| This profile is designed to be a reference resource for existing and prospective small business owners, particularly as they assess how their businesses are operating and developing plans for the future. These examples illustrate various ways in which small businesses are actually operating but are not meant to be instructions that small businesses should follow. State of the Industry Millions more Americans are choosing to drink bottled water in the last decade than ever before. Sales of domestic water in small bottles has increased from 4.4 million gallons in 1984 to 750 million gallons in 1997, according to a report in The New York Times, which draws data from Beverage Marketing magazine and individual water bottling companies. Much of the gain has come since 1992 when half-liter bottles, which can fit into vending machines, became the bottle of choice. According to Jane Lazgin, a spokeswoman for the Perrier Group, bottled water is still in its infancy. Market The states representing the top five markets in the U.S. in rank order are California, Texas, New York, Florida, and Illinois. California accounts for almost half of the total bottled water consumed in the U.S. According to the Baltimore Sun, Americans bought bottled water in Grocery Stores 44.7%, Home/Office delivery 39.0% and Vending machines/restaurants 16.3% of the time in 1996. Pricing The expanding market has produced its own price war, with prices falling from about $1.09 for one and halfliter to as low as 69 cents. Currently, in Arkansas, the price of a five-gallon delivered bottle of water ranges from $2.50 to $9.00. A cooler rental per month ranges from $6.00 to $9.75. Distribution Channels The distribution channels in the State of Arkansas are divided geographically. The distributors buy into a franchise type of arrangement with the bottler who puts certain restrictions on the contract in terms of service and selling of competitive products. In recent year, consumption of sparkling waters has increased substantially in bars, restaurants and vending machines. Operations Demand for still drinking waters appears to be growing faster than the demand for sparkling (carbonated) waters, although continued growth in sales will depend on criticism of the purity and origin of the water. Proper labeling has become a major issue. Water sources must be licensed and monitored regularly by Federal inspectors. Current operations information related to regulations, equipment and labeling can be obtained from the trade journal, Bottled Water Reporter, and the International Bottled Water Association, IBWA. Competition The value of bottled water sales was expected to grow only by 10 percent in 1990, or $2.4 billion, because competition had driven prices down. There are approximately 475 bottling plants in the U.S. with $3.375 billion revenues in 1995 producing more than 600 labels. There are over 75 brands imported, accounting for 3% of the water sold in the U.S. According to Michael Bellas, chairman and chief executive of Beverage Marketing, "The key factor is going to be the low-cost producer that is regionally diversified and the one that can put some marketing muscle behind this water." There are so many new entrants; the bottled water industry is highly competitive. Trade Publications Beverage World Periscope
Strategic Business Communications
226 W. 26th Street, 10th Floor
New York, NY 10001-6700
Phone: (212) 822-5930 Bottled Water Reporter
International Bottled Water Association
1700 Diagonal Road, Suite 650
Alexandria, VA 22314
Phone: (703) 683-5213 Hot Springs, Mineral Water
Bibliotheca Press
c/o prosperity & profits Unltd.
P.O. Box 416
Denver, CO 80201-0416
Phone: (303) 575-5676 Trade Associations International Bottled Water Association (IBWA)
1700 Diagonal Road, Suite 650
Alexandria, VA 22314
Phone: (703) 683-5213
URL: www.bottledwater.org Sources: Hays, Constance L., The New York Times, The New York Times Company, New York: January 20, 1998, Section D, Page 1, Column 2. Lazich, Robert S., Market Share Reporter, Gale Research, Detroit: 1997, pp. 90-91. MacFarlane, Theresa J., Small Business Sourcebook Vol.1, Gale Research, Farmington Hills: 1999, pp. 256-257. Schau, Michael, Research Alert Yearbook, EPM Communications, Inc., New York: 1999, p. 121.
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