The largest publicly traded distributor of drinking water in the United States, American Water Works provides water services for around 15 million people across 46 states.

Beijing Enterprises Water Group Limited operates mainly in the water sector. It provides wastewater services, construction and operation of wastewater treatment plants.

The global leader in servomotors and valves for heating, ventilation and air conditioning, Belimo also produces valves for potable water (see the December 2020 issue of Swissquote Magazine).

A specialist in treating water with ultraviolet (UV-C) rays, French company Bio-UV saw its revenue skyrocket (+61%) in 2020, partly due to the pandemic – its products can eradicate the SARS-CoV-2 virus (see November 2020 issue of Swissquote Magazine).

Korean firm Coway develops and manufactures water and air purification systems for individual customers.

"When we talk about the water market, we often think about the quantity of water available, shortages and droughts. But water quality is just as important," explains Arnaud Bisschop, co-manager of the Thematics Water Fund. According to the World Health Organization (WHO), two million people die each year worldwide from diarrhoeal diseases caused by drinking unsafe water.

To improve the situation, we obviously need to develop efficient treatment infrastructures, but we also need to test the water. Of the companies that provide this type of service, Eurofins Scientific is one of the best success stories on the Paris stock exchange. Founded in Nantes in 1987, the company has become a true behemoth with more than 50,000 employees working at 800 labs in over 50 different countries.

Specialising in bioanalysis, the company performs more than 450 million tests each year in the healthcare, agribusiness and environmental sectors. On the environmental front, Eurofins offers water network managers the opportunity to test the quality and potability of the water supplied to consumers. Micropollutants, pesticides, traces of medications and other regulated hazardous substances can thus be quantified. Eurofins also tests bathing water.

Most analysts recommend buying the share, which has already shot up nearly 78% since 1 January 2020. Why the sudden boom? Eurofins, which has done very well during the pandemic, is on track for a record year in 2021. The group has notably developed a method for detecting SARS-CoV-2 in wastewater and clean water. Its pharmaceutical division has also put out coronavirus blood tests, home testing kits and rapid PCR tests.

While Taiwan is facing its worst drought in over 50 years, the semiconductor industry is thirsty. Most people don’t realise it, but it takes a lot of water to manufacture electronic chips. The water consumption of Taiwan Semiconductor Manufacturing Company (TSMC) alone, the world’s largest semiconductor foundry (see Swissquote Magazine, July 2020), is 156,000 tonnes per day. Since February, Apple’s chip supplier has been paying dearly to have water delivered by tanker. The company, along with other industry players such as Vanguard International Semiconductor Corporation and United Microelectronics Corp (UMC), is expected to have to continue doing so until the end of the dry season in May.

"Just like in pharmaceuticals, the semiconductor industry uses ultrapure water," says Arnaud Bisschop, co-manager of the Thematics Water Fund. A handful of companies, including Evoqua, Pentair, Veolia, Suez and Kurita Water, build the machines that remove all mineral salts and other chemical compounds from water. Evoqua Water Technologies stands out in that it generates 100% of its revenues in the water sector. Selling its disinfection, treatment and filtration systems, the US firm has customers in a wide range of sectors on top of micro­electronics, including healthcare, manufacturing, maritime shipping and construction. Most analysts recommend buying Evoqua Water shares.

Leading the sanitary product market, Geberit develops products such as more water-efficient toilets. Most analysts recommend holding the share, which has already climbed 10% since January 2020.

US tech company Itron develops metering technology, particularly smart meters that measure water consumption and sensors that detect leaks in water systems.

Specialising in water treatment solutions, Kurita Water is mainly active in providing ultrapure water used to manufacture semiconductors.

The leader in the Chinese bottled water market with a 21% market share in 2019, Nongfu Spring had a remarkable IPO on the Hong Kong exchange in September 2020.

How is it possible that coffee from Starbucks tastes exactly the same in New York, ­Shanghai and Zurich? It’s partly due to the water. To ensure that the taste of its products is not affected by tap water quality, Starbucks has installed water filtration systems developed by US-based company Pentair across all of its stores. According to the manufacturer, these filtration machines remove 95% of dissolved solids in tap water and reduce contaminants to obtain perfect tasting tea and coffee.

In addition to corporate clients such as ­Starbucks, Pentair also offers products that can be fitted directly to home taps to filter tap water – a booming industry, particularly in the United States since the Flint, Michigan water crisis, when tens of thousands of residents were poisoned by lead in their tap water. "Water quality has become a critical issue," says Arnaud Bisschop, co-manager of the fund Thematics Water. "People are increasingly concerned because they realize that the water they consume has an impact on their health, and in some countries, they don’t trust the quality of their tap water. Using a home filtration system is an additional layer of safety."

This guarantees a bright future for Pentair, which is also active in other industries such as water pumps, swimming pool and spa equipment, and irrigation systems. Most analysts recommend holding shares, which have risen by 38% since 1 January 2020.

Canadian firm Primo Water installs and operates water fountains for businesses.

Specialising in water transport, Sabesp supplies water to 28.5 million people in 375 towns and cities in the state of São Paulo. The company’s poor management was singled out during the 2014 water shortage.

World leader in pumping, mixing and separation technologies for all types of fluids, the Swiss company Sulzer has bolstered its position in water treatment by acquiring the Swedish company Nordic Water in January 2021 for 128 million Swiss francs.

They have buried the hatchet. On Monday 12 April, Veolia and Suez announced that they had struck a tentative merger deal, putting an end to an eight-month financial, media and legal battle. The merger is set to create a "world champion for the ecological transition", with revenue of approximately €37 billion, according to a Veolia press release. There are two main business sectors behind the idea of the ecological transition: waste and water.

Both leaders in sanitation and water distribution, Veolia and Suez together hold just over 10% of the global market. This relatively small percentage can be attributed to the fact that companies operating in drinking water distribution or wastewater treatment tend to be local operators that enjoy something of a monopoly in their sector, such as Savern Trent in the UK, Sabesp in Brazil and American Water Works in the US. The new megagroup will have a lead on the competition, however, because the world’s No. 3 operator, China’s Beijing Enterprises Water Group, currently earns just one-fourth the amount of revenue generated by Veolia in the water sector.

To avoid concentrating too much influence, the new group will have to sell off certain subsidiaries. In addition to 100% of Suez in France (waste and water), the municipal water operations in Italy, Czech Republic, Australia and India, as well as annual revenue of €300 million in China and €700 million in Africa, will be spun off to form a "new Suez" with revenue of ­ €6.9 billion.

Suez and Veolia shares took off with the announcement of the merger, gaining 7.5% and 9%, respectively. The final deal should be concluded by 14 May.

In 2014, Radio Télévision Suisse (RTS) had calculated that 4,000 litres of water were leaking from Swiss pipes every second, due to the country’s infrastructure being in need of repair. As a percentage, the leaks amount to 13.9% of the drinking water consumed in Switzerland every year. That may sound like a lot, but our country is actually faring better than our European neighbours. According to a 2019 report from the economic research company Bipe, the leakage rate in France is 20%, 21% in the United Kingdom, 27% in Belgium and 38% in Italy.

How can such a waste of water be explained, considering what a precious resource it is? "Replacing pipes, which are sometimes 100 years old in Western countries, is expensive, because the network is so vast and buried in the ground," says Arnaud Bisschop, co-manager of the Thematics Water Fund. "To reduce costs, water management organisations have long taken advantage of road works to replace their water pipes, without any real consideration for their condition. Now, smart sensors and connected infrastructure can intervene only if necessary. There is a lot of innovation in the sector, referred to as ‘digital water’."

In 2017, water expert Xylem acquired a high-potential digital water firm, Pure Technologies, which offers a solution called SmartBall. The device flows through pipes to accurately locate leaks with its built-in sensors. In October 2020, the French company Saur used the SmartBall to inspect part of its water network. The company’s findings revealed that the tool could detect leaks the size of a pinhead, with location accuracy of one metre. This solution can considerably optimise pipe maintenance.

Xylem is active throughout the water cycle – from water extraction to wastewater treatment – supplying pumps, treatment and analysis equipment and valves. And it is expected to benefit from US President Joe Biden’s $3 trillion infrastructure investment plan. The company forecasts revenues of between $5.16 billion and $5.26 billion in 2021, up 3% to 5% from 2020. Most analysts recommend holding shares, which have risen 35% since 1 January 2020.