1st. Competitive landscape in the market of the home water purification equipment
Since its fledgling stage in the 1990s, the Taiwan market for home water purifiers has an operating history of about 30 years. Currently, there are seven major types of products in the marketplace :
- RO (reverse osmosis) water purifiers
- Functional water machines
- Cold/warm/hot water dispensers
- Water filter jugs
- Shower filters
- Water boilers/dispensers
- Filters, filter materials, metal and non-metal parts
1）RO (reverse osmosis) water purifiers
This is the biggest category in Taiwan, with a total of 34 players in the marketplace. Understandably the price competition is the fiercest in this segment. When RO water purifiers were first launched in Taiwan, they gained significant traction because of the taste and quality of water. Even cold/warm/hot water dispensers were required to add RO water purifiers. In order to grasp a slice of the market, functional water suppliers came up with unjustified criticism of RO products. For example, they claimed that consumers would end up with calcium deficiency if they drank RO purified water.
The representative RO water purifier companies in Taiwan include ALYA (Easywell Water Systems Inc.), Fluxtek, Kemflo, and CCK Reverse Osmosis.
2）Functional water machines
Electrolyzed water, hydrogen water, and hydrogen-rich water filtered with porous silicon, and so on are all functional water, i.e. pure water with additional functionality. The representative suppliers in Taiwan include Dianapure, AUO, and Buder.
Functional water is gradually gaining momentum in the marketplace, with an increasing number of players. They even established “Functional Water Association of Taiwan” in 2011 in Taichung.
3）Cold/warm/hot water dispensers
The problem with cold/warm/hot water dispensers is high electricity consumption and bulky sizes. Water inside such a dispenser is cooled, then boiled, repeatedly. They are not used by households much but can be found at companies, factories, or business premises. They have a presence in the marketplace because both cold water and hot water can be served by a single machine. The representative suppliers in Taiwan are Hao Hsing, Hao Yu, Aqua Giant, Greatness, ACUO, and LCW.
4 ) Water filter jugs
This is a huge market, and marketing-savvy Brand B from Germany got it there first. That said, there are still plenty of opportunities for the giveaway segment in Taiwan with typically ticket sizes from 6,000 units to 10,000 units. The presentative companies in Taiwan are ALYA (Easywell Water Systems Inc.) and Casing Micro Technology.
5）Shower filters
This is a relatively new product for the filtering of shower water. Consumers in the U.S. and Europe have developed an awareness in the health benefit of showers.
ALYA (Easywell Water Systems Inc.) is the most professional and representative Taiwanese company in this segment.
6 ) Water boilers/dispensers
This was the first water machine that took the Taiwan market by storm. The earliest function was only water heating up or cooling down. On few occasions, filters were added. Perhaps the price is simply too competitive. Not many suppliers today add the filtering function to water boilers/dispensers.
The government has added water boilers/dispensers to the uncompetitive home appliance industry by providing subsidies. It is also mandatory that suppliers have to apply for energy efficiency labels, as well as MIT (Made in Taiwan) markers.
2nd. Home water purifiers increasingly a home appliance
Indeed, water purifiers are increasingly becoming a home appliance. In the past, water purification equipment was designed for venues with water sources and drainage facilities. However, suppliers came up with RO water purifiers in resemblance of water dispensers. RO water purifiers can be installed at any location with an electricity socket. Water is served like a tap.
3rd. Companies with brands, facilities, and channels
About 72 companies in Taiwan in the home water purifiers industry have manufacturing and assembly facilities. As many as 79.6% of the suppliers still serve as outsourced manufacturers for other brands. The list of members for Taiwan Drinking Water Equipment Association clearly labels A-type members (manufacturers) and B-type members (non-manufacturers). The annual membership fee for an A-type member is twice as high as that for a B-type member.
In fact, the manufacturing process for home water purifiers is not difficult. Many companies in Taiwan are fully integrated, from manufacturing to sale, with activities across the whole value chain and established brand names. These companies have their own:
- Brands
- Factories
- Channels.
The Taiwanese companies with all these three elements are as follows:
Sakura, CHARM, Fairy Water Industrial, Chanson, ACUO, ALYA, Seven Star Ocean, Great Idea, Blue Mountain Water, Lepa Water, Yen Sun, Buder, Dianapure, LCW, and BWT.
4th. Trends for water purification equipment in Taiwan
- Intelligence
- Compactness
- Material science
- Energy efficiency
1. Intelligence
Thanks to the advancement of information technology, water purifiers are becoming smarter. The most common combination of electronic components into water purifiers is as follows:
1.1 Reminder for filter change
1.2 Reminder for membrane change due to too high solid contents in water
1.3 Automatic suspension of water dispensing due to leakage
1.4 Timers
1.5 Pressing on or pressing once for water dispensing
Below are some ideas not yet seen in the marketplace. Food for thought:
▪️ Hydro power generation
Water can be used to generate electricity for the functioning of electronic components. This saves the use of batteries.
▪️ Voice control
Voice control may be used to operate water purifiers, so that housewives can cook and collect water at the same time.
▪️ In-built WIFI
This function requires a prior application with the National Communications Commission. I heard that it is a costly and tedious process.
2. Compactness
It seems long time ago when product designers started the pursuit of chic and compactness, but this concept is never out of fashion. Housing prices keep going up and the kitchens are smaller and smaller. Small-sized water purifiers should still be popular.
3. Material science
Activated carbon is the most commonly used and cheapest material for water purification equipment. The most effective activated carbon is made with coconut shells. Global warming and greenhouse effects have gradually reduced the output of coconuts over the years. As a result, activated carbon producers have been hiking prices. Despite alternatives such as calcium sulfite, activated carbon remains the material of choice given its prices and properties.
It is imperative for Taiwan to develop new materials for water filters and water treatment solutions, perhaps by working with the Industrial Technology Research Institute or incubation centers in universities.
4. Energy efficiency
Water purification does not consume much electricity but cool/hot water dispensers do. The Taiwan government on September 1, 2019 published the Standards in Energy Efficiency Labeling and Energy Consumption for Warm/Hot Water Dispensers. In other words, only the water dispensers with energy efficiency labels can be marketed in Taiwan. The development of energy efficient water purifiers is a race against the clock.
5th. Conclusions
Almost all the big companies in the world agree with the market potential for home water purification equipment. Companies from different backgrounds (affiliated to water purification or not) have all jumped on the bandwagon during the past decade. As a result, the industry is extremely competitive.
Although not relevant to technological trends, continuous cost reduction is a shared challenge for all the Taiwanese companies in the home water purification equipment market. We all know that scale is critical in selling price reductions for industrial products. However, large quantities mean greater competition. It is an ongoing struggle to constantly drive down costs without affecting quality in order to stay in the game with world-leading companies.
Membranes, the most expensive component in a RO water purifier, are a case in point.
The factory prices of a 50GPD RO membrane three years ago were as follows :
About $8 for a U.S. product
$6-7 for a South Korean product
$5.8-6.2 for a Chinese product
The unit price for a Chinese product is now $3.5 only, with the same quality.
Two suggestions for cost reduction :
▪️ Development of more efficient, cheaper, and safer alternative filters
▪️ Automation in production
This can also resolve the labor shortage problem in Taiwan. It also lowers costs and achieves quality reliability.
Content of this article is free to use, but please attribute the source.
Author: Rodger Lin, Easywell Water Systems Inc.
November 22, 2020