A company is the leading company in the premium bottled water industry. Its growth is mainly driven by the negative health publicity on carbonated soft drinks and other sweetened beverages. Extensive inventory and distribution infrastructure is needed to compete in this industry. Its main packaging materials can be sourced either locally or easily imported from overseas. With its 60% market share, the company is able to influence prices and competitive activity. The second biggest competitor holds 20% market share, while the remaining 20% is shared by many small companies. Supermarkets and other grocery retailers are the largest customer segment, accounting for approximately 45% of sales. The supermarkets and grocery retailers are driving volume growth and are undergoing consolidation into larger supermarket conglomerates. Using Porter's 5

Forces, which one of the following statements best reflects the industry environment?

A) Low profitability but can increase due to increasing power of buyers.

B) Low profitability due to low threat of substitutes and new entrants.

C) High profitability but can decrease due to increasing power of buyers.

D) High profitability due to high power of buyers and sellers.