A GUIDE FOR ENTRY INTO THE
BOTTLED WATER INDUSTRY
AUSTRALASIAN BOTTLED WATER INSTITUTE INC.
October 2010
A Guide for
Industry Entry
A GUIDE FOR INDUSTRY ENTRY
Spring Water
Owners
A PLACE TO START
Brand Owners
1.
2.
Inquiries into the bottled water industry usually come from two sources
Owners of a Spring Water Source
Owners of a Product Concept or Brand
Each potentially becomes interdependent on the other in the entry into the bottled water Industry.
Home & Office
Delivery (HOD)
Spring Owners: have a few options for the use of their water
•
•
Retail Products
Bulk sales to existing bottled water companies
Find a brand owner or design their own and;
Buy an existing bottled water business
Start a bottled water business from scratch
Brand Owners: have a few options as well
Industry
Regulations
FAQ’s
•
•
Find an existing bottler to produce their product
Find a spring water owner and work together to;
Buy an existing bottled water business
Start a bottled water business from scratch
Spring Owner
Bulk Sales
Brand Owner
Retail
HOD
The Bottled Water Industry involves two main distribution sectors being:
Home & Office Delivery (HOD) Retail Products
-
11 L,15 L and 19 L bottles with dispenser
small pack products from 110 ml to 10 L
These are two distinctly different industry sectors:
The HOD sector focuses mainly on the production and delivery of products to the end consumer
including the direct interaction with these consumers with dispenser contracts and payment
systems.
The Retail Products sector focuses mainly on the production and distribution of small pack
products though wholesalers and distributors to the retail market including route trade,
convenience outlets and major chain outlets.
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A Guide for
Industry Entry
SPRING WATER OWNERS
Spring Water
Owners
Brand Owner
Spring Owner
Brand Owners
Bulk Sales
Home & Office
Delivery (HOD)
Retail Products
Industry
Regulations
FAQ’s
Retail
HOD
SPRING OWNERS
•
•
Bulk sales to existing bottled water companies
Find a brand owner or create their own brand and;
Buy an existing bottled water business or;
Start a bottled water business from scratch
The first thing a spring water source owner needs to do is to check the mineral quality of the water
to ensure the water is acceptable to perceived Australian market expectation.
Obtaining authorisation for from Local and State Authorities for the commercial extraction of
spring water would be the next key step to take. States have different levels of requirements for
licensing commercial water extraction and therefore direct consultation with the state authorities
should be made.
A spring water source owner wanting to enter the bottled water industry as an ABWI member
bottler or bulk water supplier will be required to meet a strict set of requirements as detailed in the
ABWI Model Code. Sufficient infrastructure in needed to be in place at the spring location
including food grade storage vessels, piping from bore to tank, monitoring equipment at bore head
and adequate discharge facilities for tanker loading.
Finding a bottler interested in purchasing your spring water product will be the main challenge for
the new entrant to the market. Bottlers entering the market will need to find a concept that will
differentiate your product from others in the perception of the consumer.
Key Components of the ABWI Model Code (ABWI Model Code 2005 –revised 2010)
pertaining to Source Water
Section 8 (chemical and microbiological testing requirements) of the ABWI Model Code
(2005-revised 2010) gives a detailed overview of the requirements for source owners regarding approval, landuse assessments, sampling and frequency of analysis of the source.
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A Guide for
Industry Entry
BRAND OR CONCEPT OWNERS
INDUSTRY CONSIDERATIONS
Spring Water
Owners
Spring Owner
Brand Owner
Brand Owners
Retail
Home & Office
Delivery (HOD)
Retail Products
Industry
Regulations
HOD
BRAND OWNERS
•
•
Find an existing bottler to produce their product
Find a spring water owner and work together to;
Buy an existing bottled water business
Start a bottled water business from scratch
SPRING WATER SUPPLY
There are many spring water source owners in every part of the country. Finding a specific type
of water may be more difficult.
CO-PACKING
FAQ’s
An owner of a brand or concept for a product can enter the bottled water industry with minimal
fuss by contracting the packaging of the product by an existing ABWI certified bottler. This way
the brand owner needs only invest time and money into the marketing of the product. The industry has many certified bottlers available to co-produce products for brand owners.
HOME & OFFICE DELIVERY (HOD)
Several considerations to be made with entry into the HOD sector:-
•
•
•
•
•
Population density
Existing bottled water competition
Filtered water competition
Differentiation
Service philosophy
RETAIL
The variations needed to be considered are:-
•
•
•
•
•
Still water
Carbonated
Flavoured
Volume
Container design
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A Guide for
Industry Entry
HOME & OFFICE DELIVERY
INDUSTRY CONSIDERATIONS
Spring Water
Owners
Spring Owner
Brand Owner
Brand Owners
HOD
Home & Office
Delivery (HOD)
Retail Products
Industry
Regulations
FAQ’s
HOME & OFFICE DELIVERY (HOD)
This sector involves bottled water products in the 11 L, 15 L and 19 L size of returnable bottles.
Another important part of this sector is the dispensers used at each home and office location.
Direct delivery to each customer requires special delivery vehicles and staff. The potential in this
sector is to define a niche in the existing market where a start up business can gain growth
through market expansion.
The HOD sector focuses mainly on the production and delivery of products directly to the end
consumer including the direct interaction with these consumers.
Several considerations to be made with entry into the HOD sector:-
•
•
•
•
•
•
•
Location
Population density
Existing bottled water competition
Filtered water competition
Differentiation
Service philosophy
Marketing methods
The technology required for production is relatively simple and capital requirements for equipment
are significant but lower than other beverage’s.
Customer growth is the key to this sector as the customer base is in a relative state of flux most of
the time. There is a lower capital outlay to get started in the HOD sector, with future growth to be
managed with generated profits.
This sector is very competitive and requires a sincere commitment to growing the business to
make it successful.
There are specific ABWI regulations for the design and operation of an HOD bottling plant as well
as the maintenance of the water dispensers. These can be reviewed in the regulation section of
the ABWI web site.
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A Guide for
Industry Entry
RETAIL PRODUCTS
INDUSTRY CONSIDERATIONS
Spring Water
Owners
Spring Owner
Brand Owner
Brand Owners
Retail
Home & Office
Delivery (HOD)
RETAIL PRODUCTS
Retail Products
This sector involves a multitude of product sizes, ingredients and sales outlets. The pack sizes
can range from as small as 110 ml cups to 10 L containers. Some retail products stretch as far as
15 L. This sector continues to grow at above 10% per year and new products and businesses
enter the market every year to absorb some of the growth in the industry.
Industry
Regulations
The Retail Products sector focuses mainly on the production and distribution of small pack
products though wholesalers and distributors to the retail market including route trade,
convenience outlets and major chain outlets.
FAQ’s
CO-PACKING
An owner of a brand or concept can easily enter the bottled water industry by contracting the
packaging of their product with an existing ABWI certified bottler. This way the brand owner
needs only invest time and money into the marketing of the product. The industry has many
certified bottlers available to co-produce products for brand owners.
Although understanding the requirements for labeling / cap selection (security) and bottle design
can become as challenging as placing water in the bottle. A significant amount time and money
must be invested to ensure the contract packagers components function in the bottling plant.
BOTTLING
Issues that need to be considered prior to designing a bottled water plant revolve around the
requirements as listed in the ABWI Model Code to ensure the plant can become certified and
continue to pass annual audit requirements.
Another aspect to consider is the forecasting of market volume as this has a direct impact on the
bottling plant size. The design of the bottle, type of closure, label and the type of packaging all
play a significant part on the size and speed of the production plant. Additionally, carbonated
products add greater complexity to the bottling plant. Each of these has an impact on the design,
cost and size of the bottling plant.
The major component of this sector is the ability of the business to market their product
successfully. Competing in the route trade vs. the supermarket is very different and requires very
different tactics to ensure success.
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A Guide for
Industry Entry
INDUSTRY REGULATIONS
Spring Water
Owners
The Food Standards Australia New Zealand sets the minimum standards for all types of bottled
water. These regulations are set out in the Food Standards Code. The primary standard is 2.6.2
“Non-alcoholic Beverages and Brewed Soft Drinks” Bottlers must comply with this and all other
requirements of the code. For further information please visit the FSANZ web site. http://
www.foodstandards.gov.au/
Brand Owners
Home & Office
Delivery (HOD)
The ABWI is the peak industry council and certifying organisation for water bottlers in Australasia.
Bottled water produced by ABWI members must meet standards, that are in some cases stricter
than the FSANZ standards. ABWI has developed a quality assurance program called the Model
Code, which is a strict set of standards for the safe processing of bottled water. For more information about the Model Code please visit the ABWI Model Code.
http://www.australianbeverages.org/lib/pdf/ABWIModelCode_Mar06.pdf
Retail Products
SUPPORT FOR NEW BOTTLERS
Industry
Regulations
The Australasian Bottled Water Institute has many supplier members that are involved in every
aspect of the bottled water industry. For details of the suppliers members and the support they
can offer, please visit the ABWI Members List.
FAQ’s
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A Guide for
Industry Entry
FREQUENTLY ASKED QUESTIONS
Spring Water
Owners
What licenses do I need?
Brand Owners
Why do I need to test the water?
Home & Office
Delivery (HOD)
Retail Products
Industry
Regulations
FAQ’s
Each State has different requirements for commercial water extraction. To find out what pertains
to your region or state you should contact your State Authority.
Your water should be tested for microbial content as well as mineral content. These tests will
indicate if the water meets the FSANZ standards for bottled water. The mineral content will give
an indication of the aesthetic qualities of the water which will be of interest to bottlers or brand
owners. A hydro-geologic report will also give you important information regarding the structure of
the aquifer that you would want to draw the water from, the direction of flow, and hence any
possible sources of infiltration or contamination that may occur in the future.
Who tests the water?
There are many laboratories around Australia and all large centres have several laboratories. The
ABWI would recommend that you use a laboratory that has NATA or equivalent overseas
approved methodologies.
What tests need to be done?
Most laboratories would have a standard drinking water test regime that would test for at least 15
–20 mineral constituents and give you a good indication of the water make up. The FSANZ
standards include the maximum contaminant levels for specific constituents in the water that could
be used as a guide. The ABWI Standard of Quality, found in the Model Code, gives a detailed list
of analytes that should be tested for.
Why might I need a hydrologist?
Every aquifer is different and the local hydro-geology is important with respect to water quality and
sustainability. Some State Authorities require a hydrologist report before allocating a license
volume.
Where can I find a Hydrologist?
Each State has several hydro-geology companies that can assist you with the evaluation of your
source water potential volume and longevity. These companies can be located in the yellow
pages.
What’s next after getting a license and testing the water?
Australasian Bottled Water
Institute Incorporated
Level 1, 6-8 Crewe Place
Rosbery NSW 2018
Ph: +61 2 9662 4822
Fax: +61 2 9662 2899
[email protected]
www.bottledwater.org.au
This is the most important step of investigating the potential of this industry. A determination
about what industry sector / niche, what type of product and the specific brand need to be
considered in depth with a business plan. These options should be discussed in detail with a
Bottled Water Industry Consultant to find out more details about these sectors and potential costs
of entering the industry.
Where can I find a Beverage Industry Consultant?
There is a number of Bottled Water Industry Consultants in Australia. Some of these Bottled
Water Industry Consultants are members of the ABWI and can be found in the ABWI Members
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