Purified Water Coolers

Purified Water Coolers

The BusinessThe MarketThe future Presented By:

Robin HouseholderVice President

Pure Health Solutions Inc.

Are you ready? Have you started?

How does it fit your business plan? Can you afford not too?

Setting Course(Establishing a POU strategy)

A Survival Strategy

As a member of the beverage industry commit to providing the drinking water product and method of delivery that the consumers are requesting.

Should your company provide Point-of-Use?

Be competitive

◦ Provide an environmentally friendly alternative to packaged water

◦ Responsibly hydrate your customers workforce with a healthy high quality water beverage

◦ Solve logistical issues

◦ Storage, location, customer needs, security, etc.

Diverse product line

◦ Show your customer you have a diverse product line and can handle all their office service needs

Increase revenue per account

POU only◦ Majority of products on factored lease◦ local to regional based◦ Under capitalized◦ Technology varies with price◦ Sales driven business◦ Some use of coffee as accessary item

OCS◦ Equipment capitalization in house◦ Secondary offering to coffee◦ Mostly carbon filtration technology◦ Little water only accounts◦ Lower rental rate as add on to other business

Bottled Water◦ Used as a defensive tool to save accounts◦ Technology varies with price (usually lower price advantage)◦ National footprint companies have competitive advantage◦ Strong service and support network

Water treatment◦ POU model differs from Residential model◦ Uses good filtration technology◦ Rental rate higher than average◦ Services charges extra◦ Specialize in problematic water

Current business models for POU Companies

Consumer drinking water optionsOption ChallengeBottled Water (HOD) Logistics,

Environmental impactCost

Small package (PET) Logistics, Environmental impactCost

Tap TasteHealthEmployee satisfaction

Point-of-Use QualityServiceinstallation

Who do I target?

o Accounts concerned about their environmental impact (Green organizations)

o High volume accountso Sanitary conditions make it necessaryo Customer requests ito Cost issueso Security needso Storage space issueso Companies concerned about health and Safety

Benefits to your customer:o Reduces environmental impacto Reduction of vendorso Better tasting coffeeo Service at a level they are accustomed o Securityo Fewer monthly accounts payableo Fixed budgeto Ensures consistency in “Quality People,

Products, and Service”

Your organizational benefit

Capitalize on embedded competencies by entering into a business that

compliments your existing organization

o Route delivery and service teamo Dedicated company sales force o Enhance service to your customer baseo Billing and accounting procedures

Coffee Break!

JK, That is only for your customers

LOL, We have work to do!

Is there a market to sell water?

#getrich #opportunity #goodbusiness #BYA

o Over 1 million POU coolers are installed in the US

o 2014 is estimated to install over 150,00 units in the US

o Market awareness is driving consumer demand for both high quality and low price options

o Increasing market size is now determining the differentiation in business models. Such as Low cost, High quality, Brand etc.

POU should reach 15% of US water cooler sales in 2014

The European market has set a baseline for assumed mature market penetration. The US is still far behind countries such as the Ireland, Denmark, Sweden and the UK.

POU Market Positives• Increasing market growth

potential• Less competition• Room for product

differentiation• High barriers to entry for

high quality competition

Negatives• Varying water sources

require trained technical staff

• Long term profitability model

• Consumer acceptance• No proven residential

model• Price competition from

Bottle and Low cost POU companies

• Large HOD companies offering POU products

Opportunities• Bottled water conversion• Institutional, Medical, hotel

and restaurant accounts• Growing concern for green

alternative• Free media from

threatened water supplies• Residential market

untapped

POU pricing structure• 12-18 month capitalized in-house payback average

monthly rental (Water cooler)• R/O with disinfection $45-$55 (avg cooler cost $450-

$550)• R/O $40-$50 (avg cooler cost $350-$400)• Carbon filtration (economy) $25-$35 (avg cooler cost

$175-$225)• Market price driven by low cost imports and converted

bottle coolers• 80% of coolers placed under a rental agreement• Rental agreement roll over 80-90%• Market is trending from all inclusive service to obligatory

paid service and filter changes

Marketing survey On-line survey, conducted by Amplitude Research

500 respondents, screened for:◦ involved in the purchase and/or management of the

complimentary employee beverage program (water and/or coffee) at their business

◦ business size of at least 10 employees◦ job title Supervisor or higher

Respondent Profile Respondents worked at businesses that employ at least 10

people and were personally involved with their company’s beverage program◦ Most respondents were employed with small to mid-sized businesses:

29% have 10-49 employees (82% of companies with more than 10 employees) 40% have 50-499 employees (17%) 19% have 500-2499 employees (1%) 11% have 2500+ employees (0.3%)

◦ Most respondents were beverage program decision-makers (more than one response permitted): 69% select/ decide a program 40% recommend 34% manage

Respondent Profile 97% had water units on-site:

◦ 41% have 1-4◦ 46% have 5-99◦ 10% have 100+

95% had coffee units on-site:◦ 48% have 1-4◦ 38% have 5-99◦ 9% have 100+

Respondent title levels were evenly divided between Supervisor/Manager (53%) and Director-and-above (47%)

Respondents’ functional roles were in Operations (43%), followed by Office Management (19%):◦ 43% Operations

31% Operations Management 12% Facilities Management

◦ 19% Office Management◦ 12% Finance◦ 11% Purchasing◦ 7% Human Resources◦ 8% other

Placement Environment Primary beverage station placement is in office (45%) and

operations (43%) locations:

In addition to employees, beverage stations often serve customers:

Other; 7%

Healthcare; 5%

Operations; 43%

Office; 45%

[% of respondents]Customers

Employees & customersEmployees

5%

43%

52%

Manufacturing 18%Retail 16%Warehouse 9%

Beverage Program Decision-Making Beverage program decision-making responsibility is most

often in Operations (41%) and Office Management (26%)

[% of respondents]

Other; 4% Human Re-sources; 7%

Finance; 9%

Purchasing; 13%

Office Mgt; 26%

Operations; 41%

Operations Mgt 25%Facilities Mgt 16%

Path to Purchase One-third of respondents switched to a new beverage

program in the last three years

After price, customers are most motivated to drop a program due to dissatisfaction with service and equipment quality:

OtherEnvironmental concerns

Time-consuming program management / difficult to manageInappropriate / unattractive contract terms

Unsatisfactory beverage qualityEquipment not quality / not reliable

Ineffective service / problem resolutionPricing too high

4%14%

21%25%29%

40%49%

55%

[% of respondents; more than one response]

Path to Purchase Customers learn about new beverage program suppliers

primarily through peers, on-line search and sales rep contact:

Other

Trade magazine advertising

On-line advertising

On-line search / Google

1%21%22%

25%31%

43%46%

57%


Path to Purchase When switching, customers are most motivated by the

equipment and service quality offered by the new supplier (after price):

OtherBetter for the environment

Easy program to manageAppropriate / better contract terms

Great beverages / better quality beveragesTimely and effective service and problem resolution

Quality and reliable beverage equipmentAppropriate / better pricing

1%19%

30%43%44%

52%54%

63%


Beverage Program Benefits- Total Sample Respondents do not identify a singular need they are

seeking a beverage program to satisfy. Many different benefits are important – “morale,” “cost,” “great beverages,” “quick issue resolution” and “enjoyable work break” were all rated comparably:

Reduce environmental impact

Reduce employee safety risk

Reduce workplace interruption

Foster an enjoyable work break for employees

Provide great beverages for employees

Improve employee morale

51%63%66%67%70%71%72%74%74%75%75%

[% very/extremely important]

Not significantly different (95% confidence)

Beverage Program Benefits-Total Sample In identifying the one benefit most important to their

decision, respondents selected a cluster of four (after cost): “morale,” “performance,” “enjoyable break” and “better health”:

Reduce employee safety risk


Reduce on-going time & effort required to manage the beverage program

Enable better health for employees

Help employees perform their best

Reduce company beverage cost

2%2%3%

4%5%

11%11%

13%13%

15%22%

[% chosen as most important]


Benefits Importance By Size of Company

Enable better healthFoster enjoyable work break

Help employees perform their bestImprove employee morale

Provide great beveragesResolution of equipment issues

Reduce beverage costReduce employee safety risk


Reduce on-going program mgt time & effort


2500+500-249950-49910-49Ttl

[% claimed as most important]

Beverage Product Attributes Consistent across segments (and consistent with a “health”

benefit), customers most seek delivered beverages that are “clean & safe/ free from contaminants”:

Relaxing beveragesEnergizing beverages, to help re-fuel

Natural beveragesPopular brand(s) of purified water / water purification

Popular brand(s) of coffeeHealthy beverage choices

Beverages to help re-hydrateRefreshing beverages

Delicious, great-tasting beveragesGreat quality beveragesFresh-tasting beverages

Clean and safe beverages, free from contaminants

44%47%48%50%53%

62%64%

68%71%

74%75%

81%



Significantly different (95% confidence)

Beverage Program Features After price, equipment (clean, reliable) and service are

most important program features, followed closely by quick replenishment, great beverages and easy usage. Technology (filtration and electronics) are least important program features [complete ranking in Appendix]:

Electronic displays & controls on equipmentReverse osmosis water system

Ozone disinfection of waterUV disinfection of waterCup dispense capability

Equipment dispenses beverages easilyGreat beverages

Quick replenishment of beverage suppliesNo / minimal equipment breakdowns

Prompt service call timingQuality and reliable equipment

Clean beverage equipmentReasonable pricing

42%44%45%

48%49%

75%76%

79%79%80%82%83%85%


Not significantly

different (95%

confidence)

Beverage Program Features-Equipment Most desired equipment capabilities include clean, reliable

and easy dispense, followed closely by capacity and warranty protection:



Carbon filtered water systemChoice of beverage equipment brands

Certified equipmentMinimal equipment noise

Quality equipment appearanceEquipment warranty

Sufficient beverage capacityEquipment dispenses beverages easily

No / minimal equipment breakdownsQuality and reliable equipment

Clean beverage equipment

42%44%45%

48%49%

56%56%

59%61%

65%71%71%

75%79%

82%83%


Beverage Program Benefits Large company customers (500+ employees) exhibit a

strong interest in “enabling better health” for employees:

Enable better health

Help employees perform their best

Provide great beverages

Reduce beverage cost



0% 5% 10% 15% 20% 25%

2500+500-2499

# employees at company

[% rated as most important]

Beverage Program Features



Carbon filtered water systemChoice of beverage equipment brands

Demonstrated beverage purity (analysis test data)Certified equipment

Minimal equipment noiseEquipment service provided by certified technicians

Specific hot or cold beverage temperaturesPreventative maintenance program

Quality equipment appearanceEasy on-line order/re-order for products and service

Equipment warrantySimple invoicing

Sufficient beverage capacityEquipment dispenses beverages easily

Great beveragesQuick replenishment of beverage supplies

No / minimal equipment breakdownsPrompt service call timing

Quality and reliable equipmentClean beverage equipment

Reasonable pricing

42%44%45%

48%49%

56%56%58%59%

61%62%63%65%65%

69%71%71%71%

75%76%

79%79%80%82%

83%85%


Summary 500 respondents, involved in the purchase or management of their

company’s water and/or coffee beverage program Beverage programs are typically implemented in offices and operations

facilities, and the program decision-maker’s functional area is most often operations-related

After price, service and equipment issues are greatest customer dis-satisfiers in the industry today

Larger organizations (500+ employees) prioritize “enable better employee health” as a desired benefit of a beverage program. Smaller organizations are more price-focused and do not appear to base purchase decisions on end-consumer benefits.

Customers universally place greatest importance on several program features:◦ Clean/safe beverages & clean equipment◦ Fresh beverages◦ Reliable equipment◦ Quick service & replenishment

Coffee Break!

JK, Not Yet

LOL, We need to know where we are going

#Future #downtheriver #yourbusiness #tappedout

Advanced technology will drive consumer confidence

Market maturity will drive consolidation POU market share of drinking water industry

will grow substantially through 2017 Increased concerns over water quality will

drive usage from commercial to residential Product technology will increase value to

performance options for consumers

POU Future State

15% market share to mature at 35-45% 1,00,000 POU coolers to 2,450,000-3,150,000 at

maturity. Residential solution will increase market opportunity Environmental concerns over landfills/recycling Plastics

and non renewable resources Re-occurring revenue from filtration media and service Potable water quality to deteriorate Cost of delivery for packaged water tracking with

increase fuel cost Cost of technology to decrease with volume

What to expect

The POU segment of water industry continues to offer a good business opportunity for: Entrepreneurs looking to establish a solid

reoccurring revenue on a 5-7 year plan. Businesses looking to expand their product

offerings in Vending, OCS, Water Treatment and Bottle Water.

Companies offering environmental solutions. Companies offering residential services Retail water solution outlets

Summary

Robin HouseholderPHSI

Email: [email protected]

Purified Water Coolers

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