Bottled Water in Malaysia

PROSPECTS

Strong growth due to tap water supply problems and the health trend

Influenced by growing health awareness and the media’s negative coverage of sugary drinks, bottled water continued to register strong off-trade volume and current value growth in 2019, as consumers shifted away from sugary drinks for daily hydration. The on-trade channel benefited from growing availability in foodservice outlets, as well as bundle deals with foodservice providers; for instance the Spritzer bundle deal with cinema operator GSC.

Still bottled water remains popular due to low price and wide availability

Still bottled water continued to dominate bottled water in 2019, and also saw the highest off-trade volume growth. This is attributable to its wide availability in both modern and traditional grocery retailers, as well as its affordable price point.

Reintroduction of sales tax expected to have minimal impact

Despite an announcement the previous year that bottled water would be exempt from the new Sales and Service Tax (SST), a 5% tax was imposed starting in January 2019. Until 31 May 2018, bottled water was taxed at 6% under the previous GST tax system, so there was a tax-free period from June to December.

COMPETITIVE LANDSCAPE

Wide portfolio helps to maintain Spritzer’s lead

As a well-established household name in Malaysia, Spritzer maintained its lead in bottled water in off-trade value terms in 2019. It has an extensive distribution network and a wide array of product offerings, ranging from Spritzer Bonrica functional water to Cactus still purified water, and is able to cater to a broad consumer base.

Low costs and wide portfolios ensure the dominance of local players

In 2019, local players continued to dominate bottled water due to their wide product ranges and pack sizes to meet different needs, such as on-the-go and take-home consumption. Leading local players such as Spritzer and RO Water are able to offer competitive prices compared with international players, thanks to their advantage of domestic production, which helps keep costs low.

Small pack sizes and novelties to attract consumers

In 2019, leading brands placed a growing focus on small pack sizes, such as 250ml PET, to offer convenient single-serve products for on-the-go consumption and for special occasions such as events and meetings. Spritzer launched smaller packaging in late 2019, following in the footsteps of Sea Master and La Boost, which had already launched smaller pack sizes.

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