by Daniel Debelius
November 6, 2018
AO Smith, a leading producer of water heaters, has increased its share of the global consumer water treatment systems market in recent years. Through acquisitions and sales expansions, the company is a rising star in the industry, and with strong growth prospects anticipated globally going forward, there will be plenty of opportunities to seize. Here are three markets where the company has positioned itself to grow in the years to come.
AO Smith operates in China via its AO Smith China Environmental Products subsidiary, which was established as AO Smith Shanghai Water Treatment Products in 2009. Taking advantage of its leading presence in the Chinese water heater market, the company is growing its presence in the water treatment space, producing membrane separation systems under the Chanitex brand.
One such product is the 600GPD RO Water Purifier, an under-sink unit that uses reverse osmosis (RO) technology to clean the water. The unit is advertised as having low wastewater, which can be an issue with RO technology. It also has a filter replacement reminder. Indicators on treatment systems that inform the consumer when to replace a filter or membrane are increasingly common and help consumers keep up with maintenance schedules, increasing the likelihood that a system maintains optimal functionality.
While a major leap for the company at the time, AO Smith has since made additional inroads to growing its global market share.
AO Smith, via its AO Smith India Water Products, has grown its presence in India in recent years, with plans to further expand product availability to 46 cities in the country by year-end 2018. Per the company, this expansion will enable the company to reach 75% of the massive Indian market, where shifting cultural trends toward improved public hygiene and sanitation underlie strong demand for water treatment products.
AO Smith produces a variety of under-sink and countertop models for the Indian market. For instance, the Z8 is a countertop RO unit with an eight-stage purification system and various hot water outputs. The system is marketed as using less water than standard RO systems. In addition, the Z8 features an alert system to inform the user when to replace the unit’s membranes and filter.
In the past few years, AO Smith, which had mainly participated in the consumer water treatment market overseas, entered the US market for consumer water treatment systems with the acquisitions of Aquasana and Hague Quality Water International.
In August 2016, AO Smith acquired Aquasana, which participates in consumer water treatment systems in the US through the production and sale of a variety of units, including point-of-entry and point-of-use units. Aquasana sells units that can provide comprehensive treatment and are customizable. For instance, the company offers whole-house (point-of-entry) conventional filtration systems that can be upgraded to include an ultraviolet (UV) filter or water softener.
In September 2017, AO Smith acquired Hague Quality Water International, a producer of water softeners and RO systems that is headquartered in Groveport, Ohio.
Furthermore, a cooperative agreement with Lowe’s has enabled AO Smith to expand its reach in the US market. In April 2018, the company announced its selection “as the primary supplier of residential water treatment products for all Lowe’s US home improvement stores”. As of August 2018, Lowe’s carries more than 20 different AO Smith-branded products in its stores.
Further gains are expected for AO Smith and other major industry players as the global market for consumer water treatment systems continues to grow. For more information on these insights and others, check out The Freedonia Group’s industry study, Global Consumer Water Treatment Systems, which offers:
Dan Debelius is an industry analyst at The Freedonia Group, where he writes industry studies on the US & global consumer and commercial goods markets.
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