U.A.E. Packaged Drinking Water Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

U.A.E. Packaged Drinking Water Market Analysis

The U.A.E. packaged drinking water market generated revenue of USD 682.2 million in 2023, which is expected to witness a CAGR of 4.8% during 2024–2030, to reach USD 937.7 million by 2030. The market is driven by the increasing urban population, the growing tourism sector, and the surging demand for functional and flavored water in the country. An adult consumes almost 34 gallons of bottled water a year. Hence, it is expected that the packaged water industry outlook will improve during the forecast period.

• The market is expected to grow in the coming decade with the boom of the hospitality industry, as the U.A.E. has been considered a major tourism and leisure destination across the world. For instance, according to the Ministry of Economy, in 2022, the contribution of the travel and tourism industry to the country’s GDP was nearly $45.4 billion (AED 167 billion), which was equivalent to 9% of the total GDP.
• The growing population leads to a higher demand for drinking water for domestic, industrial, and commercial needs. As per the United Nations, the Department of Economic and Social Affairs, Population Division, the population of the U.A.E. was around 9,569,048 in March 2024, which was equivalent to 0.12% of the total world population. To accommodate the country's rising water demand, more water treatment plants are needed to meet the needs of the surging population.

U.A.E. Packaged Drinking Water Market Trends & Drivers

Rising Consumption of Fortified and Functional Bottled Water Is Key Trend in Market

• Functional beverages are non-alcoholic drinks containing non-traditional ingredients, such as minerals, amino acids, dietary fibers (DFs), vitamins, probiotics, and raw fruits. Energy drinks, sports drinks, and functional bottled water are examples of functional and fortified beverage categories that have seen an expansion in recent years. This expansion can be linked to the increase in the interest in health and wellness activities, rise in urbanization level, and more health awareness.
• Functional beverages are important in modern lifestyles since they contribute to appropriate nutrition. Functional/fortified water has various advantages over plain water, for instance, the promotion of exercise, weight training and weight management, and overall health, and protein-fortified water can be used as a low-calorie protein source with more flavor possibilities.

Increase Awareness about Safe Drinking Water Will Drive Demand

• A sufficient amount of safe water for human consumption is not available everywhere in the nation. This is because harmful chemical substances found in the earth’s surface either seep into the water or pathogenic microorganisms contaminate this precious resource. Drinking such water can cause a number of water-borne diseases, majorly parasitic infections. Owing to such reasons, people are switching to packaged drinking water to prevent the spread of such diseases.
• Improved water supply and sanitation, as well as better water resource management, can boost a country's economic growth and contribute significantly to public health. For instance, Emirates Standardization and Metrology Authority (ESMA) stated that the federal testing and monitoring of all plastic bottles in the country meet the domestic and international safety standards.

Convenience and Long Shelf Life of Bulk Water Bottles

• Reusable bottles have a long storage lifespan and can store packaged bulk drinking water for future use. They are less harmful to the environment than individual plastic water bottles.
• Instead of using hundreds of individual bottles every day, switching to bulk storage can help reduce plastic waste and need for buying a new container every time, which, in turn, saves money. It also leads to less plastic and more-convenient hydration for employees or customers. Buying water in bulk is significantly more cost-effective than paying full retail prices.
• Bulk water bottles also offer plenty of flexibility and can be used as a source for coffee machines and water coolers.

High Expense Required for Installing a Water Treatment Plant

• The U.A.E. has limited natural water resources. Thermal desalination is the major process used to make seawater drinkable. The majority of the country's drinkable water (42% water requirement) comes from 70 major desalination facilities, which account for about 14% of the global desalinated water production.
• Desalination plants extract massive amounts of brackish or seawater through large pipes running along the surface or beneath the seafloor, to generate freshwater. Both the installation and operation of these are costly. The cost of constructing a new plant is rather high, primarily due to the high spending on environmental protection and the high cost of advanced energy-efficient equipment.
• In addition, if renewable energy is not leveraged for freshwater production, desalination has the potential to increase fossil fuel dependence, which raises greenhouse gas emissions and exacerbates climate change.
• Furthermore, desalination surface water intakes pose significant harm to marine life. If mature creatures, including fish and larvae, get sucked into or trapped in them, they could die or be severely wounded.

In-Depth Segmentation Analysis

Distribution Channel Insights

• The B2B distribution channel is projected to grow at the higher CAGR, of around 5.2%, during 2024–2030, as well as hold the larger market share. This is primarily due to the increasing number of corporate offices in the country. Dubai Chamber revealed that a total of 16,000 new companies joined in the first eight months of 2021, bringing its total membership to over 275,000, posting a year-on-year growth of 68.5%.
• In-app/online sales are the fastest-growing B2B direct selling channel in the U.A.E. It is projected to record a CAGR of over 5.5% during the forecast period in the market. U.A.E. retailers are investing in digital sale channels at a rapid pace and developing a catalog of online products.
• As per the International Trade Administration, the U.A.E. is the largest e-commerce market among all GCC states, and the country’s online sales increased by 53% in 2020, to a record value of $3.9 billion.
• Additionally, that year, e-commerce constituted 10% of the total retail sales in the country, which clearly shows the growing popularity of online shopping among residents.

During the study, we have analyzed two types of distribution channels in the report:

• Business to Business (B2B) (Larger and Faster-Growing Category)
• Business to Consumer (B2C)

End Use Analysis

• Based on end use, the workplace category held the largest market share, of around 30%, in 2023. The rise in water needs and stringent regulations on employee health are the key factors driving the market growth in this category.
• The Ministry of Human Resources & Emiratisation has cautioned companies that workers must be supplied with water at all times, as well as minerals that are approved for use by health authorities in the country.
• This category is also the largest as most offices use bottled water for drinking purposes. It is said that a healthy workforce is a productive workforce. In the country, there are stringent regulations about employee health.
• Moreover, employees generally spend 9–10 hours in offices; hence, providing them with safe and drinking water is most important. Thus, companies order a sufficient amount of packaged drinking water.

Below are the major end uses who consume packaged drinking water in the U.A.E.:

• Accommodation
• Complementary Services
• Education
• Healthcare
• Leisure
• Military & Civil Defense
• Pubs, Clubs, & Bars
• Restaurants
• Retail
• Travel
• Welfare & Services (Fastest-Growing Category)
• Workplaces (Largest Category)
• Catering
• Others

Market Nature - Fragmented

The market has a high degree of fragmentation, owing to many domestic and international players. The continual appearance of new entrants is impacting the established and new packed drinking water companies. Organizations can choose any company to fulfill their packaged drinking water, due to the presence of numerous players.

U.A.E. Packaged Drinking Water Industry News

• In October 2021, Masafi Co LLC announced the launch of SOURCE, a renewable and sustainable bottled water in the U.A.E. This product is designed for consumers who care about health, wellbeing, sustainability, and community.
• Agthia Group PJSC launched the Al Ain plant-based water bottle during Gulfood 2020. Its environment-friendly packaging, including the cap, is made of 100% plant-based sources.
• In 2021, a 100% renewable bottled water plant was inaugurated by Red Sea Development Co. in Saudi Arabia. This mineral water extraction plant leverages wind and solar energy for operations, to limit carbon emissions and preserve the environment.