Expert: Eric Hofer - 1/12/2011

Question
QUESTION: I have recently gained permits to both bottle and sell in bulk water from my spring which has some of the highest quality water available. I have ample room for any facility needed and have access for trucks to be loaded on the property. We are about 4 months out from being able to start taking orders and I wanted to get any advice about how to secure an order from a distributor and also how to pursue larger companies to sell our water in bulk to them. Many thanks.

ANSWER: Ray,

There are many ways of going to market.  Take a look at this company:-

http://www.szentkiralyi.hu/

Use Google Chrome add in for translation...

Now these guys were asked to find a new source of water for a local juice company (they wanted to go off the grid to save money).  Having found a source they had it assayed.  The assay came back saying how superior the water was and suggested entering it in a competition in France which they then won (2003 I think was the first, but they keep winning things).  

With that first medal, they went on an advertising blitz; and what seems like only a season, they burst forth to take a prime position in the Hungarian water market (which is the primary cold drink in the country, ahead of colas).

So, what I'm saying is if this could work in Hungary, perhaps the same could work with you if you're saying that your quality is the best available.

....

While you could go after distributors, unless you have some sort of draw/demand - you'll just be another product on the shelf.  And you'll have to give terms and expect returns.  

Do you have any ideas about marketing?  Will you put people on the street going to the major outlets to create a buzz?  Will you do promotions?

I gather you're investing in a bottling line?  Have you also thought of investing in marketing and promotion?

....

For larger companies where you're wanting to sell water in bulk, the only experience I have are either:-
- hotels, spas, etc. where the drinking water is dangerous and gets tankered in (e.g. in Baku, Istanbul, Mexico City)
- juice / rehydration - where concentrate is mixed
- private label

What are you talking about?  Tankers or bottles?

Are you thinking that somebody else will sell your water under their label?  More than likely, in these situations somebody with an existing brand, if they really felt they had to have your water would buy your source, lock stock and barrel.  Consider, that if they already have a brand, they already have supply.  So why would they switch?

Let me hear your thoughts and we can continue ...

Eric

---------- FOLLOW-UP ----------

QUESTION: Eric,
  Thank you so much for your response. Being a 28 year old single dad and doing this project among others has definatly felt like a daunting task at many points. I think entering our water in a competition is a brilliant idea.Even if we didn't take 1st place we could still get some attention. In regards to marketing I have a clever way to start that. My spring has the ability because of agricultural permits to sell in bulk or by bottle. I used this and also got licensed as  a Charity. My closest friends run many of the red carpet events in Los Angeles and all the premiers and said they would be more than happy to attach my charity and water to any event. I am pursuing using a bottle called "360 paper water bottle" (google it). Which is very eco friendly. I ideally to start I would like to pursue getting into Whole foods and other boutique grocery stores in the LA area to get the buzz going. The vision is so important to me and is still being drawn up. We are meeting with Blake Mycoskie (owner of Toms Shoes) to further discuss how we can use the company to get money for the charity and how to use the charity to promote the company.
 I hear you on the bulk selling possibility. Nestle already tried to buy us out for millions. I for some reason thought we may be able to under bid current contracts that the majors have but that is unlikely even with our high flow. Maybe after we enter some competition we could pursue smaller distilleries and boutique beer companies. Water quality I am sure is VERY important to them and effects the taste.

ANSWER: The charity angle could work a treat.  I really like it.  Might even obviate you from some taxes!  

Launching a product is very difficult. It's good that you've got some angles there.  Obviously prestige events would help.  But before you do that, have an idea how you follow up with distribution... Perhaps you leaflet at events and tie in with other events you'll have lined up.   But before you go cashing in favors... ensure that you've got lock up those key distribution outlets.  

(I'm reminded of a story my Dad told me years ago about "I Want To Hold Your Hand"; a stewardess brought over a recording to Philadelphia where her boyfriend, a local DJ, played it in "A" rotation... The record company flipped out because they didn't have a record deal in the US at the time and was begging that some how an injunction would be placed to stop the play; but instead, like a contagion, the record jumped from station to station, city to city and there was no product in the shops.)

I think using upcoming galas as a means to get shelf space could help thaw the ice with outlets.  But you'd still have to do a bit of legwork.  Other promotions, sporting events; concerts... etc. would also be good.

I'm not sure of the tie in with shoes; maybe you can clue me in.

- - -

You are not going to be able to move into the major outlets without a lot of capital.  Either you use the Nestle interest to raise capital and profile, or you have to find another way.  Majors have listing fees, their shelf space is effectively already paid for.  You might get a local shop manager to clear a couple of lines for you; but if is shop gets audited - you'll get turfed out.  The big players work hard to keep their "facings."

For the launch perhaps a smaller, regional chain: one that trades on "grow local" concept, could work.  If they have Central Warehouse Delivery, then you'll keep down your costs. But you'll have to find a way to work that trade; you'll be competing with all the other waters.

Have you thought about putting people in the field to develop accounts?  What about restaurants?  

---------- FOLLOW-UP ----------

QUESTION: Eric,
  That is great advice. We do need to make sure we can provide the product that we are trying to create a demand for. It feel like I need to pursue some of the local restaurants here in LA and smaller boutique grocery stores before going and doing that Oscars.. As for the shoes comment...."Tom's Shoes" made themselves an industry leader by using philanthropy. We are meeting with that company to get their advice on the best way for us to do something similar. Thank you again for all your advice. Very helpful.

Answer
Re Tom's Shoes ...

Ah... I've been out of America too long!  So it has been done in the past there; I didn't realize - I do think it's a great angle for your product.  And if it's quite well known, even some branding "eg. Tom's Water".  

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