This month's management briefing takes a look at the last 12 months for the global drinks industry. In part one, Ben Cooper reviews the year in the bottled water category.

The news in December that the bottled water category in China is set for growth brought what had already been an eventful year in the water sector to a close on a high note.

Bottled water brands often benefit when there are concerns over municipal supplies and so is the case in China, according to a Zenith International report. However, the market analysts also put the growth down to China's rapid urbanisation and economic growth, which means that more people are on the move.

Zenith said that China's bottled water consumption grew in 2012 by 14% to 54bn litres, representing US$16bn in value terms - a 143% rise since 2008. The market value is forecast to increase by another 73% by 2017. Annual personal consumption is 40 litres, ahead of the Asia Pacific average of 27 litres. However, higher per capita consumption rates in South Korea and Indonesia point to greater potential for growth in those markets, Zenith stated.

In July, Groupe Danone had reported a solid rise in first-half sales at its bottled water division, on the back of "vigorous growth" in Asia.

The growth potential in Indonesia has not been lost on Japanese beverage firm Asahi Group, which announced in November that a joint venture it operates in Indonesia would be acquiring bottled water producer Tirta Bahagia Group in a deal worth IDR2.2tn (US$193m). Under the terms of the deal, Tirta Bahagia, which owns the Club bottled water brand, will transfer control of the 22 companies it owns to two companies, PT Tirta Sukses Perkasa and PT Tirta Makmur Perkasa, both of which are JVs set up by Asahi in September. Tirta Bahagia is the second largest player in the Indonesian bottled water market after Danone. The deal is expected to close in the first quarter of 2014.

Asahi's foray into the growing Indonesian bottled water market is by no means the only deal the category witnessed in 2013, which turned out to be a comparatively busy year on the M&A front.

In May, Nestle Waters said that, having received "expressions of interest", it was considering the sale of three regional water brands in France that formed part of its Société Française des Eaux Régionales (SFER) unit. Separate buyers were said to be targeting the brands, Carola, Plancoët and Saint-Lambert, with Nestle Waters seeking to focus on its national and international brands in France.

The company subsequently announced in July that it had sold the Val St Lambert business to Société des Eaux Minérales d’Ogeu (SEMO), for an undisclosed sum, while Eaux Minérales de Ribeauvillé, which produces the Carola brand, had been sold to Belgian group Spadel.

A month earlier, the office water-cooler supplier Eden Springs was sold by Israeli-based Mayanot Eden to private-equity firm Rhône Capital. According to a Reuters report, Rhône paid EUR70m (US$93m) for the company. Eden CEO Raanan Zilberman said the deal with Rhône Capital was "an opportunity to accelerate the company’s expansion plans". In particular, he said the company hoped to explore new markets, notably in Eastern Europe "where demand for mineral water is growing".

Also attracting interest from the private-equity sector was Atlanta-based DS Waters of America, which was acquired by the Crestview Partners private-equity group in September. DS Waters itself made a string of acquisitions during 2013, before and after the deal with Crestview.

DS Waters president & CEO Tom Harrington said the takeover by Crestview would help the company expand its product and service offering , as well as grow its geographic reach while maintaining its "outstanding customer service in metropolitan markets throughout the US". No financial details were released.

DS Waters itself acquired home and office bottled water delivery business Hillcrest Springs in February, for an undisclosed sum, and in March bought the Houston-based AquaSpring Water Co, also for an undisclosed sum. In April, DS Waters added the Louisiana-based K&K Bottled Water Co to its portfolio in a further acquisition. Once again, the financial details were not revealed.

In November, DS Waters announced that it would become the primary bottling and distribution partner in the US for Primo Water, having also sealed the acquisition of Wurth Bottling Corp's Gold Springs Premium Spring Water Co in November for an undisclosed sum. Also in November, DS Waters bought Florida-based bottled water distributor Jensen Distributors.

However, one merger that did not go ahead in the water sector was that mooted between the British Water Cooler Association (BWCA) and the European Drinking Water Cooler Association (EDWCA). In October, the BWCA said that the proposed merger would not be going ahead after the European body rejected its conditions.

The water category has become used to public relations tussles over the years and this year saw the British Soft Drinks Association (BSDA) take up the fight for its bottled water members in a war of words with the manufacturer of a collapsible bottle designed to store tap water.

Ohyo Ltd had commissioned a consumer survey that concluded that 50% of school pupils preferred tap water, while only 25% favoured bottled water. The research formed part of a campaign by Ohyo to encourage consumers to use tap water rather than buying bottled water.

The head of the BSDA, Gavin Partington, told just-drinks that Ohyo's campaign missed the broader point about the importance of rehydration for children. "Children are more vulnerable to dehydration,” he said, "so whether it’s tap or bottled water they should be encouraged to drink more during their school day. This campaign should not be about which water children should be drinking, but making sure they are drinking enough."

The dispute speaks to the continuing debate over the environmental sustainability of selling bottled water. In January, the town of Concord in Massachusetts introduced a by-law banning the sale of water in PET bottles smaller than one litre (34oz). The move is aimed at reducing waste and encouraging the use of tap water. In 2009, the Australian town of Bundanoon, New South Wales, introduced a ban on all bottled water.

However, notwithstanding the fact that some campaigners see the concept of bottled water in countries with a safe and reliable mains supply of water as environmentally profligate, the sector continues to do well.

Indeed, in April it was reported that UK bottled water volumes in 2012 grew by 3.3% as the industry continued its recovery from a slump in 2006.

Zenith International’s 2013 UK Bottled Water market report also showed that Highland Spring has taken over from Evian as the UK's biggest-selling bottled water brand. Last year, the Scottish brand sold 200m litres in the country, representing an increase of 9% from the previous year. Third biggest UK brand is Buxton, followed by Volvic and Nestlé Pure Life. Zenith forecasts that the UK bottled water market will increase by 15% by 2017.

UK water companies are also having some success in export markets. In March, the UK Food & Drink Federation reported that, while UK water sales to Ireland fell in 2012 by 42.5% to GBP8m, there was strong demand for the country's water brands in the United Arab Emirates, with companies reporting export sales leaping by 45.7% year-on-year to GBP2m. Exports to other non-EU markets rose by 14.7% to GBP12m.

It was also reported in April that per capita consumption of bottled water in the US rose by 5.3% in 2012, as consumers sought healthier beverages. Total US bottled water sales last year increased to 9.67bn gallons (43.96bn litres), an average of 30.8 gallons per person, according to the International Bottled Water Association (IBWA).

Marketing innovation in the water category during 2013 also gives the impression of a sector with a spring in its step. Among the most novel was the "babifier" app launched by Danone in May to support an ad campaign for its Evian brand. Consumers were able to download the smartphone and Facebook app, which uses facial recognition software to turn a picture of themselves into a baby. The photos can then be shared on Facebook and Twitter.

Meanwhile, Evian's "Baby & Me" ad campaign, which followed 2009's "Roller Babies" and 2011's "Baby Inside" campaigns, launched simultaneously in some 14 countries this year.

Nestlé Waters decided to use designs by iconic pop artist Andy Warhol to mark the 150th anniversary of its Perrier brand. Warhol designs featured on bottles and cans of Perrier in all markets. Warhol, who would have been 85 this year, had produced works for Perrier in the 1980s.

While an enduring brand marked its 150th year, an ever-present face in the water sector bid the industry farewell in 2013. It was announced in September that John Harris, head of Nestle Waters, would be retiring after 39 years with the company.