The United States bottled water market was worth approximately $17 billion in 2017. Currently, there are about 664 water bottling companies in the U.S. alone, with Nestle, Pepsi and Coca-Cola holding the largest market share. As a newcomer, the only way to beat your competition is to think outside the box and come up with unique ways to attract and engage customers. Also, it's important to meet the legal requirements and have a thorough understanding of this industry.
TL;DR (Too Long; Didn't Read)
Depending on your goals, you can open a water bottling plant, launch a water refill station or buy a bottled water franchise. If you're looking for a business model with low startup costs, reach out to private-label bottled water suppliers or open a retail water store.
Research the Bottled Water Market
The first step to starting a bottled water business is to research the market so you can identify opportunities and potential threats. Market analysis can also reveal information about your competitors and target audience. According to Allied Market Research, the global bottled water industry will reach $319.8 billion by 2020. Its growth is fueled by the rising customer demand for healthier products among other factors.
Nowadays, bottled water comes in more varieties and flavors than ever before. Consumers have access to premium-quality bottled still water, sparkling water, vitamin water, flavored water and everything in between. The Mountain Valley Spring Company, Danone, Natural Waters of Viti and other key industry players are disrupting this market, using the latest technologies to create innovative products. The industry has a compound annual growth rate of over 7%, which is significantly more compared to other markets.
Consumers are choosing bottled water over soda, energy drinks and other beverages. Water has zero calories and contains essential minerals that support health and well-being. The demand for bottled water depends largely on external factors such as the local economy. Therefore, it tends to decrease when consumer income falls.
How Water Bottling Companies Work
Americans consumed a whopping 11.7 billion gallons of bottled water in 2015. This beverage is free of contaminants and bacteria. Only 2% of tap water, by comparison, is safe for consumption. If you're planning to start a bottled water business, you need adequate equipment to purify and bottle the water. A more convenient option is to team up with private-label bottled water suppliers and let them do the hard work.
Private-label agreements work best for new and small companies with a limited budget. Starting a bottled water business on your own requires an initial investment of $10,000 to $50,000. Also, consider rent, utilities, employee wages and other ongoing costs. Working with a private-label bottled water supplier can save you time and money.
Premium Waters, for example, offers these services for businesses of all sizes, from small convenience stores to national retailers. Customers can opt for spring or reverse osmosis water in 10-ounce, 16.9-ounce, 20-ounce or 33.8-ounce bottles. The company works with major water brands, including Glacier Clear, Water Joe and Nicolet Natural, and they can customize each bottle with your brand and logo. Bottled Events, Private Spring Water and Bottle Your Brand provide similar services.
Check the Legal Requirements
Bottled water is regulated as a food product by the FDA. While it's true that you can sell vitamin water, flavored water or tonic water, these products are classified as soft drinks. According to the FDA, bottled water cannot contain any added ingredients except for anti-microbial agents and fluoride. Bottled water companies are legally allowed to offer the following products:
- Mineral water, which comes from an underground source and contains naturally occurring trace minerals
- Spring water
- Well water
- Artesian well water
- Purified water, or tap water treated through distillation, reverse osmosis, ozonation and other methods before being bottled
Bottling plants are subject to FDA inspection and fall under the agency's regulations too. In some states, these facilities need to be licensed annually. Companies that sell bottled water must follow the current good manufacturing practice regulations to ensure their products are safe and don't exceed the maximum limits of physical, microbial and chemical contaminants.
If you decide to work with a private-label bottled water supplier, choose one that meets these standards and uses FDA-approved manufacturing plants. Ideally, search for companies that sell water in BPA-free bottles. Bisphenol A, or BPA, is commonly used in plastic containers and may leak into food and beverages, affecting blood pressure, endocrine function, fetal growth and more. Using BPA-free bottles can give you a competitive edge and show that you care about your customers' health.
Develop a Business Plan
Next, write a business plan for your water company. Decide on a legal entity and business model, define your target audience and outline your objectives. Include a comprehensive description of the market, your ideal customers and your competitors. Cover every step of the process, from business licensing to marketing.
Are you planning to open a small water bottling plant? Perhaps you prefer to offer water bottle refilling services? You can also start a retail water store. Choose a business model and then plan your strategy accordingly.
Make sure you also cover the financial aspects. Determine your startup costs and apply for a loan or reach out to investors if necessary. Think about how many employees you'll need, who will be in charge of what, what distribution channels you will use and how you're going to promote your business. Consider the unique requirements of your bottled water business, whether it's a franchise or a mineral water bottling plant. Write everything down and come up with a strategy to accomplish your goals.
Apply for Business Licenses
Like with any other business, it's necessary to choose a name for your company and register it with the state. Decide on a business structure, such as an LLC or a partnership. Once these steps are completed, head over to IRS.gov and apply for a tax ID number online. Open a bank account for your company and apply for a loan if you need financing.
Licensing requirements will depend on the type of business. A water bottling plant, for example, is subject to different regulations than a retail water store. Depending on your location, you may need a water bottling plant license in addition to a general business license. The state of California has this requirement, for instance. Your application should include the following:
- Business name, address, type of ownership and other relevant information
- Types of bottled water products
- Average weekly gallons
- Product brand names bottled at your facility
- Water source
- Name and address of source or water district
The license fee in California is $1,335. To renew it, you will need to pay an extra $473 (for companies producing less than 5,000 gallons per week) to $1,335 (for companies producing over 5,000 gallons of water weekly). The exact requirements and fees for a water bottling plant license vary from state to state. You may also need permits from the local fire and health departments in your area.
How to Promote Bottled Water
Bottled water is widely available in most stores, from gas stations to supermarkets. The only way to stand out from the crowd is to have a solid marketing plan and to stay on top of the latest market and industry trends. Define your unique selling proposition and use it to reach more customers.
For example, if you're selling water in BPA-free bottles, promote it as a healthy choice for children and moms-to-be. If your company specializes in mineral water, emphasize its nutritional value and how it benefits athletes. Outline its ability to hydrate the body after a challenging workout. Consider launching public campaigns that encourage consumers to drink bottled water instead of sugary drinks.
Check your competitors for inspiration. Nestlé Waters Mexico, for instance, launched an educational program in 2016 to raise awareness about the importance of proper hydration. As a startup, you may have a limited budget, but you can still host local events, competitions and online contests to attract customers and promote your brand. Team up with gym chains, schools and other businesses in your area, sponsor your local Little League team and build a strong online presence.
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- Bottled Events: Frequently Asked Questions
- Private Spring Water: Our Story
- BottleYourBrand: Private Label Bottled Water
- IRS: Apply for an Employer Identification Number (EIN) Online
- Water Business USA: Water Business Opportunities
- Fast Company: Bottled Water’s Next Trick Is Making the Bottle Disappear
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Andra Picincu is a digital marketing consultant with over 10 years of experience. She works closely with small businesses and large organizations alike to help them grow and increase brand awareness. She holds a BA in Marketing and International Business and a BA in Psychology. Over the past decade, she has turned her passion for marketing and writing into a successful business with an international audience. Current and former clients include The HOTH, Bisnode Sverige, Nutracelle, CLICK - The Coffee Lover's Protein Drink, InstaCuppa, Marketgoo, GoHarvey, Internet Brands, and more. In her daily life, Ms. Picincu provides digital marketing consulting and copywriting services. Her goal is to help businesses understand and reach their target audience in new, creative ways.