About the author: Tony Pagliaro is marketing manager at Nimbus Water Systems.
As the residential point-of-use (POU) reverse osmosis (RO) industry approaches its 35th anniversary, it is time for a reality check on the industry's progress to date as well as a look ahead to new technologies or improvements that the industry may introduce for POU RO systems in 2003.
A Snapshot of 2002
Despite the red-hot market for new homes in the United States, POU RO sales in 2002 appear, at best flat and, at worst, down by 11 percent or a total of 181,000 in 2002 versus 204,000 in 2001, according to the November 2002 Water Quality Association's (WQA's) Reverse Osmosis Drinking Water Shipments in the United States report. These numbers are reported by 15 of the largest U.S. makers of POU systems for sale only in the U.S. market. Keep in mind these numbers do not include those systems made by POU assemblers or those who engage in the assembly/direct sell to consumers and do not include all of the suppliers in the retail, or "big box," marketplaces. Taking these twists into consideration, we could safely add 100,000 to the 2002 number to date and have a total U.S. unit sales volume of 280,000, which means that this year's sales equal just about 1 percent of the total population of the United States. Another way to look at this is that homebuilders are reporting that 990K new homes were built this year versus the 280,000 POU RO units sold--a total of approximately 28.8 percent market share--if every POU RO sold was sold through the new home market exclusively. That number--29 percent--sounds much better than the 11 percent loss WQA reported. Too bad this number is not useable since a significant share of the RO units sold in 2002 have continued to be sold into existing homes or as replacements.
Take a look at another familiar kitchen appliance: refrigerators. According to Appliance Magazine, total 2002 sales year to date (YTD) on Sept. 20, 2002, stood at 9.3 million versus 8.7 million in 2001 for an increase of 6.80 percent. Have you ever wondered why the refrigerator makers appeared to rapidly add filters to their product lines once one manufacturer did just that? Using just half of the YTD September 2002 numbers (4.65 million refrigerator units sold) those replacement filter sales, based on an average retail selling price per unit of $30, would yield $139.5 million dollars in replacement filter sales in just six months and a total of $279 million if the filters are exchanged at the semiannual rate as recommended by the refrigerator makers. These sales numbers represent only a small part of the potential revenue that these filters can generate. The offering of filtered water has become a standard feature for most refrigerator manufacturers for approximately three years, and now they are on at least 85 percent of the brands offered in the United States. Further, no refrigerator maker charges substantially more for these systems, but rather has invested in increasing the sophistication level of the filter monitoring operations, which of course leads to consumers becoming more mindful of when filter changes are required as well as insuring the recurring revenue for the refrigerator and filter maker. Is there something wrong here? Absolutely not. It is the perfect example of a "win-win" approach to water quality improvement--the consumer gets better tasting water at little or no additional up front cost, the refrigerator maker generates a revenue stream and, even more importantly, maintainS close ties to its customer base for the potentially beneficial marketing programs that target other home appliance improvements and/or programs.
How does POU compare to point-of-entry (POE)? Again, referring to the WQA, RO unit shipments are down 11.4 percent in 2002, while, according to Appliance Magazine's September 2002 shipment numbers, residential water softener sales were up for the year with a total of 738,000 units shipped versus 690,000 in 2001, for an overall improvement of 6.90 percent increase for 2002. It prompts the question, why are POU RO sales decreasing while water softener sales increase, especially since the notion that drinking water is accepted universally as a requirement for good health? While the answer may vary region to region, the bottom line is that while consumers may understand all of the various POU technologies such as filtration, adsorption, distillation or reverse osmosis they simply are not buying RO devices. Perhaps the answer is simpler than we can believe: Consumers remain baffled by the myriad of choices and price points the industry offers and choose to bypass POU RO because they cannot see or understand the value of POU RO ownership.
Looking Ahead
So what can we expect in 2003? The answer appears to be technology. Right now the POU RO industry appears to be embracing new approaches to how the next generation of home RO systems will look, operate and be maintained as a method to stimulate stale sales numbers. Here is a roundup of the products vying for "Most Interesting in 2003." Their technologies are considered the most likely to be presented by POU RO manufacturers at the March 2003 WQA Convention and Trade Show in Las Vegas. (See "WQA PreShow," page 18.)
Lower- and zero-discharge systems. The basic design of a POU RO has been prefilter, membrane product water to storage tank, and then from tank through postfilter and out of the faucet. This system also uses hydraulic feed water shut-off valve, which will stop the system from processing any water when the storage tank is full. This design remains as the most commonly used configuration even today--unchanged for three decades. Recognized as simple, efficient and time-proven, this design has some limitations. The latest twist on this design premise is low- or no-waste POU RO systems.
While low- and no-waste systems have been available for quite a while in some form or another for commercial applications, bringing this concept into the home market has never reached the level as the "traditional" POU RO. In the '70s, Layton Manufacturing had such a system that installed "split-stream" style in the feed water, and the effluent from the membrane was "flushed away" into the home's general use water. The newer version incorporates a pump so that the membrane rinse water from the device is discharged into the hot water distribution piping at one pound per square inch greater than the hot water piping pressure. The manufacturer also makes retrofit kits available, according to the information on the IAPMO website. While the advantages of such a closed-loop system in more arid regions are self-explanatory, a consideration for use of such a system would be that the concentration of organic compounds contained in the membrane effluent water must not exceed the U.S. Environmental Protection Agency (EPA) drinking water requirements. This would translate to a problem if you have POU RO on an application where a contaminant such as nitrate when discharged from the membrane effluent flow exceeds the maximum contaminant level (MCL) as set by EPA.
Also available this year are the "non-pressurized" storage tank systems. These units will have an atmospheric tank or, in some cases, a bag that operates in conjunction with a delivery pump. Such systems offer high quality water, faster storage tank refill times and lower overall recovery rates by reducing the back pressure on the membrane caused by using a pressurized storage tank. Several companies have systems in production or soon will have systems available. Expect to see some creative packaging with these units as they can be arranged around or in box, taking up less space and allowing for some non-traditional installation locations as well as fewer external connections. In addition, these units can offer a solution to the problem of feed water pressure to the multiple locations and/or those applications where the POU RO must supply a product water at a minimum inlet pressure to another water-using appliance such an icemaker.
On-demand. No, not a way to enjoy first-run movies at home, but RO systems that "process water" only when the consumer pushes down on the faucet or when there is demand for the product such as to refill an ice machine. Among the first commercially viable versions of these types of units came from the Swedish company Electrolux. These on-demand systems feature a small commercial-sized element, which is pressurized by a positive displacement pump. These systems have proven that this type of technology rapidly can produce high quantities and maintain high-quality water while operating at a reduced time sequence, thus saving time and water.
Other OEMs offered units utilizing versions of this technology at the 2002 WQA Show in New Orleans, but at least one manufacturer has plans to unveil an on-demand system without a pump. Such a system would provide sufficient product water flow to meet the needs of the average consumer while "operating," or processing tap water into RO permeate, only as long as the source demands. The primary advantages of such an on-demand system operating at line pressure would be the dual reduction of both cost because a pump is not required as well as energy consumption from not having to run a high-pressure booster pump and motor while still offering drinking water to several locations within a home. Still to be determined is the flow and pressure such systems would deliver at the faucet.
Proprietary product models will continue to grow. This unit features special connection on the replacement filters and membrane elements that only the original equipment manufacturer's (OEM's) replacements will fit. These types of units are not new, having been available since the mid-1980s. It has become clear that such units offer the user and seller distinct advantages. The consumer will have access to easy-to-change and reliable filters that he may choose to service on his own. This concept of controllable replacement is important. Right now, systems with standard component filters can be fitted with any number of replacement cartridges including those not recommended by the OEM. OEMs have concerns that systems that use these standard components place the OEM at risk if the end user uses inferior or unreliable cartridges. Another emerging trend is labor. Having easy-to-use, "no-brainer" filter exchanges increases the available labor pool by opening the door for less technical personnel. Finally, there is no denying that the revenue stream from a dedicated filter base is very desirable for the dealer and the OEMs. It is said that rarely, if ever, has a propriety system maker gone out of business or turned its back on those loyal system users.
Membrane element selection options will grow. While we see the flux, or gallon per day process capacities, of standard residential membrane elements grow to completely unbelievable ranges (up to 150 gallons per day), expect to see the availability of "designer total dissolved solids (TDS) rejection" elements. These elements can be designed with selective TDS rejection and provide a customer's desired overall TDS rejection quality to match the feed water quality needs of a specialty application.
Challenges in 2003
With RO membrane element pricing at an all time low, why has the industry seemingly run out of steam? There are no easy answers. The industry must look at the facts and then determine for itself--What is the future here? But one thing is clear: while the industry can and does rise to the technological challenges of POU RO improvement, it has failed to reach the consumer with a succinct and clear message about the value of RO POU drinking water systems.
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