By Karen R. Smith
Introduction
A majority of water treatment professionals, finding significant cross-selling opportunities, enter the bottled water business. With access to customers in both the home and the workplace, many make a smooth transition and add healthy, tasty bottled water to their offerings with great success. At the outset it is common to engage private label bottlers, and that can be both a permanent and profitable solution. Deciding if (and when) to bring bottling in-house by setting up your own plant was the basis of a conversation with Bruce Kucera of Norland International, Inc.
Decision guidelines
While every situation is unique, some general criteria apply when considering adding a bottled water plant. Local overhead, of course, will consist of everything from business fees and real estate taxes to employment costs and the like. How those costs impact an individual dealership will vary and can make or break any business expansion.
Bottled water sales in and of themselves can be used as benchmark. Even fairly small operators will find their bottled water sales growing. “When they reach a minimum of even 200 bottles a day, dealers will find that they can install a bottling plant and make a profit,” Kucera said.
Do the math
That number is based on hard data. Nationally, a bottle of water purchased from a private labeler for $2.75 can be produced in-house for about 50 cents if you install your own bottling plant. A small plant, Kucera explained, will produce, on average, 100,000 bottles a year.
To see this calculation in real terms, go back to the example at the outset. A small dealer sells 200 bottles per day during a five-day business week for a total of 1,000 bottles of water sold every week. Over the course of a year those 52,000 bottles cost $143,000 purchased at a private label bottler.
You’ll need to do more than multiply the cost per bottle. A bottling plant will need space, but far less than you might think. A medium-sized plant can be accommodated in an area of 30×50 feet; but a small plant can be configured in as little as 800 square feet.
“The rural market is particularly well-suited to making a bottling plant profitable. Many dealers in those areas already have the floorspace to add a plant without any additional facility expenses, and they find themselves making a profit fairly immediately,” Kucera noted, adding that standard power supply of 150 amps and regular tap water is already a given at most establishments.
What to buy
Kucera’s strongest advice to those entering this market is to put together a complete plant at the outset, rather than try to scrimp at the beginning and fill in equipment over time. “With total equipment packages retailing for as little as $25K with very favorable financing, it’s just good economic sense to get what you need to do it efficiently from the get-go,” he explained.
Washing, filling, ozonation and capping capabilities are what most dealers buy (as they already possess water treatment and conditioning systems of their own). Look for NSF and/or UL approved and certified equipment, and work out the return on investment (ROI) for your particular business by knowing all the costs first. Your insurance coverage, for example, may become more expensive. Talk with your broker about adding product liability protection to your policy.
Your local equipment dealer will point you in the right direction for local requirements, but in general you will want to contact the health department and the department of agriculture in your area to find out what the regional standards and regulations are governing bottling plants. If you will be using municipal water there is usually very little in the way of regulatory criteria that apply.
Conclusion
After 14 years in the business, Kucera is happy to report that of the 800 people he has personally helped get into the bottling plant business, over 80 percent have found it a consistent avenue for growth and prosperity. “Reputable equipment manufacturers and dealers will help you craft a plant that enables you to succeed,” he summed up.