How to organize a drinking water bottling business

The owner (production of bottled water "Slavnaya") Alexander Usenok told how much it costs to start a water business in Belarus, how he managed to find his niche in a market filled with competitors, and why the crisis should help his company.

Alexander Usenok. Photo from personal archive

– I bought a company with the Slavnaya trademark in 2011. It was bankrupt. I was offered to buy a business back in 2010, but at that time I understood nothing in this area, except that the water business itself occupies a very serious place in the world.

From mid-2010 until the purchase of Slavnaya, I independently studied not only the water business of Belarus, but also the CIS, Europe, and America. I didn’t do any marketing research, I was interested in studying everything myself. Samples of competitors' products are publicly available, and on the Internet, if you wish, you can also find all the necessary information.

After several months of meticulous study of the water topic, I realized that many Belarusian market leaders a) have their own wells near Minsk; b) they highly purify the water extracted from there using the “deep purification method” or, as it is correctly called, reverse osmosis. Without such purification, our competitors today cannot bottle water.

The production of “Slavnaya” is located in the village of Osovets, Lyubansky district. There, which really motivated me, the water initially had a balanced composition, unlike the wells near Minsk. On the one hand, there was no need to spend money on deep cleaning, on the other hand, I understood that I could offer people a product that was 100% high-quality in terms of its natural properties: this is our main difference from our competitors.

Photo by slav.by

How the company looked for its niche

The previous owners of Slavnaya, like all 7 major competitors on the Belarusian market, occupied the 19-liter bottled water segment. In this regard, we only improved production, distribution, promotion and working conditions, but did not occupy a new niche.

In the summer of 2014, we got deeply involved in small-capacity production. I wanted to bring our product even closer to the consumer, making it accessible to any category of the population. It was in the small-car segment that I saw a good niche for myself.

Production was organized in two directions: drinking water and carbonated water.

Photo by slav.by

Decisions to enter this segment were also not based on market research. I drew on life experience and knowledge gained from studying the water business.

The small car segment today is represented on the market mainly in volumes of 0.5-2 liters. These are bottles with classic standard shapes. There is room for experimentation. According to my personal expectations, packaging can be successful if it is designed for specific categories of people. It should be beautiful, comfortable, stylish, and the product line should be long.

For example:

Containers of 0.33 liters are needed by bars, restaurants, and hotels
. Before the crisis hit, this segment was not particularly receptive to us, purely because we did not release water in glass containers. Although in general many people liked our proposal. After the market began to fall, representatives of the service industry themselves began to call us with an offer to buy “plastic” from us. What kind of glass in a crisis?
A container with a sports cap (volume 0.75 l for adults and 0.33 l for children) is suitable for athletes, for training
, and fits well in a backpack or car. I thought that if I was promoting a quality product, then first of all our consumers should be athletes. For the same purposes - promoting our brand through sports - we contacted all sports federations and agreed on co-branding. This means we put their logo on our bottle and they sell our water at their matches. Today we work closely, for example, with the Dynamo-Minsk hockey team.

Photo from the website champ.by
Using the same scheme, we work with some restaurants and hotels that can afford to release a product with their own symbols and logo.

We went to the “small car” shelves quite spontaneously and without much advertising. We have been testing and continue to test the market. He will best give the answer to which containers to produce next and which ones to discard. Maybe 19 liters will go away altogether, but we will reach a higher quality level, having learned the real needs of people. In the 19-liter segment, no new competitors have appeared since I bought the water business, so perhaps everything will remain stable here. But when it comes to small cars, a lot of successful players have emerged in the last two years.

In a month we will launch a new format of 10-liter containers, where we have no competition at all. I decided that today ten liters can be used to cover the kitchen segment. There are many establishments in Belarus (including kitchens in offices) where it is mainly women who cook. And women are simply not able to lift 19 liters and pour it into a pan. The 10-liter format allows you to do this.

We also plan to send this water to retail, because to large hypermarkets, such as “Rodnaya Storona”, “Euroopt”, “Prostor”, “Vitalur”, “Belmarket”, “Almi”, etc. people come most often by car, and even a woman can buy ten liters.

Photo from www.gutetipps.de

I think my instincts won’t let me down here either, and with a 10-liter volume it will work out the same as with a sports bottle. Today, sportswear is the most popular in retail and the most purchased in our line.

Water delivery business

If in the business of producing and bottling water, the emphasis is on the quality of the product, then in the delivery business the main thing is the number of customers and timely provision of products. Investments in business are minimal when you have your own freight transport. Presumably, the payback will come from the first trial delivery.

What is the best way to register a business?

If you want to limit yourself to home delivery of water, then registering as an individual entrepreneur is sufficient. If the clients are large companies, it makes more sense to form an LLC, since not all companies are ready to cooperate with individual entrepreneurs.

Startup costs

Purchasing the required amount of containers. It’s very easy to calculate: multiply the number of clients by three, the approximate price per bottle is about 120 rubles.
Fare. They will be minimal if you have your own transport.
Rent of premises for storage. Its area must be at least 20 square meters.

For this business, two people are enough, one is responsible for delivery, the other is involved in documentation, searching and communicating with clients.

Expenses

The water business is very complex and money-intensive. To bring it to the required level, you need to invest serious capital.

A million dollars is the bare minimum, but it can be easily lost.

You need to have constant support, that is, some other business that will develop your water business until it reaches self-sufficiency. My main profitable business - Fujifilm digital photo printing stores - gave me the opportunity to take a risk.

Those who were involved in the production of “Slavnaya” before me were inexperienced young guys who had no business before. They simply didn’t appreciate the scale of the business, they just played around and that’s it. An inventory of the entire production showed that the previous owners since 2009, since its launch, have done absolutely nothing to seriously develop the business. Anyone can install a Chinese line and pour water into a 19-liter bottle. Business, especially water business, is not built that way. As a result, the previous owners lost their millions.

In order to turn a bankrupt Slavnaya into a profitable business, it was necessary to practically organize and reconstruct the entire production from scratch. Preparation can be divided into several stages.

Step-by-step plan for starting a business

Start by registering the enterprise as an individual entrepreneur or legal entity. persons, obtain the necessary permits.
Purchase equipment, prepare the car.
Hire workers, prepare them for work and equipment maintenance.
Organize constant work to find new clients and advertising activities: distribute leaflets, give advertisements.
Promptly respond to orders, provide quality customer service, increase their level of loyalty and satisfaction (“word of mouth” is an important way to attract new consumers).

Over time, an entrepreneur can expand his activities by organizing a business for bottling water from a well. This area of production opens up new opportunities and allows you to enter retail chains.

Drilling wells is a promising idea that is not yet widespread among Russian entrepreneurs. This field of activity is open to new participants and allows you to earn high incomes. After studying the business plan in this article, the reader will be able to assess the prospects of this business and decide whether it is suitable for him.

New equipment. Modernization of premises. Car park

Photo slav.by
Installation of new modern water treatment equipment

includes: a station for deferrization, disinfection, softening, filtration, without which the product cannot be bottled (costs approximately $35 thousand).

We produce containers from 0.33 l to 10 l ourselves. To make one type of bottle, you need to think about the shape yourself. To do this, it was necessary to install bottle blowing equipment

(worth about $100 thousand).
Bottling equipment
was also installed (costs: about $250 thousand).

To ensure smooth production of all types of products, it is necessary to maintain the availability of bottle blowing materials, as well as caps, labels, etc. This also requires significant costs.

Photo by slav.by

Another approximately $400 thousand was spent on renovation of the premises.

: installation of heating equipment, laying screeds, replacing all electrical equipment, waterproofing, major roof repairs, insulation and cladding of the building with metal profiles, paving the entire territory of the plant, etc.

Since delivery is our additional service, it is clear that it should be carried out using normal vehicles. So I replaced the entire fleet

. I bought 15 Mercedes for Minsk alone. The total vehicle fleet throughout the republic today includes 25 cars, the purchase of which cost €150 thousand.

Almost all of the offices are your own, so you hardly have to spend money on rent. In the regions , renting warehouses is inexpensive: in each of the six regional centers where we are represented, we spend $500 per month on them.

Equipment for the production of drinking water

This point in organizing a business is the most expensive. Thus, a water production line should include the following equipment:

pumping and cleaning equipment, the cost of which starts from 3.5-5 thousand dollars;
a water bottling line costing about 4 thousand dollars.

If you plan to use fully automated equipment, then its price will be higher - from 20 thousand dollars.

To begin with, you can purchase ready-made plastic bottles for bottling the finished product. However, in the future, for

When purchasing all units, be sure to pay attention to their performance, quality and warranty conditions. Do not forget that the quality of the final product, and therefore the success of your business, depends on the equipment. To optimize your business, it is advisable to acquire your own production line. Such equipment will cost from 12 to 15 thousand dollars.

Personnel

Our main production, as I said above, is located in the countryside, so the issue of personnel policy has become acute. It was difficult. The contingent in the village is, to put it mildly, difficult. There is nothing in the village, everything around is in decline. There is also no private business - a significant one that would provide jobs and somehow involve people in work. There are a lot of drinking people. I could not allow such personnel to work in my production.

To motivate people, I immediately doubled their salaries (when I arrived, workers received 600 thousand rubles each). Today, workers' salaries are 3.5-4 million, which is quite good for a village. However, he warned that there would be great demand from them. There were also significant layoffs. But now I can say that my employees lead a sober lifestyle and stick to each other.

The second part of the team is the drivers and those employees who work in the offices. In total, Slavnaya employs 65 people.

We already serve about 25 thousand clients across the country (60% – individuals, 40% – corporate sector).

Most employees sit in the office and have no contact with clients. Our drivers mainly communicate with the client. That is, the driver is the face of the company, which was important to take into account when forming the personnel policy.

Photo by slav.by

We decided that the person must be appropriate: the driver must be well dressed, shod, educated, prepared and must know our product. Just a nice guy who follows orders and is conscientious about his work is not suitable here. That is why I introduced certification for all drivers: they study our product, the company's development prospects, our plans for what will appear in the assortment, as well as what market segment we occupy and want to occupy.

When trying to promote a new brand, you should invest in advertising. To do this, you need to follow these tips:

Determine your target audience. Most often, schools, offices and kindergartens purchase drinking water in large quantities. Personal visits to nearby establishments are usually sufficient to obtain an indicative client base.
Place advertisements on free Internet portals. Today, this option is one of the most effective methods of promotion, but does not require material costs.
Printable advertisement. For this you should use newspapers.
Additionally, you will have to spend money on printing business cards and flyers.

In total, you will have to invest about 20,000 rubles in advertising at the start of your activity.

Promotion

When we went through the main stages of pre-production and delivery, we made a beautiful video and launched advertising on TV and radio. Our website has been completely redesigned. Our company invested about $130 thousand in advertising from 2011 to 2013 (including the production of a commercial). At the end of 2014, we shot another video dedicated to the small car. The advertising budget that we approved with television channels amounted to 900 million rubles.

Still from a commercial. Screenshot from youtube.com

At the “Brand of the Year”, in which we participated this year, we received a lot of advice on our promotion and positioning from the jury members, we will listen to them, we will position ourselves more as a company that is distinguished by the naturalness of its water.

Although, to be honest, we were afraid to actively promote ourselves and become a brand right away. Initially, I did not rely on marketing only for economic reasons.

We could receive a volume of clients that we would not be able to handle. When volumes grow sharply, you can get overwhelmed and not have time to get your bearings in time.

We need to very quickly buy additional cars, hire a staff of drivers, and train them. Until the moment I saw that we were ready to meet demand, we did not actively promote our products.

Choosing a location for a well

One of the most important factors that affects the quality of water produced and supplied to customers is the place of its extraction. Information about its availability is available in the relevant Cadastre. At the same time, one cannot help but note the fact that not every deposit has drinking artesian water.

When choosing a place to drill a well, you should pay attention to clean areas from an environmental point of view. Next, it is necessary to take a water sample from each specific deposit and conduct a series of tests on it. Such analyzes are done exclusively in laboratory conditions using specialized equipment.

After the artesian water receives a positive assessment, you can contact a company that provides exploration and well drilling services. It should be noted that many of them are ready to complete the work from start to finish and prepare all the necessary documents.

Plans for 2020

At the moment, we are not yet profitable in the small car business. We are still covering costs. At a cost-effective level today we only have 19 liters. We spend everything we earn on the small-volume segment, which needs to be made profitable. According to my calculations, by the summer we will already make our first profit here.

I see many opportunities for myself next year. I think that the crisis will only help our company. This is exactly the case when we produce a purely Belarusian product and are not dependent on imports and in fact are not dependent on the dollar and the euro.

If now we work only one shift, we plan to work two, and if necessary, even three. Nothing is holding us back.

We can produce 2.5 thousand bottles per hour. If we work in two shifts, we will be able to produce 40 thousand bottles per day. If we take, for example, the volume of a bottle is 1 liter, then, accordingly, 40 thousand liters. At a selling price of, say, 3 thousand rubles per liter, 120 million worth of products can be produced in a day. Multiply by 22 working days - 2.64 billion only for a small car.

We are actively planning to develop retail chains. Over the past year, we have entered all major cities, where we have our own dealers who distribute products throughout the regions. The sales department is fully staffed with supervisors, sales representatives and merchandisers. This is a team that is engaged in promotion and sales in Minsk, working with both chains and small stores.

In 2020, we also thought about entering the Russian market and even almost did it at the end of 2014. But the Russian ruble fell before we had time to organize anything. In the future, when the Russian market comes to life, plans to get there remain. There are prospects to occupy a niche there in the small-car segment.

Photo from the site www.miss-wellness.ru