Overview of Bottled Water Business
Water is the basic and primary need of every individual. Instead of regular tap water, people are moving towards mineral and packaged drinking water for the safety of their health. The increase in the use of mineral water is because it contains salts and sulfur compounds that benefit our health.
So, the rise in demand for mineral water provides more and more opportunities to set up a mineral water plant. Many of the entrepreneurs are investing a large amount in the water business by seeing the never-ending demand. Using it will bring profit and increment to their business.
However, if you are thinking about starting a mineral water business, you need to know and have the correct information about the mineral water industry.
Water is available throughout the globe but how much of the available water is fit for drinking? We all rely on a water supplier (either the government water board or an external supplier) for consuming purified water. Unpurified water is highly dangerous as it may contain chemical impurities, bacteria, and dust. Naturally, available water must undergo a treatment process to ensure it has the right PH balance and only required minerals. With the consumption of water increases due to the growing population, it is quite imperative that the world would require a greater number of water purification units. This is where the bottled water business players are benefitting from.
Bottled water business comprises purifying the water, bottling them for consumption and selling them. Bottled water is extremely convenient to carry especially for employees, travelers, and students. It keeps them hydrated irrespective of their proximity to the water supply.
Bottled water can be made of spring water, mountain water or normal water. Spring and mountain water are referred to as mineral water. Flavored drinking water is a new trend in the bottled water industry.
According to the Bureau of Indian Standards (BIS), there are approximately 1,200 bottling plants and 200 brands of packaged drinking water across the country. Out of these 200 brands, 80% of them are local. A number of popular brands in India are Bisleri, Kingfisher, McDowell’s No. 1, Aquafina, Bailey, and Kinley.
Among these brands, Bisleri has captured the majority of the market share, and it stands at 36%. Coca Cola’s Kinley is next in line with a 35% market share. This is followed by Aquafina, at 15%. Other smaller brands that do not have a major market share in the mineral water sector are Parle Agro’s Bailey, Kingfisher and McDowell’s No. 1. Today, consumers purchase mineral water in 500-ml bottles, one-liter bottles, and bulk packs, with over five-liter capacity. Many people purchase 20-liter bottles for both commercial and home usage.
Bottled water is one commodity that is consumed in all parts of the world and of course those that are in the business of producing bottled water are known to generate sales year in year out if the business is well – managed. As a matter of fact, economic downturn hardly affects the consumption of bottled water simple because it is a commodity that is as important as the air we breathe in.
Production companies in the bottled water industry basically purify and bottle water into plastic and glass bottles for consumption. The bottled water are properly capped and labeled accordingly before being sold to the general public. Companies in this industry usually have an assortment of water offerings, such as spring water, mineral water, sparkling water and flavored water in a range of sizes and prizes.
Players in this industry are also involved in the manufacturing of ice manufacturing. It is common to find big corporations who are into production of soft drinks and food and beverages engage in the production of bottled water.
Is Bottled Water Business Profitable?
The profit margin in mineral water business is highly dependent. If you sell 500-ml, 1-liter, and 5-liter jars, the average profit will be 10-15%. However, if you sell 5-liter jars, the average profit will be around 30-40%. But, the number of bottles sold also varies per category. The number of bottles sold in the small bottles category far more exceeds the number of bottles sold in the large jar category.
Growth Prospect of Bottled Water (Mineral Water) Plant Business in India
- In India, the consumption of bottled water is primarily due to the absence of safe potable water because of a massive rise in the population, the inflow of overseas students & tourists, poor water of tap water and rise of health awareness.
- As the Indian government has struggled to facilitate pure drinking water, private entities have not just filled the gap but also underpinned a robust business. The mainstream water entities in India are stressing on increasing their market share by leveraging effective market strategies & attractive packaging.
- The market has a valuation of Rs 160 billion in FY 2018, and it is projected to grow @ 20.7% (CAGR) and reach Rs. ~403.06 billion by 2023.
- The 1L bottle captured almost 14% of the market share in FY 2018, followed by 500 ml bottles & 250 ml bottles. Depending on the volume, the market is expected to reach 35.53 billion litres by 2023, thriving at a CAGR of 18.2% from 2018 to 2023.
- In the recent past, the Flavoured bottled drinking water has witnessed a sharp spike in demand all accords the nation. Different kinds of flavoured water containing artificial sweeteners, fruit essence, and other sweetened beverages serve as a substitute to plain bottled water. End-users prefer these products over normal bottled water sometimes. This shift is garnering an opportunity to widen the product line of bottled water manufacturers in India.
- Mineral water has become an indispensable requirement for masses these days, which in turn creating a viable business opportunity for new entrepreneurs. The escalating consumption makes the mineral water industry one of the successful ventures for start-ups in India.
Steps to start a Profitable Bottled Water Business
1. Conduct a feasibility study and analyze market trends
A feasibility study is required for an entrepreneur to understand the requirements, determine the pricing strategy and define a marketing strategy that can make the product survive the market. A thorough market analysis can give valuable insights to untapped market places and opportunities or even enhancements to bottled water.
2. Create and write a business plan
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Business plan for bottled water business can make business execution easy and also win funds for you. Business plan for bottled water must have sections like an executive summary, vision, missions, potential market, market analysis, promotion, and marketing, staffing, capital and return estimations.
3. Chose a Name for your Bottled Water Business
Choosing the right name is important and challenging. If you operate a sole proprietorship, you might want to operate under a business name other than your own name.
When registering a business name, we recommend researching your business name by checking:
- Your state’s business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It’s very important to secure your domain name before someone else does. The name should be catchy and appealing to the consumers.
4. Plant Size for Bottled Water (Mineral Water) Business
Your water plant size is decided by factors like the types of products you’re going to launch, Volume of production and level of Automation used in the plant.
A plant that produces mineral water only in Jar (20 liters) may require 1,300–1,600 square feet of land. For only bottled mineral water it may require 2,300–2,600 Square feet.
Plants that produce both bottled and Jar mineral water usually require approximately 3,000–3,500 square feet.
A medium-capacity fully automatic plant which produces both types of products requires 5,000–6,000 square feet.
And a high capacity fully automatic plant which produces both types of products requires 8,000–6,000 square feet.
Keep in mind that you need separate warehouses/rooms within your plant to keep your raw materials and finished products. This comes under BIS norms.
5. Select a Location and find a good water source for your Bottled Water Business
Choose a location strategically by considering factors like a water source, transportation distance to the market, availability, and affordability of a space large enough to set up huge water tanks and most importantly continuous power supply. Ensure that the location selected has enough space for transporting water tankers.
Establishing a workable mineral water plant seeks a minimum space of 1000 square ft. The layout of the same should be tweaked in accordance with the equipment to be used in the process to maximize efficacy. If possible, select the location that comes in close proximity to the marketing distribution areas. This way, it will become easier for you to reduce the overall transportation cost.
Choosing a proper location for your mineral water plant is very important. These are the few basic things you need to consider while selecting a location.
Make sure that your plant has easy access to reach your products into the local market.
There should be enough water resources in the surrounding areas of your plant. Otherwise, the locals might complain against water shortage because of heavy usage of bore well water by your plant.
You require some skilled laborers in your plant. Should check the availability of skilled labor in that area.
There should not be any chemical or polluting industries near your plant.
Availability of three-phase electricity supply, especially if you are planning in rural or suburban areas.
A good water source is essential to the success of the business. The source of water could be boring well water, surface water, seawater, municipal supply or other sources in which treatment is possible.
6. Procure Certification and License to start your Bottled Water Business
Whether it be a small or large-scale industry, each of them requires certain and different kinds of licenses and registrations from the authorities of the government. As per the state government of a particular state, the certification and permit requirements may vary. So, to know the exact laws for setting up the industry in an individual state, you need to check up on the following points:
- Firm Registration – You can easily start your mineral water business by registering a Proprietorship or Partnership firm. If you are starting on your own without any partners, go for a Proprietorship firm, but if you are starting with two or more partners, register a Partnership firm. You can also register a Limited Liability or Private Limited company, but that is hard and costly to manage. Register a Limited Liability or Private Limited company only if you are planning to raise funds from an investor. You can also convert your company type later.
- BIS Registration – ISI Specification packaged natural mineral water is IS 13428:1998 and for packaged drinking water is IS 14543: 1998. BIS is a national body which maintains the quality, safety, and reliability of products in India. The BIS license is expected to be granted within 30 days of submission of BIS Certification application. The ISI mark refers to a standards-compliance mark for particular products in India since 1955. The mark ensures that the product aligns with the Indian standard (IS) underpinned by BIS, an apex government body. For some products, ISO marks are not mandatory. Most of the norms are required to be fulfilled with the BIS and its provisions. It is mandated by GOI to avail BIS certification for the Mineral Water Plant. In India, for potable drinking water, it is compulsory to get it tested in accordance with the BIS norms. Once you have availed the BIS license, you are also need to obtain a report on raw as well as processed water from BIS. To serve such a purpose, you need to head over to LWTL (Local Water Testing Laboratory).
- GST Registration – GST Registration is mandatory for every business. There is NIL GST on water (no mineral) but the GST rate for water with added minerals is 18%. The HSN Codes for water including aerated, mineral and non-mineral are 22011010 and 22011020.
- Trade Licence – Trade license is issued by the local authority. In the case of towns and cities, Municipal Corporation issues a trade license. In rural areas, the Panchayat or SDO (Sub-Divisional Officer) may offer a trade license. It differs from state to state and city to city. You can always Google to get more information.
- Pollution Certificate – Water treatment plants can cause pollution. The State Pollution Control Board of every state issues a certificate after inspection of your plant. The rules, regulations, and norms differ from state to state. The experts test the water, surrounding, equipment, production process and packaging methods to ensure that the factory is not adding to pollution levels in the area.
- FSSAI Registration – Food Safety and Standard Authority of India issues an FSSAI license after inspecting your plant and product. The FSSAI license number has to be printed on every water bottle that you manufacture.
- Trademark (Optional) – If you have a brand name like “Kinley”, “Bisleri” or “Aquafina” that you don’t want any other business to copy, a trademark will protect it. However, it is not mandatory to start your business. It is only a prevention measure to stop competitors from using your brand name.
- MSME/SSI (Optional) – Government has introduced a lot of schemes for MSME (Medium and Small Enterprises) and SSI (Small Scale Industries) like low-interest loans, single window clearance and many more. It is not mandatory to register as an MSME or SSI, but it can help you to do your business easily. SSI registration is an essential for the growth of the small scale industries in India. Thus, in order to access various benefits of government subsidies, you must apply for this registration.
- IEC Code (Optional) – IEC means Import Export Code. It is mandatory only if you plan to import your raw materials from other countries and export your mineral water bottles to other countries. If you plan to sell within India, this license is not required.
- Water sample analysis – Water is the main resource you need to start mineral water factory. For that, you need a clean source of water. Getting samples of this water tested at government labs is a must. If they are happy with the quality of water, then you will get the permits.
- Pest control reports/certificate – Safety and hygiene is of utmost importance in a mineral water production company. Thus, you need to get permit from the pest control department.
- NOC certificate – It is the responsibility of the factory owner to get no objection certificate from the Gram Panchyat or Municipality.
- Worker medical certificates – The owner of the company must get health reports of each employee. The owner needs to ensure that the workers are not suffering from any communicable disease. Otherwise, the health department will not give the license.
- Power certificates – Whether your mineral water plant is small or big, it will require a lot of electricity. All heavy duty machines require electricity to operate. It is not possible to do so with domestic connections. You must apply for commercial connection to the respective government department. Once you get this permit, the power company will install commercial meters at the plant.
- Certification from power agency – You will not be able to start production until you acquire the safety certificate from the power enterprise and department. The experts will visit the plant, check the meter, wiring, and safety equipment. If they are happy with the report, then they will give the grant to start production.
Having all these licenses and certifications will help to have a better and trustworthy plant business.
7. Investment Required for Bottled Water Business
This completely depends on the factors like value of the land, construction costs, the type of products you are planning to launch, the production capacity of your plant, and the level of automation or types of machinery you are going to use.
Opening a bottled or packaged water manufacturing plant is cost intensive. A medium sized plant, with the capacity of dishing out around 45 lakh bottles, during one financial year, will require anything between Rs. 118 lakhs to 122 lakhs. It is a rough estimate, and will vary on several relative factors. It is the amount that you require to set up the plant. The overall financial expenditure necessary to get the desired production is around Rs. 240 to Rs. 245 lakhs. Opting for a dealership is a better option. If you get a dealership, then you can start the business with anything between Rs. 15 to Rs. 25 lakhs. The actual amount will vary according to region, host company policies, demand and other factors.
Opening a mineral water manufacturing plant is a medium to big scale business. It cannot be done on a small scale. If you do not have necessary funds and resources, then it is better to opt for dealerships or franchise. But that is equally expensive proposition. Whether you open your own manufacturing unit or opt for a franchise, a number of high end machines are needed for purifying, processing and packing the water.
On rough estimation we can say, you need approximately 20 lakhs (small scale) to 2.5 crores (large scale) to start a mineral water plant in India.
Once you are done with market research and planning stage contact any mineral water plant contractor or machinery supplier, describe them your requirement, and get a quotation. Collect at least 3-4 quotations from different suppliers or contractors.
8. Machinery and Raw Material Required for Bottled Water Business
The basic raw material for mineral water manufacturing plant is of course water. The most preferable way to get water is underground boring.
There are other raw materials that you have to purchase include water bottles, bottle caps, chemical, reagents, pouches, cartoon boxes, etc.
The machinery for bottled water business depends on the scale on which you would like to produce. There are different types of machinery available for starting a water treatment plant. There is fully-automatic, semi-automatic and manual equipment. You have to frame your budget, target market and requirements to decide which machinery you should buy. Fully automatic machines are costly while semi-automatic and manual machines are comparatively cheaper than fully-automatic machines.
The common machinery required is a generator, tanks, bottle filling, labeling and sealing machines, testing tools, treatment machines, filters and water purifying chemicals. To ensure safety and hygiene, the bottles must first be washed and sterilized. This is can be done manually using warm water for small scale water plant units but must be automated for medium and large-scale units.
Some of the most commonly used machines in Mineral Water Plant are as follows:
- Reverse Osmosis (RO) plant
a. Raw water pump
b. Dual media Filter
c. Carbon Filter
d. Antiscalant dosing system
e. Micron cartridge filter
g. High-pressure pump
h. Reverse osmosis system RO
i. Water Storage tank
j. Transfer pump
k. Micron cartridge filter (post-treatment)
l. UV System
m. Ozone System
n. Ozone storage tank
- Bottle Blowing Machine
- Automatic bottle rinsing, filling& capping machine
- Jar bottle rinsing, filling & capping machine
- Batch printing machine
- Automatic labeling machine
9 . Water Purification Process Overview
Below is a summary of the water purification process. However, the process is highly dependent on what machinery you use for your water treatment. The supplier will provide you with all the relevant information.
- Collect The Water – The water is pumped out of the ground and stored in the storage tank. The water is dozed with alum for coagulation with heavy metals and other insoluble matters.
- Remove Impurities – After allowing the water to settle for 1-2 hours, the impurities are removed with the help of osmosis technique.
- Bubbling Chlorine Gas Processes – The purified water is then transferred to a chlorination tank where the bubbling chlorine gas process kills the harmful bacteria.
- Sand Filtration – After the chlorination process, the water is passed through sand water filters to trap the undissolved impurities.
- Carbon Filtration – Carbon filtration removes the foul smell of chlorine and purifies the color of the water.
- Micro Filters – The microfilters performs terminal disinfection and removes the impurities below 5 microns, 1 micron and 0.4 microns in size.
- Ultra-violet Filtration – The water is then passed through an ultra-violet filtration chamber that kills the remaining bacteria and makes the water drinkable.
- Bottle Filling – The mineral water is then filled into bottles using automatic filling machines or manually. The bottles are then capped automatically or manually depending on your machinery.
- Packaging – The filled bottles are then wrapped in sheets and packed into corrugated boxes for transportation. A box can contain 12 to 24 bottles depending on the box and your requirements.
10. Market your Products
The criteria of your success depend upon the quality of the product you sell. Moreover, marketing strategies are linked with selling. So, decide your target market and build a strong distribution network.
If you are running a large scale plant then you need to get in touch with good distributors. They usually have a good network all over the region. This would help you to reach your products to the entire region you are targeting.
You can also run advertisements in the newspaper and local news channels to promote your brand.
Participate in tender biddings like railways department where you can get huge orders for a long period of time.
Small scale mineral water plants can take full use of social media to market your products. Run paid advertisements on Facebook targeting your region.
Stickers on your goods vehicles also work as a great marketing source.
Other marketing tricks like build networks with wholesale sellers, retailer shops in your area, run advertisements in local newspapers, distribute flyers, etc.
* Promotional tips for better business
- Online advertising – Today, online representation is a must for any company. If reputed agencies are taking assistance of online promotion, then it is a must for a person, just starting out in the business as well.
- Traditional advertising – Apart from online promotions, you can also harness the power of traditional media. Audio media (radio), audio – video media (television) and print media will offer your product positive exposure and promotion.
- Making use of social media – Social networks are potent platforms for getting in touch with the target clients. Maintaining a separate account for the brand will keep people posted about the upcoming events and launches. It also increases exposure that is a must for promotion and business.
- Distribution of pamphlets – If you are manufacturing and selling mineral water under your own brand name, then distributing handouts, and offering free samples to people will come in handy to create a hype in the market. It must be done before the actual launch of your product.
- Promotional hoardings and banners – Putting up promotional hoardings and banners, in places where a large number of people can see it, will increase the chances of your brand’s exposure.
* FSSAI Standards for Mineral Water Plant
The mineral water plant must align with the given standards underpinned by the FSSAI:
The mineral water is required to undergo a various phase of treatment such as:
- A combination of filtration
- Filtration with membrane filter depth filter
- Cartridge filter
- Activated carbon filtration
- Reverse osmosis
The packagers must ensure that the mineral water is entirely disinfected via chemical agents or physical methods. During such treatment, the packager has to keep the level of microorganisms below the scientifically accepted level to ensure safe production.
Packagers must leverage the desalinization process for the treatment of seawater.
Sealed containers of several compositions, capacities & forms must be used which are safe for direct consumption.
Where the water is subject to a re-mineralization process, the ingredients utilized will need to conform to food-grade as well as pharma-grade quality.
* Risks and Management
- Preventing underground water pollution – As these plants depend on ground or underground water sources, and waste water is drained out, steps must be taken to prevent any risk to these natural water sources.
- Safe storage of fuel and chemicals – The commercial water purification plants use a number of chemicals. The machines also run on fuel. Better care must be taken to store these chemicals and fuel, to keep risks and accidents at bay.
- No faulty storage of products – A lot depends on the storage facility. If the storage areas are not clean, then the packaged water can turn bad in no time. Risks can be averted by paying attention to capping, sealing, boxing and boxing activities.
- Adequate quality control – Another risk, closely associated with the mineral water business is inability to maintain high quality of water. It is the responsibility of the R&D department to carry out batch tests to make sure that purification and addition of preservatives have been done accurately.
* Waste management
The bottled water manufacturing plants generate a high percentage of liquid waste on daily basis. The effluents have high potential to increase soil and water pollution. To prevent environmental degradation, these waste products must be treated. The plants must ensure that only treated wastes are going out in the sewage drains. The slant of main drains, going out of the plant, must be adequate. These drains must be covered, and should not be placed adjacent to water processing and packaging units. Back run of dirty water, into the plant must be stopped at all costs. Chemicals must not be stored alongside bottled water boxes