With billions of gallons sold yearly in the U.S. alone, bottled water is big business – and you can cash in by starting your own bottled water company. While there is enormous potential for this type of business, it isn’t easy to break into.
To help you get started, this guide will provide an overview of the industry and walk through the key steps to launch your own successful bottled water company..
As a bottled water company, you will be processing and purifying water and then bottling it for resale to consumers. The most common types of water are purified water, spring water, naturally sparkling water, mineral water, and seltzer water, directly sourced from municipal supplies, underground springs, and wells.
The business makes money by selling bottled water on a retail or wholesale basis. The profit margins can be attractive, as the key input, water, is usually fairly low in cost. However, the main expenses in this business involve processing, packaging, and distribution, as well as compliance with health and safety regulations.
The bottled water industry in the United States is large and growing. Only 464 companies make up this industry, employing over 15,000 employees, and are expected to make $9 billion in 2023.1 The three largest companies by sales in the US include BlueTriton Brands, Coca-Cola Company (Dasani), and PepsiCo (Aquafina).2
Growth in this industry is driven by several factors. People are continually seeking healthier drink alternatives, and bottled water is seen as a preferable option to sugary sodas or juices. Plus, the convenience of bottled water is appreciated by consumers on the go.
In addition to large competitors, there are other challenges to confront in this industry. Notably, environmental concerns about plastic waste are becoming increasingly significant. The desire to reduce carbon footprints might drive some consumers towards other, more eco-friendly beverage choices.
Steps To Start A Bottled Water Business
Step 1: Write a Business Plan
Before a single bottle is filled or sold, developing a strong business plan should be your first step to starting a bottled water company. The investment needed in this type of business can be quite large, not to mention the logistical complexity, so without careful upfront planning, it’s easy to make a costly mistake. Here are just a few of the main reasons why a business plan is so important, especially for a bottled water company.
To start, your business plan helps bring your vision for your bottled water company to life. In this plan, you set clear goals and decide how to achieve them. Setting a clear direction is very important when you’re in a business so tied to brand identity and what consumers prefer.
Next, the bottled water market is pretty competitive. To stand out, you need to understand what consumers want, what your competitors are doing, and where there’s room for someone new. Your business plan will include a careful study of the market, helping you create products that meet consumers’ needs and find your unique place in the industry.
Last, your business plan will need to cover the financial side of things in detail. You’ll need to spend on things like getting water, cleaning it, putting it in bottles, and getting those bottles to stores or customers. A business plan helps you figure out how much all this will cost. It also helps you think about where the money will come from, whether that’s your savings, loans, or investors. What’s more, if you’re hoping to get investment or a loan to help get your business off the ground, having a clear business plan is a must to show possible investors that your business has strong potential for growth and success.
Related: How to write a business plan
Step 2: Secure a Water Source
The next step in establishing your business is to secure a water source. It may seem like a simple task, but the quality and availability of the water source play an essential role in the success of your business. The water source is not just a supplier; it’s the heart of your bottled water business. The quality, taste, purity, and cost to treat your product depend on the source you choose. Consider volume, flow rate, natural mineral content, potential seasonal variability, and protection from contaminants when evaluating options.
Bottled water manufacturers typically source their water from protected underground springs, wells, and municipal supplies. Each of these offers its own benefits and challenges:
- Underground springs and wells: These sources are often preferred due to the high-quality water that they can provide. However, this quality can come with higher costs and stricter regulations.
- Municipal supplies: This option might be more economically friendly, but it can also mean that you’ll need to handle more water treatment yourself.
Beyond just finding a source, you’ll also need to consider the quality of the water that it can supply. Will it meet the standards set by the Environmental Protection Agency and Food and Drug Administration? There may be unique requirements for bottling businesses. Carefully study these, as you will need to adhere to them for your business to be approved and run legally.
After identifying and evaluating a water source, the next step is to secure the rights to use it. Depending on the source’s location, this can involve negotiating with landowners, municipalities, or government agencies. Having a reliable source of water is important for your long-term success, so be sure to obtain the rights that allow for the volume of water extraction needed for your operations.
Finally, you’ll need to set up the necessary infrastructure to extract, transport, and store the water. This might involve drilling a well, installing pumps, and building storage tanks. You’ll also need to consider how to protect the water source from contamination.
Step 3: Find Funding
Starting a bottled water business requires a significant investment, and this step is often challenging. Here are several common sources of funding that entrepreneurs can explore:
Personal investment: The first source of funding to consider is personal savings. This can include cash savings, retirement accounts, or other personal assets.
Bank loans: Banks and other financial institutions are a common source of funding and typically require borrowers to invest a minimum of 15% of their personal funds towards the total cost of the project, have a good credit score, and have sufficient collateral. If the bank needs additional security to back the loan, they can use a Small Business Administration (SBA) loan guarantee.
Equipment financing: For bottled water companies, equipment is often one of the largest expenses. Equipment financing allows entrepreneurs to purchase necessary machinery without a large initial out-of-pocket investment.
Angel investors: Angel investors provide funding in exchange for equity in the business. In some cases, they can also offer valuable industry insights, which can be beneficial for navigating the bottled water market.
Step 4: Register the Business
Starting a bottled water company involves several legal steps to ensure the business is properly registered and compliant with federal, state, and local bottled water regulations. Requirements will vary by location, but here is an overview:
Business structure: There are four main business structures to choose from, each with different implications legally and for taxes:
- Sole proprietorship: Simplest structure with no formal registration needed, but owners have unlimited personal liability.
- General partnership: This is also relatively easy to establish, but partners share unlimited personal liability.
- Corporation: A corporation is a separate legal entity that provides personal asset protection. However, it is more complex and costly to set up and maintain.
- Limited Liability Company (LLC): An LLC combines the benefits of a corporation and a sole proprietorship or partnership. It provides personal asset protection and has fewer regulations than a corporation.
The most common structure for bottled water companies tends to be an LLC or a corporation due to their liability protection advantages.
Related: Comparison of business structures
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
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Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.
Obtain business licenses and permits: Depending on your location, there will likely be a variety of general business registrations needed before opening. These could include a business license, seller’s permit, and Employer Identification Number (EIN).
Compliance with federal and state regulations: There are several federal and state regulations to follow in this industry. These include:
- FDA regulations: Adhere to the FDA’s Good Manufacturing Practices (GMPs), standards of identity, and labeling requirements. The FDA ensures that bottled water companies meet federal standards for quality and safety.3
- EPA regulations: Ensure your business complies with any environmental regulations, particularly if you’re sourcing water. This might involve the Environmental Protection Agency (EPA), especially for companies using private or municipal water systems.4
- State Department of Health requirements: Each state may have additional requirements for bottled water companies, often overseen by the state’s Department of Health.
The International Bottled Water Association provides a lot of resources on industry regulations.
Certifications: Consider obtaining certifications like the NSF seal of testing compliance. These certifications can add credibility to your product and reassure customers about the quality of your water.5
Trademark protection: Trademarking your brand, including the company’s name and logo, protects your brand identity from being used without your permission and helps establish a unique presence in the market.
Step 5: Set Up Operations
With funding in place and the business properly registered, the next step involves moving into the operational phase. This phase begins with the establishment of a processing facility, ideally situated close to the water source. The reason being that water is usually processed and sealed in safe drinking containers at the source. This can involve multi-barrier filtration methods and purification processes such as deionization, distillation, or reverse osmosis.
Next, map out an efficient bottling production line flow, including water treatment systems, conveyors, labeling machines, palletizing stations, inspection systems, and more. Proper equipment layout saves costs and ensures that the process is as efficient as possible.
Once your production line is in order, turn your attention to your suppliers and staff. These suppliers will provide the materials you need for your operations, including bottles, caps, and labels.
Finally, you’ll need to hire the right people to manage various aspects of your business. This includes workers to oversee the bottling process, maintain equipment, handle deliveries, and provide customer support.
Step 6: Set up Distribution Channels & Marketing
Starting a bottled water company is not just producing a quality product but also ensuring it reaches your customers effectively. The next step in this journey is establishing the distribution channels and creating a marketing strategy.
Before you can start selling your bottled water, a distribution plan is needed. There are a variety of distribution channels to consider, including direct sales, retail stores, restaurants, and vending machines. This plan will help you determine who you will sell to, how you will get your product to them, and where you will sell it. In it, consider factors such as packaging, transportation, storage, and delivery.
When developing your distribution plan, you will need to research the competition and evaluate the market demand for your product. You may also want to consider partnering with a distributor who can help you reach a wider audience. This can be especially helpful if you are new to the industry and don’t have existing relationships with retailers.
Once you have your distribution plan in place, you need to create a marketing strategy to promote your product. This will help you create a strong brand identity, build brand recognition, and drive sales. There are a variety of marketing channels to choose from, including digital, print, and outdoor advertising, as well as public relations and events.
Your marketing strategy should be tailored to your target market. You will need to identify who your customers are and where they are most likely to see and interact with your message. This may include social media platforms, local events, and trade shows. You will also need to consider your budget and create a marketing plan that is both effective and affordable.
Branding and packaging are two of the most important aspects of your bottled water business. Your brand identity should be memorable and unique while also communicating your company’s values and mission. Your packaging should also be visually appealing and functional, ensuring that your product stands out on store shelves.
When designing your brand identity and packaging, it can be helpful to work with a professional designer or branding agency. They can help you create a cohesive brand and visual identity that resonates with your target market. You may also want to consider sustainable packaging options to appeal to consumers who value environmental sustainability.
Your pricing strategy is also an important consideration in this phase. You will need to consider your production costs, distribution costs, and retail markups when setting your prices, in addition to evaluating the competition’s pricing and setting pricing that is competitive while also allowing for a reasonable profit margin.
Your pricing strategy should also be influenced by your marketing strategy. You may want to offer promotions or discounts to drive sales, or you may want to position your product as a premium offering that justifies a higher price point. It’s important to experiment with different pricing strategies to determine what works best for your business and your target market.
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Common Questions When Starting a Bottled Water Business
How much does it cost to start a bottled water business?
Starting a bottled water company can be a significant investment, with total startup costs ranging from $200,000 to over $750,000, based on the scale and specific requirements of your business. Here’s a detailed breakdown:
Location: The most significant expense is securing a location for your processing facility. A facility could range from $100,000 to over $500,000.
Equipment: The next most substantial expense in starting a bottled water company is often the equipment. This includes water treatment systems, bottling machinery, conveyors, labeling machines, and quality control systems. A basic water treatment plant for mineral water production can cost around $25,000 to $150,000.
Vehicle fleet: A fleet of delivery vehicles is an essential part of your distribution network. You might expect to spend around $50,000 on two second-hand vehicles to start.
Business registration: The cost of business registration and permits varies by state and water source, but expect around $5,000.
Initial insurance costs: Initial insurance costs, covering liability and property insurance, can range from $2,000 to $5,000. This is crucial for protecting your business against potential risks.
Marketing: Up-front marketing and branding costs, such as designing a logo, creating a website, and launching an initial advertising campaign, might account for $20,000.
How profitable is a bottled water business?
Estimating the profitability of a bottled water company involves taking into account several key industry statistics, overhead, production costs, and potential sales revenue. For this analysis, let’s hypothetically consider a small bottled water company that has the capacity to produce 1 million bottles of water per year.
Determining our hypothetical company’s potential revenue involves understanding the standard wholesale price for bottled water, which can vary between $0.19 to $0.45 per bottle.6 Let’s use a conservative estimate of $0.30 per bottle for a 500ml bottle of water. So, if our company sells all 1 million of its bottles, that results in a total sales revenue of $300,000.
However, achieving this revenue also depends on the expense of producing bottled water. Bottled water production costs can include the cost of water, purification, bottling, packaging, and labor. On average, let’s assume that these costs amount to around $0.12 per bottle. Therefore, the expense of producing 1 million bottles of water would be $120,000.
Additional costs such as marketing, distribution, office overhead, and other operating expenses also need to be accounted for. These costs can vary, but for argument’s sake, let’s assign a value of $100,000 for these expenses.
To calculate projected profit, we subtract total expenses from total revenue. In our scenario, the total revenue of $300,000 minus total expenses of $220,000 (production plus additional costs) equates to an estimated profit of $80,000 before tax.