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Commercial Bottled Water Production It is most instructive to read the labels on the Aquafina and Dasani (and perhaps other) brands of "bottled water." The label on the back of the Aquafina bottle says "Enjoy the crisp, refreshing taste of Aquafina. Our state of the art RO purification system ensures consistently great tasting Aquafina in every bottle." Dasani has a similar statement about their state of the art RO plant. Their bottled water is far from "natural!" It is highly synthetic, having been produced from some unknown source by an RO procedure. The economics of commercial bottled water are stunning, even for a process as economically inefficient as RO. It would require a market survey to verify the prices these companies are able to sell their bottled water product for in the key markets such as California or the Northeast. However, we know that the sale price of such water on a volumetric basis is astronomical. As an example, currently in Michigan and Wisconsin such water sells for approximately $1.29 per liter. That is equivalent to approximately $5/gallon or $5,000/1000 gallon, three times the cost of retail motor gasoline! It costs the producer only approximately $9/1000 gallon to make that water. Even if the bottling procedure were to cost 5 times that amount (which we are confident is a very conservative estimate), then premium bottled water producers realize approximately $4.90 in margin per gallon sold. Distribution and equipment depreciation, etc. bring the profits down somewhat, but the profit potential is tremendous. Keep in mind, neither Aquafina and Dasani are natural at all—they are run through a RO plant. They are probably nothing but processed Lake Erie water! Now think about Reticle Carbon CDI water purification in their context. Consider how many convenience stores and grocery stores there are in the U.S. In each one alone, there are at least 500 gal of bottled water in the display case. If there were 2500 7-11 stores in North America, that would be $6.25 million sales per convenience store type! This is only the cost to stock the 2500 stores with 500 gallons each. If there are 300 different types of convenience stores ("Circle K, Citgo, AM/PM Minimarket, etc.), then the convenience store business alone achieves the billion dollar mark quite easily. Even if a Reticle Carbon water product were to achieve only a 1-10 percent market share, that would mean $10-100 million in revenue just from convenience store sales alone. All Reticle would need is a clean, inexpensive water source such as Lake Superior to make premium bottled water and distribute it. Even at prices as moderate as one half of the present market price at which the RO producers sell their premium bottled water, Reticle could achieve high margin capture. It is fascinating that there is an "RO pitch" on the label of present bottled waters. Amazingly, RO is being used as a positive marketing statement to customers, a "pitch." There is no reason Reticle Carbon could not do the same and to the same degree. Clearly marketing of bottled water is more about the marketing per se than it is about the cost of producing the water or the technology used to do it. Would a premium water bottling company would sell more bottled water if it reduced the price by fifty percent? Indubitably not, or else that would already have happened. There are a number of competitors in the premium bottled water market, and they are clearly not competing on price but rather using price as a "signal" to customers that their product is worth hundreds of times what tap water is worth. However, from the perspective of the water producer, the lower his cost to produce and deliver that water, the higher his profit margin. The low cost provider makes the most money, all else equal. Reticle Carbon CDI offers prospective producers the opportunity to reduce their raw material production cost by an order of magnitude or so and thereby put additional margin dollars into their business. |
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