives by key market participants. RO is the predominant water treatment technology in POU systems in India.
Conclusion
Although COVID-19 slowed the global residential water treatment market in 2020, the market is expected to continue to grow at a compound annual growth rate (CAGR) of more than 8% over the next seven years. Some of the markets that are expected to witness the highest growth rates include Indonesia, China, India, Thailand and Malaysia.
