Jul 31, 2013

Point-of-Use Market Booms in Developing World

Report says smart strategies and products can tap growth rates in emerging economies

Lux Research Developing Countries POE POU Market Growth

Product differentiation and innovation are key in targeting the $14 billion market for point-of-use (POU) and point-of-entry (POE) water treatment products in developing nations, some of which will grow at an annual rate of nearly 20%, according to Lux Research.

Overall, the market is growing at a modest 2.2% annually as countries such as China and South Korea reach maturity. But poorer countries such as Bangladesh and Myanmar offer remarkably high annual growth rates of up to 19%.

“Small-scale POU and POE systems represent a massive market, but one that requires long-term strategy and differentiation to break through,” said Brent Giles, Lux Research senior analyst and the lead author of the report titled, “Finding Growth and Differentiation in Small-Scale Water Treatment Markets.”

Lux Research analysts evaluated the major markets, estimating each country’s market size and growth through 2030. They also analyzed 28 start-ups in the space on the Lux Innovation Grid based on their technical value and business execution. Among their findings:

  • China's momentum slows. China and India will dominate the markets till 2030, but the fastest growth will occur in the poorest countries, such as Bangladesh and Myanmar. India still will grow at 9.3%, but China will slow as it shifts to a municipal treatment model.
  • Product differentiation, innovation will do the trick. Companies with unique technologies have an opportunity to enter POU and POE markets. For example, Electrolytic Ozone offers $100 ozone generators with long-lived diamond-coated electrodes, and Absorbent Materials Co. offers a modified silica product that removes toxic organics from water — both are rated "high-potential" on the Lux Innovation Grid.
  • Incumbents need to adapt. Residential markets are highly commoditized and current leaders are vulnerable, because incumbent technologies such as activated carbon and reverse osmosis have significant limitations. Large markets will open to companies that can both develop superior performance and ease of use.

The report, titled “Finding Growth and Differentiation in Small-Scale Water Treatment Markets,” is part of the Lux Research Water Intelligence service.