Instant Water Heater Market Size, Share & Trends Analysis Report By Type (Gas Instant Water Heaters, Electric Instant Water Heaters), By Application (Commercial, Residential, Industrial), By Distribution Channel (Supermarkets/Hypermarkets, Specialty Stores, Convenience Stores, Online Stores) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2022-2030

Market Overview

The global instant water heater market size was worth USD 17,226 million in 2021. It is estimated to be valued at USD 31,251 million by 2030, growing at a CAGR of 7.73% during the forecast period (2022–2030).

A water heater is a heating device commonly found in a commercial, residential, or industrial setup. The device utilizes temperature exchangers and valves to transform electrical power input into heated water. While these devices' product line is vast and accommodates differing efficiency rates, the consumers' purchase remains conditional on wide-ranging setup requirements. Companies with vested interests in the water heater space were highly rewarded in 2019, a year that accounted for exceptionally high sales shares. As governments prime markets for manufacturing devices that accrue higher energy efficiency standards, Straits foresees new growth opportunities for sustainable, cost-effective solutions.

Market Dynamics

Market Driving Factors

Increased Demand from Rural Areas to Boost Market Progress

The demand for instant water heaters is rising in rural geographies undergoing rapid, robust infrastructural development. Additionally, these regions project an uptick in population size. While our focus areas have transformed into semi-urban areas, the decision-making heuristic among consumers shows little change. Target groups are more likely to purchase energy-efficient heaters to reduce utility bills. Leading players such as A.O. Smith Corporation, Ariston Thermo S.P.A, and Havells India Ltd, amongst others, are adopting new technologies to serve this thought process of customers. The combined effect of these developments will fuel global market growth for instant water heaters.

Market Restraining Factors

High Electricity Costs to Restrict Market Growth

Electricity prices are an essential component of costs that need to be settled by households or commercial enterprises. These price factors include the cost of building and operating electricity grids and power plants. Variations in fuel, maintenance, operation, transmission, and distribution costs have contributed to the overall surge in electricity prices. While demand for energy and electricity is based on price and supply economics, the broad stroke is that electricity prices are higher for commercial and residential consumers than for industrial units. This general trend is two-fold: First, electricity distribution costs remain high for residential and commercial areas. Second, distribution to industrial consumers is based on wholesale prices, contrary to the retail format. Other factors such as availability of power plants, price-cap regulation, and locale carry adverse spillover effects for the growth of the instant water heater market worldwide.

Key Market Opportunities

Enormous Potential in Emerging Economies to Boost Market Opportunities

The markets for instant water heaters remain untapped in the developed world. Although non-OECD member countries make up more than 80% of the global population, their purchase levels for heaters fairs out to be low compared with levels of the member countries. Owing to sustainable economic growth in recent years, the sales outlook in Asia-Pacific and LAMEA remains positive for instant water heaters. Future sales depend on calibrating hard-sell and soft-sell strategies and allowing customers to identify new features from marketing campaigns. Water-efficient technology that produces tap and saltwater regeneration cycles is a strong selling point for companies aspiring to expand and build their presence in Asia-Pacific and LAMEA.

Straits estimates that 60% of the global middle-class will belong to emerging economies in the developing world. For example, from 2000 to 2012, more than 57 million households in China could pass the USD 10,000 average income mark. By 2020, another 173 million households have moved beyond this benchmark. With rising average household incomes, the middle-class population will be in a favorable position to demand more units of instant water heaters. 

Regional Analysis

By region, the global instant water heater market is segmented across North America, Europe, Asia-Pacific, and LAMEA. 

North America Holds Dominion over Others

North America acquires the leading market position and is expected to grow at a CAGR of 7.23% over the forecast period.

Europe commands the second-largest market share and is expected to reach USD 6,769 million by 2030, growing at a CAGR of 6.43%. This market is investigated in the United Kingdom, France, the Netherlands, Germany, Turkey, and the rest of Europe. Due to their exceptional efficiency, smart technologies, and designs, water heaters are gaining traction in Europe. In 2019, the United Kingdom was the leading contributor in revenue terms.

Asia-Pacific is the fastest-growing region. This is attributed to the ongoing growth of commercial infrastructure due to economic development prospects, especially in developing countries. The commercial landscape will take charge through smart city initiatives and the construction of zero-emission buildings. These initiatives in infrastructure investment will help the instant water heater market grow faster. The instant water heater market in APAC is very competitive. The leading players include Haier Electronics Group Co., Ltd, Bajaj Electricals Limited, Noritz Corp, Rinnai Corporation, and Venus Home Appliances (P) Ltd. To attract more customers, leading brands are working on expanding their retail channels into e-commerce. 

Segmental Analysis

The global instant water heater market is segmented across types, end-users, and regions.

On the Basis of Type

By type, the global instant water heater market is segmented into Gas Instant Water Heaters and Electric Instant Water Heaters.

The Gas Instant Water Heaters segment accounts for the largest market share and is expected to grow at a CAGR of 7.23% over the forecast period.

The Electric Instant Water Heaters segment is the fastest growing.

On the Basis of End User

By end-user, the global instant water heater market is segmented across Industrial and Residential.

The Residential segment accounts for the largest market share and is expected to grow at a CAGR of 8.43% over the forecast period. Residential water heaters offer smart technology, sleek designs, and cost-effectiveness. Rapid urbanization, rising disposable income, and innovative company marketing strategies contribute to the growth of the residential water heater market. Several organizations offer installation services, after-sales services, and free demos to attract users in the residential segment and gain a competitive advantage in the market. The rise in residential developments also propels this segment.

The Industrial segment is growing swiftly. This is attributable to the growth of various industries in both emerging and established nations. Countries like China, India, and Japan are quickly growing, resulting in increased demand for industrial water heaters. Industries prefer solar water heaters because they generate energy from a natural source and are particularly energy-efficient and cost-effective. 

Impact of covid-19

COVID-19 has positive and negative market consequences, as carbon emissions have decreased globally due to the lockout. COVID-19's reduction in emissions is a short-term benefit. Still, when industries and enterprises attempt to recoup some of their financial losses in the first quarter of the year, carbon emissions will rise dramatically. COVID-19 had a negative impact on global recycling efforts. Countries, notably the United States, have halted or decreased recycling programs to focus on collecting additional domestic waste or because services have been disrupted by the virus.

Also, with industries slowly returning to normalcy following the COVID-19 outbreak, this shift in workplace health and safety is expected to increase due to mandatory social distancing and continuous personal care through sanitization to eliminate even the tiniest possibility of COVID-19 spread. COVID-19 has impacted various companies' revenues, and if the lockdown is lifted, companies will turn their attention to operations to make up for their losses.

Recent Developments

• May 2022 – The US Environmental Protection Agency and the US Department of Energy collectively gave A. O. Smith the 2022 ENERGY STARⓇ Sustainable Excellence Award. The company wins the award for the fourth consecutive year and devotes this recognition to its commitment to energy-efficient solutions.

• March 2022 – Ferroli S.P.A. announced a new product line, ‘Presto,’ for instant boiling water. The price points for ‘Presto’ are sensitive, promoting stiff competition in European markets. The firms’ new products raise the convenience bar with new features that avoid drainage and limit the usage of electricity units.