Do you want to start a packaged drinking water plant? If YES, here is a complete guide to starting a packaged drinking water plant business with NO money and no experience. Building and running a packaged drinking water plant in the united states is an opportunity to produce a product that contributes to environmental sustainability. But starting this business involves a lot of processes which you can’t neglect.
First you have to create a comprehensive business plan that determines the mission of your business, a description of your target customer, the state of the market, the way in which you plan to enter the market (marketing plan), the estimated budget for your business and the goals you want to achieve within the first year or two of operation.
Having a business is very necessary but note that a business plan takes research. You need to look at the packaged drinking water plants operating in your area and identify unaddressed needs from consumers that your company can satisfy. Then you will have to choose a suitable name for your business. A fictitious Business Name is the name individuals use in place of their own in order to establish a business. A business license may be needed to operate legally in the state.
Also have it in mind that your will need to search for investors that will support your packaged drinking water plant. Venture capitalists, angel investors and bank loans can provide the start-up capital needed for bottle design, a website and bottle supplier partnerships. Also don’t forget to create and design the logo and graphics for your plant.
Look for inspiration in art that you enjoy or from shapes and colours that appeal to you. After you must have decided the way you want your drinking water to be packaged, you then have to look for a supplier. For instance, online bottle companies will provide you with descriptions and specifications regarding their bottles, including the price to buy and ship the items.
Read on as we take you through the process of establishing and running a successful packaged drinking water plant in the United States.
18 Steps to Starting a Packaged Drinking Water Plant Business
Table of Content
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Develop Iron-clad Competitive Strategies to Help You Win
- 18. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
1. Understand the Industry
Packaged water is one commodity that is consumed in all parts of the world. Reports have shown that economic downturn hardly affects the consumption of packaged drinking water because it is a commodity that is as important as the air we breathe in. Businesses in this industry are known to purify and package drinking water into plastic and glass bottles for consumption.
The packaged drinking water are properly capped and labeled accordingly before being sold to the general public. We were able to note that the level of concentration in the packaged drinking Water Production industry is modest, as the top four players are expected to generate 65.5 percent of revenue.
Due to the heavy bulk weight of industry products and the relatively low value per unit sold, packaged drinking water production is generally taken on by large companies with major economies of scale and heavy investments in transportation.
Even though the packaging process is performed as one of many activities within the corporate portfolios of international food and beverage companies, the remaining portion of the industry’s production is performed through small-sized local players.
Reports have it that this industry is a thriving sector of the economy of the United States of America and they generate over $5 billion annually from more than 565 registered and licensed water production companies. From our detailed research, we were able to ascertain that this industry is responsible for the employment of over 14,360 people. Experts project the water production industry to grow at a 4.0 percent annual rate.
Even with the big fishes in this industry taking more than the available market share, starting a small scale packaged drinking water production business has minimal barriers to entry, with low start – up capital. A lot of players in the packaged drinking water production industry are small to medium-size establishments that cater to the local community.
A lot of factors that encourage aspiring entrepreneurs to dive into this business is because the amount needed to start the business is not on the high side compared to other small scale businesses.
It’s also very important to state that the target market for packaged drinking water cuts across people of all races, culture, financial status and age. This makes it easier for loads of entrepreneurs who are interested in the business to come into the industry at any time they desire; the entry barriers are quite affordable and any serious minded entrepreneur can comfortably raise the startup capital without collecting loans from the bank to build a successful plant.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
This business is all about giving your customers easy access to drinking water. Whether purified, distilled, or natural spring water, your packaged drinking water business will supply your customers with ample hydration. We believe that starting your own packaged drinking water business can be a satisfying experience that allows you to make money while also helping your customers achieve a healthy lifestyle.
Have it in mind that this business is perfect for individuals who are passionate about their health and want to run a business that promotes a healthy lifestyle. We believe that your ideal customers will usually be commercial enterprises like local grocery stores. However, some small companies do sell directly to consumers or to businesses.
3. Decide Which Niche to Concentrate On
This business is not something you wake up one morning and decide to venture into. You need to find out what is really involved and what it takes to run such a business and this can only be achieved through a market research. This industry can be very confusing and exponential, which is why it is advisable you carry out your research alongside a consultant or an expert in such field.
The result of your research will determine the type of packaged drinking water to produce; your location and your Pricing Strategy. Some of the more common types of packaged drinking water which you can choose a niche from may include…
- Artesian water plant
- Fluoridated water plant
- Groundwater water plant
- Mineral water plant
- Purified water plant
- Sparkling water plant
- Spring water plant
- Sterile water plant
- Well water plant
Level of Competition in the Industry
Research has shown that global packaged drinking water sales have increased dramatically over the past several decades, reaching a valuation of around $79 billion and a volume of more than 214,000,000 cubic metres in 2016. Reports have it that U.S. sales reached around 42 billion bottles of water in 2017, a slight drop from 2016 levels. Note that the rate of consumption more than quadrupled between 1990 and 2015. Spring water and purified tap water are currently the leading global sellers.
Reports have also shown that the second largest consumer market for packaged drinking water in the world is the United States, followed by Mexico, Indonesia, and Brazil. China surpassed the United States to take the lead in 2013.
In the United States, packaged drinking water and tap water are regulated by different federal agencies: the Food and Drug Administration (FDA) regulates packaged drinking water and the Environmental Protection Agency (EPA) regulates the quality of tap water.
The International Bottled Water Association (IBWA) is headquartered in Alexandria, VA. From 1970 (16 brands) over 1998 (50 brands) to 2012 (195 brands), the number of mineral water brands in the U.S. has risen greatly.
4. Know Your Major Competitors in the Industry
- The Coca Cola Company
- Nestle (Nestle Pure Life)
- Pepsi Co. (Aquafina)
- Fiji Water
- Voss Artesian Water
- Smart Water
- Arrowhead Mountain Spring Water
- Ice Mountain Natural Spring Water
- Deer Park Natural Spring Water
You need to understand that packaged drinking water businesses make money by charging customers for processing and packaging drinking water. We believe that the growth potential of this business is virtually unlimited. Companies like Nestle own massive water processing and treatment plants where they produce packaged drinking water for countless grocery stores and make billions in profits every year. Most packaged drinking water plants start life as small or medium-sized plants.
Have it in mind that you can grow your business at a rapid pace by taking on outside financing from a bank or venture capital firm. Maybe you can grow more organically from sales profits. But note that growing through leverage (bank loans) has its advantages.
For example, your profits are likely to climb quickly on momentum. Don’t forget that it can shortcut the time it takes you to grow and meet your revenue growth targets. However, it can also saddle you with creditors who want to see profit targets that are too optimistic.
5. Decide Whether to Buy a Franchise or Start from Scratch
A lot of entrepreneurs would want to enter the packaged drinking water business by starting from the scratch than through a business franchise. But packaged drinking water business start-ups aren’t easy – many fail within the first year.
You need to know that there are a lot of factors that need to be considered in buying vs. starting a business. We believe that by buying a profitable packaged drinking water business, you’ll reduce the amount of time it takes to achieve a return on your investment because you’ll have the benefit of a proven operation and an existing customer base.
Also if you want a reliable packaged drinking water business with plenty of support, you may want to consider buying a franchise. We believe that franchises offer proven business models, financing, marketing and technical support, among other services.
You will be needed to sell the franchisor’s brand of equipment and obey to certain operational guidelines. If you want more freedom and flexibility, you may choose to operate as an independent dealer. Even as an independent dealer, you can expect some vendors to offer you technical training and, in some cases, marketing support.
6. Know the Possible Threats and Challenges You Will Face
Don’t think that starting this business will be relatively easy if you lack experience in this line of business, but if you are hardworking and willing to learn, you will surely find it a easier. Note that the profit you stand to get from this type of business is largely dependent on your marketing and sales strategies. The few challenges you might face may include;
- Industry competition
- Industry laws
- Writing a good marketing plan
- Getting a suitable location
- Getting qualified workers
- writing a business plan
- Getting insurance
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
You have to understand that any decision you make here will dictate the pace and success of your business, which is why this decision should involve a number of considerations, including taxation, owner liability, governance, capital structure, and potential exit strategies, to name a few.
The best legal entity for a packaged drinking water Business is the LLC. A limited liability company (LLC) is an unincorporated entity in which one or more individuals called “members” have limited liability for the enterprise’s debts and claims even if they participate in management.
The world generally now understands the importance of starting your own business as an LLC. This legal entity has great flexibility in structuring the management of your venture through the LLC’s governing document, known as an “operating agreement.”
The advantages of creating an LLC typically outweigh any perceived disadvantages and are typically unavailable to sole proprietorships and general partnerships. Also it is advisable that you consult with an experienced attorney and accountant while preparing your business plan to make sure your facts and figures are accurate and legal because you should avoid creating loopholes
8. Choose a Catchy Business Name
- Mineral plant
- Pure Hill Water plant
- Alright Waters
- Pure well
- Dirt Free
- Water Active
- Water Wave
- Europa plant
- Life safe water plant
- Bring Pure
- Germ Away
- water hug
- Neat life
- Pure Blend
- White Moon plant
- Pure first
- Water Star
9. Discuss with an Agent to Know the Best Insurance Policies for You
The importance of water in our daily activities cannot be quantified. Water is a precious natural resource entrusted to packaged drinking water businesses. When you start this business, get ready to face many challenges from water main breaks to water quality and treatment issues.
In many cases, water systems are being pushed to the limit by growing urban populations. Have it in mind that such complex risks need specialized coverage unique to this class of business. They may include;
- General Liability Insurance
- Inland marine insurance
- Property insurance
- Workers’ compensation insurance
- Commercial Auto insurance
- Umbrella liability insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
You need to know that competition in this industry is alarming, even with very few major players taking control of the industry. Experts believe that intellectual property rights are required in the packaged drinking water industry for trademark and patent protection.
But we advise that you research the essentials of patenting and protecting any ideas and procedures you must have developed. It should also include your tagline, logo, and other marketing designs. You should know that without proper protection, your ideas may be developed by someone else which can jeopardize your business.
It’s also very important that you learn more about trademarks, copyrights, and the other legalities of the packaged drinking water business by meeting with an expert in the industry.
We also suggest that you register your trademark because it helps protect the results that you create. It’s also important to note that proper protection of your trademark and patent can lead to a successful brand development and a great heightening of the value of your company or product in the industry. We believe that another way for you to protect your patents and trademarks in the packaged drinking water industry is by having your key employees sign employment agreements.
11. Get the Necessary Professional Certification
Whether you believe it or not Professional Certification is very crucial in this business as they indicate a level of knowledge and expertise shown by the person certified and they are a profitable baseline in the industry. Professional certification needed for a packaged drinking water business may include
- water quality professional certification
- certified water treatment professional
- Master water specialist
- certified water specialist
- Water Treatment Plant Operation Specialist Certificate
- Certified water technologist
12. Get the Necessary Legal Documents You Need to Operate
Getting all legal documents needed to start a packaged drinking water plant is very important for the success of your business. You should make sure you enquire and gain all possible documents to avoid dramas that will damage the image and vision of your business.
Federal Business Licensing Requirements
The Food and Drug Administration (FDA) regulates packaged drinking water. FDA regulations for packaged drinking water include Good Manufacturing Practices (GMPs), standards of identity and labeling requirements.
State & Local Business Licensing Requirements
Certain state permits and licenses may be required to run a packaged drinking water business. A lot of businesses in the United States are needed to collect sales tax on the goods or services they provide. Possible documents needed to run this business successfully without setbacks include..
- Business license
- Employment agreements
- Federal license
- State license
- Local license
- Proof of Insurance
- Intellectual property protection right
- Federal tax identification number
13. Raise the Needed Startup Capital
The goals of this industry is to produced drinkable water and make it accessible to customers. Even in a crowded market like this business, you can still take up grounds if you have substantial finance and creativity with your branding and packaging.
It will surely attract your own fair share of the existing market. Financing is a major determinant in the packaged drinking water world. Ways to finance a packaged drinking water Business may include;
- Funds from Personal savings
- Getting loans from families and friends
- Taking small business loans
- Getting microloans
- Attract an angel investor
14. Choose a Suitable Location for your Business
The location of your business will also dictate the success and failure of your plant. There are a lot of considerations to make when choosing a suitable location, both business and legal. From a business perspective, the issues include whether the premises has adequate space for both present and future operations; are the utility systems (electrical and plumbing) adequate to handle operations and waste disposal; and is there adequate office and storage space?
Also note there are a lot of legal considerations that must be weighed including land use and zoning requirements for parking; legality of the commercial venture on the premises; loading and unloading; and compatibility with local Waste Management systems.
We believe there are also factors for acquiring the premises. If the space will be leased, the third party landlord must be amenable to the nature of the business operations. Also, the landlord may need a long term lease. Will a long term lease be compatible with your vision and growth?
Do you have the ability to exit the lease if your business needs change before the expiration of the lease term? Do you have the ability to extend your lease under favourable terms? Have it in mind that these factors merely highlight the myriad of issues that most lucrative businesses face when selecting a premises to run its operations. We suggest you get professional assistance when making this decision.
15. Hire Employees for your Technical and Manpower Needs
First and foremost, you need to know that the FDA allows you to choose between two sources of water — groundwater and the public water supply. If you choose an available groundwater source, this will need to be inspected and certified as sanitary to meet FDA requirements.
Apart from a consistent and reliable water source, you will need to get bottles, sanitizing equipment, bottling equipment, packaging and labeling materials. Sophisticated systems that will load empty bottles onto a conveyor, rinse, sanitize, fill, cap and label them, are available from several companies. Also if you are going to deliver your product to customers, consider the type and number of delivery trucks needed as well.
We also believe that you will require business experience, contacts in the industry, and a working understanding of how water is treated and packaged. Have it in mind that no degrees are needed but you may need special licensing from the government.
A lot of owners and managers of packaged drinking water business have extensive management experience, especially in a related industry. Have it at the back of your mind that the cost for starting a plant include storage tanks, filling machines, water treatment machines, filters, conveyors, sealers, water sterilizers, water dispensers, bottle loaders, trucks, and employees to work in the plant.
Depending on the business size, start -up costs can range from $500,000 to $750,000. But, some plants may need more capital, up to $1.5 million, or more, depending on the size of your operation.
We strongly suggest that you take your time to find a sustainable water source for your operation. Your water source will greatly influence your profits. Packaged drinking water has a high mark-up. If you are selling to grocery stores, you may be able to charge $1 to $2 per bottle, or a flat rate per truckload or pallet. A lot of companies make arrangements for regular shipments to establish themselves as “anchor customers.”
You may or may not sell your products for a lower price to get these deals, but will generally increase revenue as a result. You must begin building a team immediately. A packaged drinking water company cannot operate as a solo or one-person company. You will need at least 20 to 50 employees to start, and you should scale up within the first 3 years to at least 50 to 100 employees, or more.
The Service Delivery Process of the Business
The process of water packaging can be very confusing, but it starts first with racks of empty bottles collected from homes or other points. When they bottles are picked, they are inspected for cleanliness and put into blue racks. Immediately the racks arrive at the bottling line, the bottles are again inspected visually and the each bottle is sniffed for any foreign contaminants.
Once a bottle passes these inspections, it is loaded onto the washer conveyor. After that the next step is to check the bottles for pinhole leaks or cracks. You can do that with a leak tester. A Leak Tester pulls a vacuum on each bottle and then monitors if there is any air leaking into the bottle. If not, the bottle passes muster and moves ahead to get filled.
Just as the bottles enter the Bottle Washer machine, they go through the washing process. The machine is controlled by computers and basically washes every bottle for about two minutes in a 130 degree washing solution. At this point the bottles then get rinsed and sanitized with an ozone solution (ozone is about 1500 more powerful than chlorine) and finally, the bottles are rinsed again with finished product water.
After that the bottles are then inverted and transferred to the filler. Timers and pneumatic valves ensure each bottle is properly filled, capped and time/date coded – all without touching a human hand. Finally, the bottles pass on to the racking area where they are reinserted into the blue racks that get loaded into to trucks or are arranged for distribution.
16. Write a Marketing Plan Packed with ideas & Strategies
Marketing and distribution is key in this business. Have it in mind that your target market should be grocers, vending machine companies and operators, stadiums, event locations, and other large-scale commercial enterprises and operations that need high volume packaged drinking water supplies. A lack of marketing experience can sometimes be overcome through persistence and innovation, two key features of packaged drinking water services business marketing success.
Social Media Monitoring
Reports have it that the use of social media as a marketing tool is one of the most successful and newest wave to overtake the small business community. When put together with a functional company website, social media attracts new customers and converts them to brand advocates.
Don’t forget that you are required to be particularly sensitive about the potential for negative brand commentary on social media sites. Note that to counter negative social media; you’ll have to monitor your brand’s online presence and enter the conversation, redirecting negative discussions toward more positive topics.
Rebranding is an intentional marketing technique designed to deliver long term results. In a packaged drinking water services business, brands are tied to specific stages in the life of a business. But if your business is growing, you will inevitably outgrow your brand and it will be time to prepare for a comprehensive rebranding effort.
But first consider all your options, if you are confident that you possess the skills necessary to rebrand your business, we advise consulting with a professional marketing firm before you introduce a new brand to your customers.
Flawless Marketing Ethics
Big players in this industry avoid marketing tactics that exploit their customers. Ethics are especially important in direct marketing. By relying on trusted list provider, you can ensure that your lists are accurate and are consistent with standard industry protocols.
17. Develop Iron-clad Competitive Strategies to Help You Win
Before you start analyzing the best ways to defeat your competitors, you need to find out who your competitors are by doing your research on the local competition. We strongly suggest that you find out who your competitors are by searching online directories and searching in your local Yellow Pages.
If there are a number of competitors in the same industry (meaning that it is not feasible to describe each one) then showcase the number of businesses that compete with you, and why your business will provide customers with service/products that are of better quality or less expensive than your competition. Few strategies for winning your competitors in this industry include…
This strategy is similar to the cost leadership strategy just that it focuses on a niche market. Instead of marketing a product to the entire population, it is marketed to a particular segment of the population. The aim of the strategy is to be the cheapest provider in that segment.
This strategy just like the low-cost focus strategy also focuses on a specific subset of the market. But instead of marketing a product or service as the cheapest, it is marketed as being unique in some way.
This strategy is always used by large companies that can get products cheaply through economies of scale. Then they turn around and sell these cheaply purchased products to buyers, adding a minimal mark-up to keep the price low. We believe that the idea behind this strategy is to be the cheapest provider of a good or service — making it difficult for your competitors to compete with you. Because this strategy requires economies of scale, it’s poorly suited to most small businesses.
Knowing what your customers want gives you an advantage over your competitors because your competitors simply can’t offer what you’re offering. But to develop unique products and services, you have to often invest heavily in research and development — something that a lot of small businesses simply can’t afford. Companies that depend on differentiation need to be careful to not develop easily imitated offerings, because that can ruin the uniqueness.
18. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
A lot of experts have gone a long way to explain the importance of brand awareness. It makes your business what it is and attracts customers for you. We believe that the best way to achieve brand awareness is to make yourself visible to your target market, which is the sole reason why it is important to create a substantial marketing plan to reach them.
We strongly advise that you make use of the diverse print and electronic media. Have it in mind that it is better and cost effective to use the internet and social media platforms to promote your company, and besides it is pretty much effective and wide reaching. Listed below are the few qualities you need to leverage;
- Dedication to your clients
- Creative Problem Solving and Fast Decision Making
- Patience and knowledge
- People skills
- Business and Financial Management Skills
- Work drive and ethics