The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Bahamian bottled water industry “is not the business to spend money in”, according to one leading manufacturer, who said the market was already “saturated”, with prices being driven by foreign competition.

Illustrating just how competitive the bottled water industry is, Geoffrey Knowles, operations manager at Aquapure, said his company had recently lost a customer to a rival over a $0.02 cents price difference.

“We lost a customer to one of the other companies the other day for a matter of $0.02 cents a bottle. They asked if we would match the price and we said no. It’s that kind of competition that is out there. The market is very competitive. Everyone is price, price, price. The foreign competitors are driving the price issue because they have economies of scale that we don’t,” said Mr Knowles.

He was speaking after Tennyson Wells, the former Cabinet Minister and MP who is the principal of the Source River Group, revealed to Tribune Business on Friday that the 40-strong investor group that acquired the former Bacardi plant is set to go head-to-head with Aquapure and Chelsea’s Choice by entering the reverse osmosis water market in April/May 2013.

Believing they can achieve “equal market share” with the incumbent, Mr Wells told Tribune Business that the group was seeking to build on its existing distilled water business by “broadening our market base” via its new ECH2O Pure label.

“If someone wants to spend a few hundred thousand dollars getting into that, then so be it,” responded Mr Knowles. “Every time someone new comes into the market it dilutes the share everyone has. Research would show that this is not the business to spend money in, not the way it stands right now. I don’t know if any of the manufacturers are making money, or if they are making anything to brag about. It’s a saturated market and everything is driven by price.”

Mr Knowles added: “Every day there is something new about the water business. It’s just crazy, and now with the Value Added Tax (VAT) situation and World Trade Organisation there’s a lot of uncertainty in the industry. We are not sure what’s going to happen.

“Right now we are holding our own in terms of market share. We maintain our standards. We’re not going to lower our standards for anyone or anything. If we can’t make a return on the products that we sell, there is no use being in business, but we’re not going to compromise quality.”

Nautilus Water chief executive, Garland Evans, told Tribune Business the industry was saturated mainly because of foreign competition. He added that there was enough business to go around for all the major players if foreign imports were eliminated.

“It’s really only saturation because of all the imported water,” he said. “There is plenty of business there for the guys in the business, but if we are fighting imported water too, they’re squeezing us out. Those people aren’t employing Bahamians; we are.

“The Government has to do something to help us with the imported water coming in here below our production costs. Those companies in the US produce a million cases per day. We employ 65 people and we produce a fraction of what they do. It’s not like we could even try to compete with imported water,” said Mr Evans.

He added: “People are buying imported water because it’s $0.50 a case less or $1 a case less. We have had to drop our pricing to compete with the imported water, which is really hurting our margins. We don’t even run every day right now because we are saturating the market a bit, but there are still one million cases a year coming in.

“Nestle and Niagara are among the biggest in terms of imported water here. We need to slow down this imported water because, first of all, it’s not as good a quality as the water here. We all here make a much better, more solid bottle. Most of us make a good product. We all make something a little different.”

And Mr Evans said further: “It is my understanding that the duties that are on the imported water are not being adhered to as they should be. People were bringing in water as mineral water, which is a lower duty, but the tariff says that mineral water has to be naturally-added ground minerals and not minerals added.

“People, from my understanding, were bringing it in as mineral water and paying lower duty, and that was affecting everyone in the industry.”