Studies estimate that about 120 billion liters of bottled water are consumed yearly around the world brought by consumers’ changing lifestyles, increasing health concerns and choosing natural products. Another study showed that three of the five fastest growing food and beverage categories in the global market were beverages. The research revealed that the water business ranked among the top five in the said category. And in Asia Pacific region alone, bottled water was shown as the single fastest growing product in the food and beverage category with a growth of 7% back in 2001.
In the Philippines, Filipinos consume 310 to 507 cubic meters of water daily, but not everyone has access to the commodity. Statistics from the Department of Health (DOH) showed only 76.3 percent of the more than 13.923 million households nationwide have access to safe water supply and around 69.3 percent have sanitary toilets.
A study conducted by the College of Public Health of the University of the Philippines found out that one-third of the households in the slum districts of Metro Manila drink water contaminated with waste. In 2003, five people died and more than 500 residents in Tondo were brought to hospitals due to polluted water. It is no wonder that bottled water became popular.
Bottled water comes in various sizes. Those in retail outlets and supermarkets range from 320 ml to 6000 ml. This has created business phenomenon: water refilling stations. There are an estimated 3,000 "water stores" nationwide, many of them inside affluent villages and subdivisions. They have sprouted like mushrooms in the metropolis and urban areas in the past years.
For would-be investors who wants to put-up and mange a water refilling stations, it might be prudent to first try to find out if acquiring a franchise or being an independent seller is more feasible given one’s current financial condition. Both options have their pros and cons. For instance, acquiring a franchise to operate a water refilling stations would mean a capital infusion of about PhP 800,000.00 to more than PhP 1 million, depending on the franchise, the space, and the location. On the other hand, being an independent seller can cost an initial investment of only Php 400,000.00 to P1 million, based on the capacity of the tanks and filtering system.
The advantage of securing a franchise is that, you will enjoy immediately a head-start in terms of starting their operations compared to independent operators because of franchise programs such as the management assistance/support package. New franchisees are given assistance and guidance on how to the business operates daily while independent operators will have to discover the intricacies of business operation on their own.
Franchise packages, likewise, include marketing programs for the franchisees which can be a big help in marketing the products. Independent sellers, on the other hand, need to design and develop their own promotional scheme to attract clients. With a marketing plan clearly laid down, franchise holders enjoy name recall and brand attachment to entice the customers while independent sellers have to be more creative in this aspect to gain a share in the market.
One good thing about operating as an independent distributor is that you have the luxury of setting your own price. You can price your product lower than what the franchised water refilling stations charged to attract clients and to take out your competitors. It is, thus, not surprising to see that many independent operators usually priced their products at PhP 35.00 per gallon while franchisees offer around PhP 40.00 per gallon. Franchisees cannot afford to lower their price further than PhP 40.00 per gallon because they have to offset the royalty fees and other charges billed to them by the company. Also, franchise agreements usually stipulate that the prices set by their franchisees should be the same.
Nevertheless, one thing is clear: water refilling stations are definitely profitable with return on investments (ROI) ranging from as early as 10 months to two years, depending largely on the store’s location. Staff requirement could range from 2 to 5 people depending on the number of deliveries that the station is willing to make everyday. These deliveries are usually free to ensure that the clients in both the residential and commercial areas maintain their loyalty to the station.
In many cases, water refilling stations can make use of a 1m x 3m space. With rising rental fees, having a medium-sized tank and filtering system might be more feasible. However, it should be noted that the government, through the Department of Health (DOH), will now require a 5m x 5m floor area for water refilling stations as part of their effort to regulate the business.