High competition in the field of water production makes it necessary to conduct a preliminary marketing research to identify the level of competition, the sales market and a preliminary calculation of the profitability of the future enterprise.
Water production, as a business, requires a fairly high level of initial costs, so you need to be sure that these costs will pay off in a reasonable time.
Water is an inexpensive product, but the cost of its production is also low.
In principle, the raw material for production is a practically free product, so the main costs will be made at the stages of its processing and sale.
Conducting competitor research
When conducting market research, first of all, you need to identify the level of competition. It is most profitable to sell bottled water in large cities where there is a shortage of clean drinking water, there is a huge sales market, and the level of solvency of the population is quite high.
However, it is in large cities that there is high competition in the production and marketing of bottled water.
In addition, retail chains in large cities often purchase bottled water from external sources.
Segments of the «water» market
1) A very profitable segment of bottled water sales is its sale through coolers installed in the offices of large enterprises, hotels, and public places.
However, it often turns out that the sales market through this channel is already occupied by competitors. Therefore, you need to carefully study the competitors, the quality of the water they offer on the market, its production volumes, distribution channels and sales methods.
If marketing research reveals that not all niches in the bottled water market are occupied by competitors, then you can proceed to the second step — identifying and planning distribution channels. To do this, you need to study all possible channels for selling bottled water, from large retail chains and enterprises to small shops, kindergartens and schools.
2) Abroad, it also widely uses such a distribution channel as the delivery of bottled water to the population of large cities. this distribution channel is practically not used by anyone yet.
Work with supervisory authorities
The main issue in the production of water is the quality of water, since it is under strict state control.
It is possible to obtain permission for the production and sale of bottled drinking water only after receiving a positive conclusion from a certified laboratory.
Such an examination is not cheap, therefore, before concluding an agreement, it is necessary to check the certificate of the laboratory, which gives it the right to issue such conclusions.
Organization of production
1) As for the production itself, the most profitable option is to equip your own artesian well, which will allow you to receive large volumes of water and not spend money on paying for water utility services.
However, in cities where there is a sales market, most often, the soil is polluted to a great depth, so it is problematic to obtain clean water from an artesian well within the city.
In addition, the production of water requires the placement of equipment, treatment facilities and occupies a fairly large area. Renting land and premises within the city is expensive, so many water producers are creating production infrastructure outside the city. This allows you to get cleaner water, save on rent, but increases transport costs.
2) Another option is to locate the water production directly in the city, receiving water from the water supply.
Water purification systems are capable of producing high-quality water from almost any source, but it is clear that an artesian well outside the city limits allows you to get water without the risk of heavy metals and chemicals getting into it.
In addition, the use of pure artesian water adds an additional argument when conducting advertising campaigns.
3) Water production includes several stages of water purification, first by aeration, then through a series of coal or sand filters, then purification from salts and minerals.
After that, water is disinfected using ultraviolet rays, water is ozonated, and only after that it can be poured into plastic containers.
Often, in the production of water, the technological chain includes other methods of purification, as well as mineralization of water to the required standards.
Some water companies add various additives to the water, such as silver ions, gold ions, and so on.
This is done to improve the quality of water in the fight for the market.
What is included in the initial costs of organizing water production?
The initial cost of a water production business will consist of:
— the cost of acquiring or renting premises;
– drilling and equipment of artesian wells;
– acquisition, installation and certification of water purification and bottling systems;
— the cost of obtaining permits and certification of water.
When calculating the initial costs, it is also necessary to take into account the fact that the water treatment facilities themselves must be equipped in accordance with sanitary standards, and this entails additional costs.
The initial costs of water production as a business also include the purchase of initial volumes of plastic containers, as well as the necessary equipment to capture the market. A successful marketing move is to purchase a certain number of coolers at your own expense and install them in public places to popularize the brand of water.
Experience shows that the cost of purchasing equipment for cleaning and bottling water is several tens of thousands of dollars.
The total cost of starting a water production business is between $3 million and $5 million.
Current costs of running this business
The operating costs of the water production business would include the costs of:
– equipment maintenance,
— rent and utility bills,
— staff salaries,
— Advertising expenses.
The profitability of the water production business is estimated at around 20 percent, although much higher profitability rates can be found in the literature.
However, the relatively low cost of the finished product does not allow you to get high incomes, especially in the early stages of conquering the market. Therefore, the payback period for a water production business project can be estimated at 2-3 years.
More accurate profitability calculations, as well as a ready-made business plan for the production of bottled water, you can order on our website from highly qualified specialists .