When we think of industry and innovative new water markets, we usually think of tech, renewable energy, and transport. For the vast majority of us, water isn’t exactly the first thing that springs to mind. But maybe it should, after all, it’s a rapidly growing market currently valued at around $350 billion, and this is only set to surge in the next ten years, with estimates putting the figure at over $650 billion by 2034.
After hearing that, you’re probably stroking your chin, more curious about the market as a whole – who the major players are, where most of the money is made, and how the market operates. If that is indeed the case, then worry not, because, without any further ado, let’s dive into the water market together.
The Major Players
Now, there are a few different ways of looking at this, as there are several subsectors at play. Firstly, let’s discuss the bottled water market. This is where we find the household names: some of the biggest corporations in the world. The likes of Nestle, Coca-Cola, and Danone rule the roost in an increasingly gated community – if you’re trying to make a splash in this market, then you’ll need to lock horns with some of the world’s biggest, most recognisable brands.
Next, let’s talk about water utilities. The global leaders in this domain include Veolia and Suez from France, with major US-based players like American Water Works, and UK competitors United Utilities and Severn Trent. These companies dominate water supplies, along with wastewater management and environmental services; they are often publicly traded and are frequently invloved in ambitious infrastructure projects and long-term water management contracts.
Finally, water tech is all about the businesses that support the rest of the industry with transporting, treating, testing and managing water for public and industrial use. The core of these businesses is creating new innovative technologies that the rest of the industry is dependent on – this can mean pumping systems, analytics systems, or filtration technology to make ultrapure water. In this arena, you’ll find businesses like Xylem, which has been operating for decades.
Where Investors are Making Money
Now, let’s get to the meat and potatoes. We need to talk about money; which sectors are making consistent returns for shareholders? Utilities are, in many ways, the foundation of the market as a whole. These companies are all about stability.
People are always going to need water in their homes and in their businesses, so because it’s such a basic necessity, utilities enjoy consistent levels of demand and predictable revenue streams. So, for investors, utilities make a lot of sense. They often pay dividends and aren’t as volatile as other sectors.
Infrastructure is another area of interest for plenty of investors. Particularly as such a huge proportion of global water infrastructure is desperately outdated. So companies that can contribute with expertise in engineering, construction, and materials management play a central role here, designing and building the systems that safely deliver water.
Agriculture is, without a doubt, the largest consumer of water in the world. This essential industry accounts for the overwhelming majority of the world’s water usage, making it the biggest cash cow in the entire water market.
Companies that provide more sustainable irrigation systems and water-saving technologies are gaining traction as farmers seek new ways to improve efficiency – maximising their yields while conserving resources. Drip irrigation systems, for example, are in high demand as they feed the water directly to plant roots.
This sector offers a broader investment opportunity, as it offers investors a way to participate in both the water industry and food production chains.
Water Rights and Trading
In certain corners of the globe, water rights themselves are traded. This creates a market that works like commodities or even real estate. Investors can buy the rights to water usage and sell those rights based on demand.
The only asterisk here is that it requires traders to have a strong, nuanced understanding of local regulations and laws. If you take the necessary time to learn the different complexities and intricacies of water rights, then you might be able to make some of the most lucrative short-term investments in the market as a whole.
Closing Thoughts
Too many of us take water for granted – not just as a resource. As an investment, the sector as a whole presents a myriad of options, at least one of which is bound to fit in the portfolio of even the most experienced investor.
It’s important to approach this sector (as any) with an open mind and a willingness to understand its nuances. But, unlike plenty of other industries, you can do so with the reassurance that you’re putting your time and money into something stable, that presents opportunities for different goals, and will continue to be around for years to come.