Chinese bottled water faces consolidation

The Press-Enterprise

Entrepreneur Richard Heckmann is diving back into the water business, with an aim to consolidate the bottled water industry in Asia, much like he did in the United States to the tune of billions in revenue.

The former chief executive of Palm Desert, Calif.-based US Filter said last week that his acquisition firm would acquire China Water and Drinks Inc. for about $625 million. Heckmann said China’s rampant groundwater pollution, coupled with its population of 1.3 billion people, provide for an ample market. About 250 companies produce and sell bottled water in China, a hefty number that Heckmann said he hopes to consolidate.

Most people can recognize the biggest car company and the biggest toy maker, Heckmann said during a conference call with investors.

“You can live without all those things. Five days without water and you’re a dead duck,” he said.

“I don’t care where oil prices go. You’re going to drink water before you buy gas,” he said.

The average Chinese person drank 11.5 liters of bottled water last year, according to market intelligence firm Euromonitor International. Americans drank 101.4 liters each.

Shareholders of China Water and Drinks, a Hong Kong-based company registered in Nevada, have already approved the deal, which will be paid for with $455 million in stock and $170 million in cash. The deal is expected to close before the end of the year.

During the conference call, Heckmann said China Water ranks fifth in overall revenue among competitors in Asia, behind Coca-Cola China. China Water is not listed in Euromonitor’s top five companies by market share in water bottle sales. Hangzhou Wahaha Group holds 28.8 percent of the region’s market share, Nongfu Spring Co. Ltd. has 10.6 percent, Guangdong Robust Corp. has 8.3 percent, Coca-Cola China Inc. has 6.7 percent and Ting Hsin International has 4.6 percent.