The quantity and quality of water continue to pose significant concerns globally. According to the WHO, about 10,000 people die daily due to unsafe water consumption. The rate of waterborne illnesses continues to rise worldwide among children. Hence, I’m convinced that the bottled water business will keep going strong for many years to come.
Are you interested in starting a water bottling business and have no idea where to start or expect? Keep reading!! I have provided a detailed plan in this article to guide you through.
Overview of The Bottled Water Industry
Bottled water is a global commodity and is a profitable business if well – managed. Water is like the air we breathe. Since the outbreak of the COVID-19 virus, bottled water has seen a surge in its demand. Consumers spent the year working and studying from home to limit the spread of the pandemic. Production involves purification and packaging of water for consumption. Plastic and glass bottles are the materials used for packaging.
The U.S. market is the largest bottled water consumer market. Americans drank over 14 billion gallons of bottled water in 2019, according to IBWA, 2020. In 2018, the industry generated a total amount of 18.36 billion dollars. According to Statista (2020), the market should grow by 8.0% from 2021 to 2025. Furthermore, the Bottled Water segment will show a revenue growth of 12.4% by 2022.
Large companies generally take on bottled water production. They include; PepsiCo Inc, Nestle, Coca-Cola and Primo Water Corporation. The remaining part of the industry is the responsibility of small-scale local players.
Figure 1: Graph showing the consumption of different beverages from 2006 to 2019
(Beverage Marketing Corporation, 2020)
The bottled water production industry in the U.S. now employs more workers compared to five years ago. The number of employees increased by 1.6% between 2016 and 2021. (IBIS World, 2021). As of now, there are 16,464 people employed in the bottled water production industry. Big corporations have the lion share in the production of bottled water. Yet, starting a small-scale bottled water production business has minimal barriers to entry.
Bottled water production is open to any aspiring entrepreneur. You can set-up a small-scale plant to service a community. You can decide to start on a large scale with several outlets in key cities all around the country.
SWOT is defined as Strengths, Weaknesses, Opportunities and Threats. It helps you to maximize strengths and reduce risk. It also allows you to explore opportunities and provide protection against threats.
One of the positives of your company should be the quality of personnel on board. These individuals must be passionate about the mandate of your organization.
Quality of branding is one of the reasons why people prefer bottled water. The label of logos is an extra boost to consumer’ preference. Invest resources in quality branding.
New York is the biggest business hub in the United States. It is home to 58 business headquarters and has a yearly revenue of $1.4 billion. (Startupanz, 2019).
A significant concern is the location of the business. New York City drinking water is popular for its world-class quality. Over one billion gallons of clean water are supplied to nine million customers in New York. (NYC Environmental Protection). The existence of a consumable water system could affect the bottled water business.
U.S. public water systems pump out over 1 billion gallons of water every hour. (IBWA, 2020). Although the bottled water industry is large, it is smaller than the public water system.
The total amount of bottled water Americans buy in one year would only match U.S. tap water supply for about 9 hours. Thus, the bottled water industry must step up to supply the growing demand for safe water.
An increasing number of health-conscious consumers are replacing soft drinks for bottled water. This menace represents a potential opportunity for you to exploit (IBIS World, 2021).
One of the threats to this business is Government policies. Department of Environmental Protection (DEP) publish water quality status of the system.
This is to assure consumers of the quality of the water system. Another threat is the arrival of a similar business to in your locality. This threat is because New York attracts lots of entrepreneurs.
Competition exists at all levels in the bottled water industry. Whether among the big players or the small-medium scale businesses. It ensures that companies produce bottled water with the best quality.
Also, bottled water production companies are now flexible with their labeling. They customize labels based on demands for special occasions at a higher price.
The indestructibility of plastic is a source of concern globally. Because of this, companies are exploring environment-friendly alternatives. This effort might encourage environmental-conscious individuals to buy their products.
The plastic also has experienced changes in the weight of a bottle. A 500ml plastic bottle’s average weight has dropped 48% to 9.89 grams from 2000 to 2014. (International Bottled Water Association)
The bottled water industry cuts across all demographics. In 2018, the highest number of bottled water consumers were between 30-49 years (66.86%).
50-64 years accounted for 63.7%. In comparison, 57.85% of the respondents were between 18-29 years (Statista, 2021).
Focus is on wholesale and retail distribution in New York to different groups of people. They include Hotels, Restaurants, Functions, Students, Tourists and every individual in New York.
Figure 2: Bar Chart showing the demographics of Bottled water consumers in 2018.
PRICING AND MARKETING STRATEGY
Different platforms should be available for consumers’ convenience. They include Cash, Bank Transfer, POS machine, as well as crypto-currency means.
A penetration-pricing system is best. This system helps to attract consumers for the first few months. It involves selling your products a little below the average cost of bottled water in the state. You must ensure product quality. You can make up for the deficit in price by producing more quantities. More quantities will increase the marginal profit.
Marketing should focus on the following;
- Advertisements on print and electronic Media
- Sponsoring programs in the locality
- Excellent branding on all products and other relevant merchandise. Etc
The cost of starting a bottled water production business varies. Depending on the size of the company; it ranges from $500,000 to $750,000.
Innovations drive any business. Customer service will also determine your survival. Finally, invest in your workforce to increase efficiency.
Please click below to watch the production process of bottled water production.