Dubai - The price of five-gallon water bottles for domestic consumption in the UAE is slated to increase by Dh1, following a decision by the five-gallon water companies association, recently.
The price hike was decided at a meeting attended by the 42 five-gallon mineral bottle water companies in Dubai in May this year. While a number of large companies such as Oasis and Nestle have already implemented the hike, several small and medium-sized companies are awaiting the decision by Zulal Water Company, owned by Sharjah Electricity and Water Authority (Sewa).
"As soon as Zulal gets a clearance from the Sharjah government to hike the price of its five-gallon water bottle from Dh5 to Dh6, smaller companies will toe the line," a source from a five-gallon water bottle company said.
"Zulal's approval on price hike from the local authorities is expected soon," the source said, disclosing, "No sooner Zulal announces the hike, other water companies in Dubai and Northern Emirates will follow suit. Zulal, being a government-owned company is currently supplying five-gallon bottle to homes for Dh5, while retail outlets receive it for Dh4.50. Zulal has a major market share in Sharjah, hence smaller companies cannot hike up their price for the fear of facing stiff competition from Zulal in terms of price."
Sajjad Ahmad Chowdhary, General Manager of Desert Spring and an active member of the five-gallon water companies association, said that the price hike across all big and small companies will be effective soon. The big companies have already hiked their price like Oasis supplies five-gallon water bottle to consumers for Dh7, while Nestle bottle costs Dh8. But the small and medium-sized companies will hike their price to Dh6 only following stiff competition from 32 medium and small-sized companies in the UAE.
Chowdhary attributed the proposed hike to increasing fuel cost, and rise in cost of chemicals used in bottling plants.
"The UAE is reeling under increasing rents, salary hike of employees, rise in electricity and water costs and other infrastructural costs which have forced manufacturers to hike the price of five-gallon water bottles," he said, adding: "But the hike will not be imposed for five-gallon bottles supplied to commercial establishments since the volume of consumption is high."
He pointed out that Dh1 hike is not too much, and the domestic consumer in general should not face much problem. He said a small family of four in the UAE spends an average of Dh80 to Dh100 a month on bottled water for domestic use. The marginal hike by Dh1 will not upset their budget, he added.
An official of Oasis water announced that the five-gallon water bottle costs Dh7, but some consumers have enjoyed a special rate of Dh5 for a while. "Now from August 1, we have raised the price for these special customers from Dh5 to Dh6. While retail outlets are supplied bottles for Dh6 who sell it to consumers for Dh7 keeping a profit margin of Dh1," he said.
The five-gallon water companies association formed recently is hoping to bring all big and small companies in the UAE approved by the municipality on a common platform and present their grievances to the local authorities. The association is yet to get its approval from the local municipalities.
By Meraj Rizvi
© Khaleej Times 2005
