Determinants of Bottled Water Prices in Saudi Arabia: An Application of the Hedonic Price Model

This study investigates the determinants of bottled water prices in Saudi Arabia using a hedonic price model, analyzing data collected from nine retail stores in Al-Ahsa Governorate. The analysis of 499 observations reveals that physical attributes, such as bottle size, packaging material (glass and aluminum), non-standard caps, and packaging type (multipack and box), significantly influence the price. Specifically, larger bottles, multipacks, and boxes are associated with lower per-liter prices, while glass and aluminum packaging and non-standard caps command higher prices. Chemical characteristics of bottled water, including total dissolved solids (TDS), sodium, and pH, have a minimal impact, and in some cases, they exhibit a negative influence on prices. Crucially, market dynamics, including the source of origin (imported vs. domestic) and the type of retail store, impact prices significantly. Imported bottled water is priced higher than domestically produced varieties, while products sold in hypermarkets are cheaper than those in other retail stores. Moreover, when analyzing domestic and imported bottled water separately, physical characteristics lose their statistical significance for imported products, and chemical characteristics become irrelevant for domestically produced bottled water. The study highlights the complex interplay of product characteristics and market factors shaping bottled water prices, providing insights for both the bottled water industry and policymakers.