By Bruce Kucera

Summary: Whether you’re getting into the bottled water business or expanding your current product offering, choices have to be made. If you’re new to it, you’ll need a basic introduction to water treatment technologies. If already familiar with these, perhaps a list of alternatives available to you as a distributor would benefit your business—not to mention your bottom line.

The boom in the bottled water industry has resulted in reliable supplies of clean, fresh water for millions of thirsty people around the world. It has also meant fantastic profits for the pioneering entrepreneurs who are willing to capture this explosive market.

Sales of bottled water today can be traced to two separate but related categories of demand. The demand for safe drinking water and for refreshment beverage alternatives.

Meeting the demand
During the last several decades, the demand for safe drinking water has grown in world markets. In many regions of the world, well-founded concerns over the contamination of groundwater sources and surface reservoirs have created a base of consumer distrust of tap water quality. In all markets today, whether established or emerging, the major factor driving bottled water demand is found not so much in the curative or mineral attributes of bottled water, but in the demand for good-tasting and safe drinking water. This translates into a much stronger market incentive than in the past. Because of public distrust and documented source contamination incidences, significant market potential exists in the industrial regions of the world as well as developing countries.

In the United States, the bottled water industry has generally enjoyed double-digit growth over the past two decades, fueled in large part by those products catering to the demand for tap water alternatives.

Europe, although always strong in its natural mineral water tradition, is just beginning to witness growth of the 3-to-5 gallon water delivery business. Demand for quality water in virtually all other areas of the world is exploding even in areas of low or limited amounts of disposable income.

Selecting the alternative
Consumers are turning to bottled water as a refreshment beverage alternative, fueled by increasing concern about health and fitness and greater consumer education abut the ingredients in food and beverages—as well as awareness over water quality issues in general. The bottled water industry has been the fastest growing segment of the beverage industry in many world markets for nearly two decades.

Single-serve bottles—normally in PET (or polyethylene terephthalate) containers—are widely available and convenient, making it easy for consumers to buy bottled water. These are popular in 0.5-liter, 1.0-liter and 1.5-liter individual packages.

This growing popularity is fostered in part because consumers’ tastes are changing. With more active, athletic and leisure-but-on-the-go lifestyles, they want an alternative to sugar-laden soft drinks as a thirst quencher. Bottled water producers are working to create consumer perceptions about their products with emphasis on long-term brand building, rather than simply supplying a commodity.

As part of brand-building efforts, bottlers are adopting different strategies. Some focus their brand’s position on the water source (especially in the case of natural spring or mineral water companies), while others focus on quality—highlighting the steps and technologies used to produce their products from the source to the bottle.

Water treatment techniques
Distillation and reverse osmosis (RO) are too popular technologies utilized to produce high-quality purified water for a bottled water operation. Both are generally well recognized in the water treatment industry. Other technologies including ultraviolet light (UV), ultrafiltration (UF) and filtration using a variety of media are also utilized in some bottled water operations. Ozonation has been popular in the past as well as both an oxidant and disinfectant. Each technology can be used singularly or you can combine technologies in order to supply several different markets.

Distillation
The use of distillation as a means of purifying water has been used for centuries. By definition, distilled water is water that has been purified using nature’s evaporation and condensation cycle. As water boils, steam rises; in distillation, the steam vapor is condensed and turned back into water droplets. In essence, this method removes the water from the impurities. Some companies utilized very large, energy-efficient distillation equipment, but medium-scale, energy-efficient equipment was extremely limited and not widely used in small- to medium-sized bottled water plants until fairly recently.

At least two companies today offer medium-sized vapor compression (VC) distillation equipment that provides reliable and great-tasting distilled water on a cost-effective basis. These VC distillation systems allow the production of distilled water for a medium- to large-sized operator for approximately 1/30th of the cost of standard distillation systems. Today’s systems are not only energy efficient, but extremely reliable as well.

Reverse osmosis
Another popular means of treating your feed water is through RO. By definition, RO is a reversal of the natural phenomenon of osmosis brought about by the application of hydraulic pressure greater than the osmotic pressure in water containing dissolved solids. This pressure causes the water molecules to flow through a specially designed semi-permeable membrane and away from the dissolved substances. This method is highly accepted as it produces high-quality, low-cost drinking water. The bottled water systems operate by automatic controls and are highly reliable.

Ozone
Most bottled water plants will utilize ozone to maintain the freshness of the bottled water and to ensure the water going into the bottle remains bacteria free. Ozone is desirable because it works well without leaving a residual taste as you may have if chlorine were to be used.

Ozone is an unstable, colorless gas and is a powerful oxidizer and a potent germicide. It has a much higher disinfection potential than other disinfectants such as chlorine. Chemically, ozone has three atoms of oxygen and is sometimes referred to as “supercharged oxygen.” It quickly reverts back to oxygen after a matter of minutes. Ozone is produced within the bottled water facility and injected into the water before being delivered to the filling apparatus.

Conclusion
As the bottled water industry worldwide moves into the 21st century, the business will be principally driven by the need for clean and safe drinking water and the consumer’s desire for a beverage alternative. These factors should provide an opportunity for growth well into the future.

About the author
Bruce Kucera is vice president of Norland International Inc., a company that supplies complete bottled water operations to companies around the world. Kucera first became interested in bottled water after playing basketball professionally in Australia. Returning to the United States, he saw the rapid growth of companies in this industry and decided to help others take advantage of this dynamic opportunity. He can be reached at (402) 441-3737, (402) 441-3736 (fax) or email: bk@norlandintl.com.

It’s All in the Packaging

There are three popular approaches to the bottled water business.

Each of these three different types of bottling plants has various options as far as equipment is concerned. For our purposes, we’ll make a distinction between these approaches in the bottling business.

The 3, 5 and 6 gallon, large bottle, office- and home-delivery approach: This approach is a very fundamental and sound approach to the bottled water business. Your profits are derived from bottled water sales and rentals of bottled water coolers. This option allows for high profit margins and less volatile account activity than the small-bottle option. Essentially, a customer base is established through direct sales or media advertising to sell the service of home or office delivery of bottled water. In most cases, a bottled water cooler is placed into each customer’s location, and bi-weekly or monthly service calls are made on those customers to replenish deleted supplies of water for continued sales. Typically, a routing system is designed to deliver, by truck, to contracted customers within a tight geographic region.

The 500 mL to 1 gallon retail market approach: This approach targets retail-distributing networks for sales and marketing of smaller packaged water products. Generally, retail outlets such as grocery or warehouse stores, convenience stores, food chains, gas stations and other consumer outlet locations are prime areas for distribution of small packaged bottled water. Typically, pallets or cases of water are supplied to retail outlets for consumer purchasing. Although individual bottle profits may be low, volume sales can produce tremendous revenues in certain areas. Local companies producing water have a big advantage over nationwide marketers because water is extremely heavy, making it expensive and difficult to ship long distances. Producing bottled water locally greatly reduces shipping costs, which would otherwise affect the profitability of small package products.

The best of both worlds—large and small bottle approach: Perhaps the best approach to take (if your finances can afford both) is to produce both large and small bottles of water. There are several advantages with this approach. First, you’re able to capture both retail and delivery opportunities. Second, the production and distribution of small bottles can also help promote your large bottle business. By placing your small bottle line with local convenience or grocery stores, your name reaches a larger market. This can help create brand awareness not necessarily associated with large bottles. Finally, in most cases, the production of both types of bottles helps to maximize the use of your equipment. It makes better sense to keep your equipment in full production than to let it sit idle. By approaching these two markets, you’ll keep your staff busy and equipment profitable.

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