A basic study

1. Mineral water is water from a mineral spring that contains various minerals, such as salts and
sulfur compounds. Mineral water may be effervescent or "sparkling" due to contained gases.
Traditionally, mineral waters were used or consumed at their spring sources, often referred to as
"taking the waters" or "taking the cure," at places such as spas, baths, or wells. The term spa was
used for a place where the water was consumed and bathed in; bath where the water was used
primarily for bathing, therapeutics, or recreation; and well where the water was to be consumed.
Today, it is far more common for mineral water to be bottled at the source for distributed
consumption. Travelling to the mineral water site for direct access to the water is now
uncommon, and in many cases not possible because of exclusive commercial ownership rights.
There are more than 4,000 brands of mineral water commercially available worldwide
Analysis of mineral water industry in
Bangladesh through
5 Forces Model
The characteristics and strength of the competitive forces operating in an industry are never the
same from one country to another. The most powerful tool to analyse this is five forces model of
competition. The five forces model includes;
a) Competition from the rival sellers
b) Competition from the new entrants in the industry
c) Competition from the substitute products
d) Supplier bargaining power and
e) Customer bargaining power
1. Rivalry among competing sellers
Rivalry among the existing companies is moderate in nature. Because of low differentiation
and low switching cost, rivalry exists in the industry but it is moderate.
Rivalry is stronger in some cases of Mineral water Industry in BD:
a) Buyer (Retailers, Hotels, Restaurants, fast food Shops) costs to switch to brands are low
because of availability of several products of same price.

2. b) The products of industry members are weakly differentiated as the elements are used in
same manner.
c) Competitors of large scale production are almost equal in size and competitive strength.
Rivalry is weaker in the following cases of Mineral water Industry in BD:
a) Buyer demands are growing rapidly because the temperature level is increasing and it
results in increasing demand of bottled water. As the demand of customer rises, the
demand of buyers also rises.
b) Fixed and storage cost is low. So the producers can exit easily if they are not able to
continue their production. When the fixed cost is a large fraction of the total cost the
rivalry will become intense as price cut down, discount and so many weapons are used.
c) Sales are concentrated among a few large sellers. But day by day the number of sellers is
increasing.
d) Low exit barriers are the main cause of weaker rivalry in Mineral Water Industry in
Bangladesh.
2. Threats of new entrants
Threats of new entrants in Mineral Water Industry in BD. is high as the number of small size
producers is increasing and the industry is looking attractive to enter.
Entry threats are stronger because of;
a) Entry barriers are low in BD. as the rules and regulations are moderately prescribed.
Firms need to take the permission of BSTI and taking this becomes easy day by day.
There is a large pool of potential entrants, some of which have the capabilities to overcome the
barriers. Sparkletts, Nestle Pure life, Dasani, Fiji, Doland, Bisleri, are emerging.
b) Existing industry members are looking to expand their market reach by entering
geographic areas where they don’t have a presence. In the recent days, mineral water
becomes available at the farthest corner of the rural areas. It is a sign of attractiveness of
this particular industry.
c) Small scale production doesn’t need higher amount of investment for mineral water bottle
packaging.
Entry threats are weaker as;

3. a) Cost advantage due to low fixed cost, access to lower input, technology or location. This
cost advantage can be gained by large scale firms as they have economies of scale.
3. Competition from substitute products
The competition from the substitute products is pretty high because the beverage products and
soft drinks are very much available to get instead of mineral water. In the rural areas, where
mineral water is not available people tend to get soft drinks to quest their thirst. The substitute
products of mineral water are;
a) Coca-Cola
b) Fanta
c) Pepsi
d) 7 up
e) RC cola
f) Pran frooto
g) Frutika
h) Sprite etc.
Strong completion from the substitutes;
a) Good number of substitutes are readily available
b) Buyers have little cost to switch to substitute products. In BD. the price of half liter
mineral water is almost same as half liter soft drinks. The price of 1 liter mineral water is
almost 25 tk and the soft drinks are 35 tk. So the price range is almost same. The price
range causes high competition from the substitutes.
1. MUM= 500ml (15 tk.)
1.25ml (25tk.)
5 Liter (70 tk.)
2. Pran = 500 ml (15 tk.)
1 Liter (20 tk.)
2 Liter (30 tk.)
3. Fresh = 500 ml (15 tk.)
1 Liter (20 tk.)
3 Liter (40 tk.)
5 Liter (60 tk.)
4. Jibon= 500ml (15 tk.)
1 Liter (20 tk.)

4. 4. Supplier bargaining power
Suppliers with strong bargaining power to can erode the profitability of business by charging
industry. In BD. WASA is the main supplier of water and they have high bargaining power. But
it is true that the firms are collecting water from the areas outside of the capital city to reduce the
bargaining power of WASA. This bargaining power is increasing although it is pretty high in the
recent days.
Stronger bargaining power of the suppliers;
a) Supplier’s product is in short supply as WASA has a limited water supply.
b) Industry members incur high cost to switch supplier as they need to set up plant in other
areas which creates a great problem.
c) There are no good substitutes available compared to WASA. WASA supplies water with
low cost which helps to generate extra profit.
Weaker bargaining power of the suppliers;
a) Industry members account for a big fraction of supplier’s sales.
b) Industry members have the potential to integrate backward. Most of the companies are
locating their plant outside Dhaka to integrate backward.
5. Bargaining power of the buyers
The bargaining power of the buyers is pretty high because the retailers have the opportunity to
switch brands. The number of small scale producer is good enough and it results in extra
bargaining power of the retailers or the buyers. Jar Hotel and restaurants have high bargaining
power as they have the opportunity to sell semi popular products which are provided at a low
cost. Hotels are eager to buy from the low cost providers and it pushes a pressure to cut down
price. The whole sale price needs to be cut down when the restaurants and hotels bargain. The
retailers also have pretty high bargaining power as the firms provide many other opportunities
with their products. They provide fridge, gifts etc.
Strong bargaining power of the buyers;
a) The industry product is standardized and undifferentiated or little differentiated.
b) Buyer’s cost to switch brand is low.
c) Buyers are price sensitive.
d) Product performance is not a critical consideration.

5. Weaker bargaining power of the buyers;
a) Buyers are numerous as the number of retailers is good.
b) Buyers cannot credibly threaten to integrate backward.
c) Buyers cannot easily postpone purchases as it becomes a commodity day by day.
The potentiality is pretty good and the threats identified thorough using the five forces model
suggests that the attractiveness in increasing as the demand of mineral water is gradually
increasing. It will be also attractive as the weather is getting warmth day by day and the demand
of jar water is decreasing among the consumers and the awareness among the consumers rises of
their health. Above all, it is not unattractive at all.