Purified water is drinking water (from a tap) that has been purified, various impurities removed, bottled and resold. While purified water has various uses in industry and in various manufacturing processes I will be looking at it from the point of selling the water for human consumption.
There are various business models in the purified water industry which can be used on its own or combined for more revenue streams including:
• Operating a “water bar” in a busy venue where people can bring their empty bottles to be refilled. Or you can install water bars on behalf of others to be used for this purpose.
• Operating a string of water dispensing machines aka water coolers, renting it out (and making money refilling it)
• Operating a dedicated water shop where you sell and dispense water from
• Operating a bottling plant bottling the water in 500ml to 5 liter bottles in large quantities and reselling it.
In the South African water industry the most popular method of water purification is reverse osmosis uses a semi permeable membrane to remove ions, molecules, and larger particles from drinking water. When discussing the above strategies further we will assume that they all use this method.
Please note: Purified water is not to be confused with spring water which is water that comes from an underground source and may or may not have been treated and purified. Though spring water sounds more appealing (like it comes fresh from a mountain) than purified water it is not necessarily better as some spring water contains contaminants while others that claim to be “spring” water but its origin is uncertain.
Onto the various strategies in the purified water business:
Starting with a water bar
This is most likely the cheapest system to startup, which includes a small reverse osmosis system, and a glass dispensing tank with tap, usually built in a tabletop setup (the reverse osmosis system is under the counter). In South Africa you will see this at some Spar shops. The reverse osmosis system is attached to the dispensing tank and sold by the liter. These machines usually have a capacity of around 1500 liters a day, which you can sell for R1 a liter as well as make money from a markup on empty (5 liter) plastic bottles as well.
Business Models for water bar
Installed in a shop
The most popular configuration. It is sold in shops where people can pour their own water and pay by the counter. It is your choice whether you want to sell empty bottles or whether you only want people to bring their own. The business model for the entrepreneur gets tricky here (if he doesn’t own the shop). You can install it in various shops (or even in offices) for a once off fee, and then maintain the filtration system when necessary. You can make it available on a “vending” profit-share system. Which you can grow to be installed in various shops but this depends on the honesty of the shop keeper to pay you as there is usually no way on the machine to see how much water has been dispensed.
If you do have a water bar that’s going a bit slow you can try:
Even though a water bar in a shop is the most popular configuration, entrepreneurs can use the water bar in different ways. They can use it to purify, bottle and deliver water to clients. This is not really common as the large tank is largely cosmetic and there are more efficient ways to purify for this purpose.
Promotional water bottles
This can build a low volume niche custom label (for promotional purposes) water business using a single filling machine.
Operating water dispensing machines (water coolers)
This involves renting machines to various business which makes the complimentary water available for staff or clients. All the dispensing machine does is cool the water, you make the purified water from your premises and deliver it in bottles that attaches to the dispenser. You can make extra money by supply Styrofoam cups and making a small profit on there as well. As mentioned above there is no reason you cannot use a water bar for this purifying purposes if that is all you have but you will be limited to capacity. Plus a water bar is more for cosmetic purposes as well, so you will just need a purifying machine and filling machine.
Operating a dedicated water shop
This is one option that has gotten popular in recent years. Purifying and selling water (and related items) from a shop front. Here you mainly do a bit of everything. Selling water in 500ml to 5 liter bottles, operating a water bar for people to bring and fill their own bottles. Supply bottled refills to water dispensers (not necessary owned by you). You can also do wholesale to other resellers.
Operating a bottling plant (bottling and selling purified water)
This is probably the most expensive to startup but can be grown to the largest. Once the water has been purified it is bottled usually in 500ml, 1liter and 5liter bottles, and then delivered to retail outlets to be resold. Marketing, branding and distribution is what makes or breaks this business as there is lots of competition out there. Besides the bottling plant which requires the large capacity reverse osmosis machine, you also need a filling machine. You need to produce labels that will help you stand out. You need a distribution strategy to get into shops which means you may need delivery vehicles.
The setup can produce custom label bottles on a larger scale, to places like hotels and resorts or other resellers in what is known as “private label” agreements.
The purified water business is an interesting business but one with lots of competition. Networking and building connections is crucial to get you into as many doors as possible.