How to Start a Bottled Water Business
Bottled water manufacturing is a multi-billion dollar industry in the US. It continues to grow rapidly – in the States and worldwide. Demand is driven by consumers who are increasingly conscious about their health and well-being and, at the same time, are looking for convenient and portable hydration.
These factors make starting a bottled water business an attractive opportunity. However, the barriers to entry into the market are high, and a solid background in business operations will be crucial to making your venture a success.
Business Description
As a bottled water manufacturer, you will be processing and purifying water, then bottling it for resale in a safe drinking container such as a plastic or glass bottle. 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 (IBISWorld). A bottled water manufacturer typically employs 52 workers.
Industry Summary
According to IBISWorld, in 2023 the bottled water market is worth $8 billion in the US and comprises just over 670 businesses. The four largest companies in the US, including Pepsico Inc., Nestle SA, Primo Water Corp, and Coca-Cola Co, command 73% of the entire market.
The industry has been buoyed by increased demand for healthy and hygienic hydration options and a scarcity of safe drinking water in some areas.
Related Industries
Industry Trends
According to a Grand View Research report, the bottled water industry is forecasted to grow at a compound annual growth rate of 6.7% by the year 2030.
Consumers continue to move away from high-calorie, surgery, and carbonated drinks, such as juices and sports drinks, in favor of purified and mineral water.
It is also expected that the demand for electrolyte-rich, caffeinated products, and water fortified with additional oxygen and hydrogen will continue to expand in the coming years.
On the other hand, there is a growing awareness of the negative environmental impact of plastic waste, and the industry will have to meet the demand for other, more earth-friendly packaging options.
Target Market
The target market for a bottled water manufacturing business includes individuals and households, as well as institutions such as schools, hospitals, and offices. You can sell your product in various sizes, including single-serving bottles, multi-packs, and larger containers for businesses and institutions.
This industry is becoming increasingly competitive, with several brands already well-established. Therefore, we highly recommend you do thorough market research, understand your competition, and identify unique selling points for your product.
Checklist for Starting a Bottled Water Business
Starting any new business can be challenging, but having a clear checklist of what is required from you will make it easier to break down into manageable steps. Read all about how to get started on the path to becoming an entrepreneur with a successful bottled water business.
Step 1: Write a Business Plan
Starting a bottled water business is no small undertaking and without an effective business plan, your new entrepreneurial endeavor could easily end in failure.
A comprehensive business plan outlines a strategy for success, factoring in the necessary investments, budgeting, and marketing plans. It can also provide insight into how to meet customer demands, gain competitive advantage in the marketplace, and of course – potential revenue projections. A good plan helps you to anticipate potential risks, understand the local market place and secure investors or partners as necessary.
Related: How to write a business plan
Step 2: Name the Business
Naming a bottled water business is an important task. It should be unique, engaging and memorable so that customers easily recall it when in the market for a beverage. Especially given the current interest in health, making sure the name conveys a sense of purity and natural hydration can help capture the attention of consumers.
Additionally, including a geographic aspect to the name can help solidify its connection with customers looking to satisfy their thirst while still supporting local economies. In essence, well-chosen words will give your business the power to stand out from the crowd and create lasting relationships with potential customers.
Related: Tips on naming a business
Step 3: Form a Business Entity
A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a bottled water business, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
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.
Some popular LLC formation services include:
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ZenBusiness - Best for beginners. $0 plus state fees & free registered agent for 1 year!
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Step 4: Apply for Business Licenses and Permits
There are a lot of state and federal regulations to be aware of when starting a bottled water business.
At the federal level, the Food and Drug Administration (FDA) regulates bottled water companies through Good Manufacturing Practices (GMPs), standards of identity, and labeling requirements. Additionally, each state also has requirements that are typically administered through the Department of Health.
In addition to bottled water specific requirements, there are also general business licensing requirements at well. These vary by location, however a local business license, sales tax permit, and Employer Identification Number will be needed.
Related: Common business licenses, permits, and registrations by state
Step 5: Find Financing
The cost to start a bottled water company tends to be pretty high. Startup costs can be lowered by contracting with a private label manufacturer, however the initial investment in distribution and marketing costs can still be significant.
Banks are typically going to want the borrower to have good credit and be able to invest 15-25% of their money towards the total start-up costs. A loan guarantee through the Small Business Administration (SBA) can help lower the personal investment. Investors are another option to get the funding to start the business as well. In either case, a great business plan will be necessary.
Step 6: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 7: Get your Marketing Plan in Place
Marketing a bottled water business effectively requires a comprehensive approach that can take advantage of online and offline channels. From creating an eye-catching logo to crafting engaging social media posts, developing creative advertising ideas and even setting up sampling events, there are many steps entrepreneurs can take to generate buzz and excitement around their product.
Additionally, taking advantage of promotional discounts can be an effective way to create loyal customers. Offering free samples and tastings at local events is another great way to get potential customers interested in your product.
Related: Low-cost ideas to market a new business
Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.
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FAQs For Starting a Bottled Water Business
How much does it cost to start a bottled water business?
The budget to start a bottled water manufacturing business is not for the faint-hearted and will need a solid business plan and budget. It requires significant investment.
Expenses include the cost of water, bottling equipment, packaging and labels, as well as the cost of transportation and distribution, marketing and communications. This is also a highly regulated industry, and you will need to factor in the expenses for obtaining licenses and permits.
Further ongoing costs will include insurance, maintaining and upgrading equipment, the lease or rent of appropriate premises as well as the cost of labor.
One of your most significant expenses will be the cost of water, which varies depending on the source and your location. Additionally, the price of bottling equipment can also be hefty and vary greatly. For example, you can expect to pay between $50,000 to $100,000 for a small-scale bottling operation and several $100,000 for a large-scale plant with a high level of automation.
How profitable is a bottled water business?
The expected income for a bottled water manufacturing business will depend on various factors, including the size of your business, the cost of production, and the product’s retail price. Some estimates suggest that a small-scale bottled water manufacturing company can generate annual revenue of $500,000 to $1 million. However, a solid business plan, a detailed budget, and business acumen are critical to a successful venture.
Are there grants to start a bottled water business?
It’s extremely rare to find a grant to start a bottled water business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.
What skills are needed to run a bottled water business?
Operations and business management skills. To ensure the success of your business, we highly recommend you gain a good knowledge of production processes. You will also need to lead and motivate personnel, and manage equipment and supplies. In addition, you should have a solid understanding of financial management, the ability to track against a business plan and its objectives, and experience in marketing and sales.
A good understanding of regulatory requirements. This industry is quite heavily regulated. Therefore, it will be essential for you to know and follow local, state, and federal regulations related to bottled water production and labeling. In addition, your business must comply with water quality standards, and the ability to ensure the consistent quality of your product through testing water sources and monitoring production processes will be crucial.
Useful resources:
US Food and Drug Administration (FDA)
Central States Bottled Water Association
International Bottled Water Association
Final Thoughts
For a person with a strong entrepreneurial spirit and a good grounding in business and operations management, starting a bottled water business presents a promising opportunity for success. However, it does demand quite a hefty investment – preparing a detailed business plan to secure financing and grow the business from there will be vital
