By Philip Stadnyk
The bottled water market has been changing over the last few years and it’s time for manufacturers to change their market. Presently, there are some retail centers that sell bottled water; they are usually supplied by bottled water companies, who also deliver and wholesale the water. Besides the obvious conflicts, the problems with this concept are high cost, poor use of those full and empty bottles lying around.
Water vending machines have long been readily available in most US states (especially in the sunbelt areas from Florida to California) as well as in other countries. People in Australia, New Zealand, Guam, the Philippines and Taiwan have readily accepted the concept of water vending. Many companies (large and small) have concentrated their efforts on water vending machine operation and made this promising market their primary business. Many operators start small with one or two machines and slowly grow from a home business to a lucrative full-time vending operation. Some operators have become successful enough to be listed on the stock exchange. Glacier Water Services, Inc. of Vista, Calif. is one notable example of this success.
There are now several water vending machine manufacturers across the world; each claims certain benefits and advantages. Some machines are designed for basic filtration only, while better-quality machines incorporate pretreatment, reverse osmosis (RO) and ultraviolet (UV) systems. Machines are made of steel ($) or fiberglass ($$), which is more corrosion-resistant and has a longer lifespan. Components including coin acceptors, pumps and solenoids, are available different quality levels as well. Price is determined by quality, not quantity; but as the old saying goes ‘you get what you pay for’.
A major misconception should be avoided right from the beginning: water vending machines are in no way comparable to any other type of vending machines. Water vending machines are unique as they are connected to a water supply (usually municipally treated water), which automatically purifies the incoming water. They are also different, as they are equipped with a lot of expensive, sophisticated components; standard product vending machines are considerably less expensive; they simply dispense a pre-packaged item.
One important fact to remember is when you are purifying water to sell to the public, quality (of equipment and of water produced) is vital to ensure your success. In the past, manufacturers of water vending machines tried to improve their products by adding all kinds of different electronic gadgets and features, from remote control to computerization to wireless access. Production was streamlined to reduce space and new materials and new, modern-looking designs were used. Everyone tried to make their units more interesting to differentiate themselves from other manufacturers. The result turned out to be that the more options that are incorporated into the machine simply, the more maintenance and more upkeep costs and possibly more downtime, too.
A win-win opportunity
The majority of bottled water companies will usually sell five gallons/18.9 liters of water from $5 – $9. The approximate cost to produce five gallons/18.9 liters of RO water is only 10 cents, which covers the cost of water, wastewater and electricity. These companies have already completed product marketing throughout the world, insuring product awareness is already in place, which means lower start up costs in advertising.
The benefits of this type of business are numerous: instant cash flow; no personal selling involved and no overhead, rent, utilities or office space; a year-round, all cash business without seasonal fluctuation. Additionally, it is a very good, family-oriented business, with variable hours and greater flexibility in scheduling. One exceptional marketing concept is to (initially) sell five gallons/18.9 liters of water for only 99 cents as an introductory offer. In convenience store settings, this attracts new customers and tends to enhance sales of fuel and grocery items. Clear Creek Water Company of Farmington (New Mexico) added block and shaved ice products that became a huge success. (See WC&P September 2006 Dealer Profile.)
Customers who bring their own bottles and containers to retail stores can now purchase high quality water at a fraction of the cost. In some cases, consumers could be saving up to 80 percent. The storeowner, where the machine is installed makes his usual commission for providing a place for installation and makes the same profit margin as on other products. The addition of replacement bottle sales to the product offering stimulates more profit margin.
As more consumers become concerned about the quality and high cost of bottled water, enormous potential exists for water vending systems that produce and dispense RO purified water. It’s an opportunity that is enjoying renewed favor at present and will continue to generate both a quality product and a substantial revenue stream for the foreseeable future.
About the author and company
Philip Stadnyk is President and CEO of The Water Clinic, one of Canada’s largest manufacturers of rural water purification systems and manufacturer of PUREAQUA self-serve bottled water vending systems. He manages the firm’s dealership and wholesale divisions in British Columbia, Ontario, Quebec and Atlantic Canada. The company exports its products to the US, Mexico, the European Union and the Middle East through its dealership network. Contact him at (800) 664-2561 or email [email protected].