Bottled water firm prepares assault on retail market

Alpine Coolers, a brand in the bottled water market, has defied the industry trend of diversifying into juices and other beverages adopted by competitors.

Rather than chase growth through new product lines, it has opted to chase new markets for its existing product in the retail market. The bottled water market is segmented into bulk and single use small packs such as half-litre and one litre.

But a strong brand in one segment doesn’t always translate into the other, a fact that managers at Alpine Coolers are keenly aware of as they prepare a major assault on the retail market this year.
“It is a very crowded market with over 150 brands. Unless you have something that sets you apart from the rest, chances are you will not be able to make an impact. Having a strong brand in the corporate (bulk water) market does not mean you will succeed with the same brand in the retail market which requires completely different marketing strategies,” says Jairus Mbayi, finance manager. The company is not completely new to the retail market because some of its bulk water corporate clients have asked them to do contract bottling for them for the small packs.

Contrary to popular perception, the bulk of small packs are not purchased through retail outlets such as supermarkets but through airlines, hotels, bars, restaurants, churches, seminars, government workshops, public rallies, funerals and functions where huge crowds congregate. Weddings are another key outlet with more and more couples choosing to have personalised bottled water at their nuptials. “In my opinion, supermarkets and other retail outlets account for only 20-30 per cent of the small packs bottled water market,” says Mr Mbayi.

Unlike the corporate bulk water market where clients are keen on the water quality and therefore willing to buy from accredited suppliers, the average consumer is very price sensitive. Many small companies in the industry just bottle tap water without putting it through the extensive purification process that the leading accredited brands do. Alpine water for instance, goes through a 7-step treatment plan and the company has been ISO 22000:2005 Certified- an international food safety and handling standard which only three companies in the sector have. But this may not mean much in the retail market where price is the overriding concern. “I have gone to supermarkets and watched the way consumers buy bottled water and many will say “water is water.” If they can save Sh20 by buying a cheaper brand, that’s what they do, irrespective of the source of the water,” says Mary Gachao, business development manager.

The perception that bottled water is a luxury still persists in the market years after the product went mainstream and when times are hard economically, bottled water is one of the first items that consumers take out of their budget or reduce consumption of. Given the intense competition in the industry due to the number of players, there is little headroom to increase prices like now when transport costs have increased dramatically due to the high cost of fuel. Alpine Coolers has therefore had to absorb these high costs which have reduced its margins.

Despite these challenges the company will continue to focus on bottled water. “We have deliberately focused on the one thing we know best. Bottled water is our only business and hence our customers are assured of service that is exceptional and unrivalled among other market players,” says Mr Mbayi.

Direct delivery

While supplying the market through retail outlets would probably be easier, he says that direct delivery to clients and provision of dispensers has given the company a distinct advantage in the market. “By going the extra mile and delivering to our customers’ doorsteps, they get to appreciate our product a little bit more. By giving dispensers, clients can get hot or cold water without having to boil or refrigerate it. Direct distribution to corporate clients enables us to get direct feedback from them which has enhanced our services.”

Alpine Coolers was incorporated in 1993 and has three directors - Navnit Patel (the CEO), Mansukhlal Hindochia and Arvind Patel. It currently has 200 employees and earned revenues of Sh270 million last year. Its main plant in Nairobi is capable of bottling 20,000 litres of water per hour and the company has over 6,000 dispensers installed all over the country and does over 3,000 deliveries per day.