Clearly Canadian (OTCBB – CCBEF)
Stock Guru Profile – Clearly Canadian
In the President’s Annual Letter to Shareholders Brent Lokash stated that a 2007 Clearly Canadian goal was to “Expand our business in Asia.”
The rising demand for the global bottled water industry in Asia (including Australasia) stands out as the fastest growing consuming region.
There are clearly millions of people in east and south Asia, as well as the Pacific, who are living below the poverty line and who cannot and may never be able to afford to buy clean bottled water in supermarkets or corner stores. But, those who can afford it are clearly doing so more frequently.
According to the 2004 Global Bottled Water report produced by UK-based drinks consultancy Zenith International, Asia/Australasia’s bottled water market advanced by 11.2% in 2003 to reach a total of 36bn litres, while the region’s compound annual growth rate in sales for the 1998-2003 period was 18.1%.
The report showed that consumption per person has more than doubled in the past five years pushing the regional average for consumption-per-person to a high of 10.3 litres in 2003. Previously, consumption in the region overtook that of North America in 1999 and Latin America in 2001. The Zenith International report also noted that although China was the region’s largest bottled water market in 2003, with a one-third regional share, the highest consuming individuals were the Thai. Thailand had consumption per person exceeding 80 litres for this 12-month period.
The US and Mexico are still the two largest single markets but, significantly, China and Indonesia appear likely to demote Italy (which has always been seen as a big consumer mainly through its successful tourism industry) back to fifth place by 2008.
The Zenith International report also said the global outlook indicates that in the next five years Asia/Australasia’s consumption statistics will overtaking western Europe. This growth will be led by demand in the huge markets of China, Indonesia, India and South Korea.
According to the vice-president for communications at the US-based International Bottled Water Association (IBWA), Stephen Kay, bottled water companies that sell in Europe and the US have the countries of the developing world, including Asia, on their radar screens.
“Analysts expect growth to continue in the US and at the global level. As with any business, expansion and increased return on investment, development of new markets and return to shareholders and owners may cause companies to look to developing markets for opportunity,” Kay said. The larger companies, such as the Danone Group and Nestlé, are among those who are training their sights on the huge potential markets of the developing world.
The European Bottled Water Association’s (EBWA), Hans Mommsen, agreed that the Asian bottled water market looked bullish, highlighting sales which are growing by 10 to 11% a year. “It’s a good market to get into,” he said.
One factor fuelling this growth, certainly in the poorer nations of the Asia-Pacific region, is health. Increased health programmes across the south east Asia region have highlighted the importance of drinking safe water and using it for preparing food and brushing teeth, and as a healthy alternative to sugar-rich soft drinks, some of which have been targeted as contributing to an unhealthy life style.
Now only the most remote and poorest rural areas of nations in the region are without supplies of bottled water. Yet even in some of the least accessible hill towns of Vietnam and Laos visitors are still offered a bottle of fresh, iced mineral water straight from a fridge.
Zenith International’s 2004 report said: “The rise of bottled water consumption illustrated that health is becoming an increasingly influential factor in consumers’ choice of soft drink.
“In particular the rising issue of obesity is a major challenge for the soft drinks industry. There are currently more than 300m obese people in the world, according to the World Health Organisation (WHO), and the high consumption of sugar rich soft drinks has been accused of contributing to this problem,” said the report.
“Health issues are already influencing the dynamics of the soft drinks industry and this is likely to become more pronounced as time goes on. In this climate, bottled water remains a likely beneficiary.”
A report from the global industry analysts AC Nielsen, entitled “What’s Hot Around the Globe”, found that “in addition to new product entries into the category, consumer concern over the quality of local water was one of the contributing factors driving ’still’ (bottled water) growth”.
When combined with the marketing kudos attached to bottled water, which was highlighted by the EBWA when it called the product “young and hip”, its rising popularity seems destined to be sustained for some time to come.
What is harder to fathom is the extent of, and type of, bottled water production occurring in South East Asian nations because statistics are notoriously unreliable in what can still be considered a young industry here. Some markets do not rely heavily on natural mineral or spring water but instead favor taking portable water and purifying it using a variety of methods such as reverse osmosis and distillation. Then the water is bottled and sold.
Across Asia, the ratio of natural mineral/spring to purified water is respectively 60:40 with the following countries showing a strong penchant for purified water: South Korea, Thailand, Malaysia, Vietnam, the Philippines and India (source: Zenith International). Each of these markets has less than a 10% share for natural water formats.
Clearly Canadian is Clearly Headed in the Asian Direction and for good reason!
Link Here for Clearly Canadian’s Chart. It’s hard not to love a chart like this. It’s a classic.
Additional information about Clearly Canadian may be obtained at http://www.clearly.ca/.
SOURCE:
Business Wire and
Clearly Canadian Beverage Corporation
Investor Relations contact:
Steve Cook, 800-983-0993
investor@clearly.ca$
or
Marketing contact:
604-742-5314
smanson@clearly.ca
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