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Q: Bottled Water Economics ( Answered 4 out of 5 stars,   4 Comments )
Subject: Bottled Water Economics
Category: Business and Money
Asked by: kbc-ga
List Price: $25.00
Posted: 21 Jul 2006 19:46 PDT
Expires: 20 Aug 2006 19:46 PDT
Question ID: 748455
How high is the profit margin on bottled water?
Subject: Re: Bottled Water Economics
Answered By: easterangel-ga on 22 Jul 2006 02:29 PDT
Rated:4 out of 5 stars
Hi! Thanks for the question.

It seems that profit margins for bottled water is quite high, about 50
to 200 percent!

"The normal profit margin on bottled water is an astounding 50 to 200
percent, which leaves Starbucks with a per-bottle profit more than 20
times its much-publicized largesse."

"Market forces seek to control the essence of life -- water" by
Deborah Kaufman, Alan Snitow

"Unlike virtually anything else we sell, bottled water has a healthy
profit margin?up to several hundred percent. Those $1 bottles of
Poland Spring you buy? They cost us around 20 cents."

"Hitting the Expiration Date" by Ben Ryder Howe

Search terms used:
"bottled water" "profit margin" percent
I hope this would help you in your research. Before rating this
answer, please ask for a clarification if you have a question or if
you would need further information.
Google Answers Researcher
kbc-ga rated this answer:4 out of 5 stars
Answer and sources cited were very good. In some ways it wasn't quite
the answer as I was hoping for, but information is useful because
nonetheless in giving me additional food for thought. Thank you.

Subject: Re: Bottled Water Economics
From: steveonline-ga on 23 Jul 2006 07:56 PDT
Bottled water may be very profitable, but the environmental
consequences are high in terms of the resources used in bottling,
additional road traffic to deliver, landfill cost in disposal of empty
bottles etc.

These should be compared against the use of the good quality tap water
available in most developed nations and particularly in Europe, where
the EU Drinking Water standards applied are much more stringent for
potable water than those which apply for bottled water.

See this <a href="">Bottled
Water article on Climate Change web site</a>
Subject: Re: Bottled Water Economics
From: randy_j-ga on 23 Jul 2006 10:53 PDT
Hi kbc-ga,

I've found a few print and online sources in addition to those that
your researcher has found.  The sources I've identified point to a
larger range of profit margins, ranging from 15% for small bottlers to
600% for large bottlers with the average profit margins being between
25 and 30%.

"According to industry stock analysts, "the profit margins in the
business are really pretty good" -- for some bottlers in the
neighborhood of 25 to 30 percent."
Natural Resources Defense Council

"...Industry analysts have estimated that bottled water businesses
score profit margins of 25 percent to 30 percent. According to von
Wiesenberger, profit margins can range from 15 percent to 100 percent,
depending on the type of bottled water. Something that has to be
shipped from Fiji has a lower profit margin than a product that is
just purified tap water."

"But the private labeled bottled water market offers a distinct edge
to small, local bottlers over the national brands, which target mass
marketing opportunities. It's creating an entirely new, highly
profitable market for the product, with margins running from 50
percent to as high as 200 percent."
Water Tech Online

"Rough estimates can be made to compare the profit margin for bottled
water versus tap water.  For larger bottlers, total production costs
(including source costs) amount to about 10 cents for each bottle that
can be sold for 70 cents or more (a 600 percent markup).  The "market"
for tap water, even for private companies, is closer to 10 percent."
Water and Wastewater Infrastructure Needs: Hearing Before the
Subcommittee on Fisheries,... By Wildlife, and Water United States.
Congress. Senate. Committee on Environment and Public Works.
Subcommittee on Fisheries. U.S. G.P.O. (2002)

Search terms:
profit margin bottled water
profit margin bottled water percent
Book Search: profit margin bottled water
Subject: Re: Bottled Water Economics
From: nzarnie-ga on 24 Jul 2006 00:07 PDT
I can answer this business is in manufacturing bottled water.

I'll give you a really quick example using my plant setup.  We
manufacture our own PET bottles from preforms (looks like a test tube
with a threaded cap) and produce on a line capable of 12,000 bottles
per hour.  Three manufacturing staff per shift and one store person.

First calculate your component costs (lets assume freight and duties
are part of the cost US$):

500ml bottle - lightweight - flat cap - basic label

 - 20 grams of PET resin around $0.035 dependant on resin costs, dye,
and conversion costs.
 - Cap US$0.006
 - Label - anywhere around US$0.02

Then Packaging
 - Box US$0.25 per carton (divide by 24 500ml bottles per box)

Then you've got your misc costs like shrink wrap for the packaging,
processing consumables, maintenence and amortisation of the machines -
around $0.025 per bottle.

Labour component - $0.01

Total cost of goods manufactured around $0.081 per bottle.  This can
vary wildly depending on the type of bottle and packaging (you can go
cheap all the way) and also the type of operation you're running. 
Your costs will be considerably higher if you're running a plant that
doesn't produce it's own bottles and anything less than automated
drives significant labour costs into the equation (up to another $0.10
per bottle).

Freight is your real issue, as is supporting a brand, or securing
contracts - these are where your real cost lie.

Hope this helps a little - just paying back some information I've
received in the past of GA.
Subject: Re: Bottled Water Economics
From: frde-ga on 24 Jul 2006 03:01 PDT
My father set up a mineral water bottling plant in the UK for a European company.

One of his complaints was that the supermarkets drove an extremely
hard bargain, the margins were there alright, but the manufacturer did
not see them.
Also - they only did branded - no supermarket label.

ZNarnie-ga's second to last paragraph, I suspect it was written with a
degree of heartfelt bitterness.

ZNarnie-ga, you might be interested in this, he was asked to find a
source, and located a mom & pop operation which they bought. They had
to drill to increase the supply and also built a substantial factory.

The Belgian company shipped over a water diviner who they always used.
He was on old peasant farmer with a few cows, he would not stay
overnight because he wanted to get back to them.  He told them the
spot, and the depth.

Everyone (not the Belgians) was very nervous, it was dry until they
hit the depth, and then there was a perfect supply.

To my immense annoyance, he did not tell me about it until after the
event, otherwise I would have had photographers and probably a film
crew there, they missed a story that would have been irresistable to
the print and TV.

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