By Tim Sewell
This is a brief overview of the growing bottle-free cooler market. There are many factors to consider and much to learn if your business is not aggressively selling or renting bottle-free. According to one survey, there are still over four million bottled water coolers in North America—many just waiting to be converted. Make sure your business is ready to capitalize on the trend.
This market was once called bottle-less by many, but someone had the business savvy to trademark the phrase and so now, rather than pay a royalty, many in the business are adopting alternative terminology. But while the name has changed, make no mistake: the bottle-free cooler market is steadily growing as profits of bottle-delivery service decline. This reality has caused significant increases in delivery-service prices. Climbing costs, along with some compelling marketing, have drawn an ever-increasing percentage of users to bottle-free coolers. Industry sources estimate that 18 percent of the market was bottle-free in 2009, with a projected annual growth rate between 12 and 15 percent. Most of this growth is directly at the expense of the bottled cooler market.
As is often the case in North American water and plumbing markets, Europe is leading the trend. Europe has much higher adoption rates for bottle-free technology, due to stricter codes and better enforcement when it comes to many water issues, including heterotrophic plate count (HPC) levels in water dispensers and legislated cooler sanitation requirements. The market there has also grown more rapidly due to higher fuel costs and more expenses associated with bottle delivery. The North American market benefits as slower adopters, because more advanced bottle-free designs originating in Europe, and manufactured at lower cost in countries such as China, are now being sold here.
Recognizing an opportunity, North American dealers are watching the trend to bottle-free, yet are also concerned because many have substantial investment in bottled coolers and service vehicles. Some have made a significant investment converting to bottle-free, but some remain uncommitted and are only testing in limited markets or not at all. The market momentum is not slowing down; in fact, more and more end users are seeking bottle-free solutions everyday for a number of compelling reasons, including:
- Economics. As delivery services increase pricing to cover costs, users are driven to alternatives. Bottle-free coolers have great economies in many applications; incorporate a savings worksheet into your presentation. In most markets, it is economical to provide bottle-free coolers if the customer uses one five-gallon bottle per week or more. Most coolers, regardless of type, are rented.
- Building safety. No one has to deliver bottles regularly;supply for bottle-free coolers is generally from a municipal source.Cold or hot water is available on demand. Delivery trucks are never late with bottle-free.
- Worker health. No lifting is required for refilling, which can be an important issue, since the bottles weigh close to 40 pounds (19.05 Kg).
- Workplace hygiene. Five-gallon water bottles are typically lifted by the neck with bare hands. This neck is submersed in the bottled cooler well; any germs on the hands ends up in the water. Cooler sanitization is a neglected area of service by bottle delivery companies, often resulting in the growth of a slimy residue in the reservoir, called biofilm (See Figure 1).
- Customized service. Many bottle-free companies will customize coolers based on local water conditions. A carbon filter is gen- erally used at a minimum, but other treat- ments available include UV, RO (requires a drainline for waste) and customized filtra- tion options for various water conditions, including hardness. Newer technology with ozone is also on the market, but it presents some inherent challenges. The benefit from ozonation is short-lived; therefore, it is best used in combination with other treatment options.
- Virtually unlimited supply. Water supply for bottle-free coolers is generally from a municipal source. Cold or hot water is available on demand. Delivery trucks are never late with bottle-free.
- Green. It is better for the environment because water trucks aren’t polluting the air as they make deliveries and there is no plastic bottle disposal.
Figure 1. Reservoir biofilm contamination
Some bottle-free coolers now feature antimicrobial treatments on the exterior and some internal surfaces to help reduce cross-contamination. These coatings are an extra level of defense against contamination and will typically not wash off over time. They are an added bottle-free selling point, since most bottled coolers don’t offer it. Figure 2 shows a collection tray with (on left) and without antimicrobial treatment in a controlled test. Collection trays are generally neglected and benefit greatly from the technology, but most contact surfaces should feature this added protection to increase drinking water and workplace hygiene.
Making the transition
Any water cooler is about making quality water accessible and affordable, and both types have inherent advantages and disadvantages. Dealers with a large field inventory of bottled coolers should develop a migration plan to bottle-free coolers, and develop a training plan to educate their sales team to recognize bottle-free sales opportunities.
A major concern about switching a dealership’s emphasis to bottle-free is what to do with existing equipment? The question is twofold. Should you leave it in place as long as it is profitable? What to do with old equipment as you replace it? Leaving equipment in place allows bottle-free competitors to target companies with bottled coolers. They present a compelling sales pitch, complete with slides and pictures and a list of bottle-free advantages. Be proactive and present solutions first (or at least as soon as you can after reading this article and locating a good source), but under the premise of offering options. Develop a story, armed with facts for your particular business model and an upgrade strategy/policy. If customers can sign up for another lease period, offer an upgrade based on a written policy. Consider cell phone providers. If the customer purchases new equipment, the provider extends the terms of the agreement. Many bottle-free cooler companies will help with support literature and sales tools to help facilitate a changeover and sales-force training. This training will include equipment education and site survey tools. Both bottled and bottle-free coolers have a variety of applications, but bottle-free coolers generally have more profit potential in today’s economy in more areas.
A site survey will include questions about the workforce, current water sourcing, concerns, issues and budget. The salesperson will also be trained to look for:
- Bottle-free environments
- City water
- Secured access
- Accessible water service
- Drainline availability if an RO is desired
- Delivery service that poses issues
- High-congestion area
- High mileage per delivery
- Workforce challenges for heavy lifting
- Sophisticated buying process—analysis of overall costs
- Space-constrained locations limiting bottle storage.
- Growing ‘green’ and environmental concerns
- Bottled water environments
- No water service available (the major reason to sell bottled coolers)
- Densley placed machine population with easy delivery access (a large manufacturing plant is an example of this)
- A private water source with problem water that requires highly specialized treatment
Figure 2. Collection trays
What do you do with older, used inventory once committed to emphasizing bottle-free operations? Used equipment presents problems for any operator because waste hauling is an expense and the market for used coolers is limited. The best option is to find a site that requires a bottled cooler and offer a compelling program. Make sure to sell service, including sanitation, when placing the equipment. Service is a key value-added offering that can make this option profitable and viable for end users as well.
The next best option is listing the equipment on eBay or a similar site ‘as is’ for pick-up only. Coolers don’t ship well; to avoid damage, try to convince the customer to accept this burden. The net of this disposal strategy is that not much will be realized from the sale. The seller, however, will not incur disposal costs or have to deal with other issues, including addressing proper refrigerant disposal and other environmental protocols, depending upon the cooler’s age and manufacturer. Get creative and donate clean, gently used bottled coolers to a local charity auction, along with free water for a short period, as long as it is picked up. Check with a tax professional about the tax implications for business and investigate the logistics before moving forward with this strategy. Do what makes the best sense for the situation.
If you still remain unconvinced about converting your bottled coolers or expanding your product offering to include bottle-free coolers, contact several cooler vendors to learn more. They will want to sell you their bottle-free models, but they will also have data, including market size and potential in your area, as well as programs for training and financing. Learn from them and check-out your local competition. It’s a challenging market, but bottle-free coolers can be a great addition to your business.
About the author
Tim Sewell is in marketing at WaterGroup and has worked in the plumbing, water treatment and pump markets for over 15 years.
About the company
WaterGroup has been serving the water treatment market over 40 years with innovative, high-quality products. The company manufactures and distributes water treatment equipment, bottle-free coolers and pumps across the US and Canada. Stocking locations include Fridley, MN; Rancho Cucamonga, CA and Durham, NC.