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ALSO IN THIS ISSUE Why Be Active How to Win When FSMA’s Consumers’ Food Defense Plan in Politics Hearts and Minds Affects You

BOTTLED WATER REPORTER | MAY/JUN 2014

BOTTLED WATER AND POLITICS: A Match Made in (Television) Heaven?

SPECIAL FEATURE: HOD Marketplace

THE HOME AND OFFICE DELIVERY ISSUE Best Practices of HOD Companies—Large and Small Technology: An HOD Distribution Advantage A PUBLICATION OF THE INTERNATIONAL BOTTLED WATER ASSOCIATION


VOL. 54 • NO. 3

COLUMNS GOVERNMENT RELATIONS

24 | Election 2014: It’s Closer Than You Think The best way to positively influence elections is to always stay involved in the political system COMMUNICATIONS

26 | Winning the Hearts and Minds of Consumers Understanding the demand for bottled water TECHNICAL UPDATE

28 | FDA Publishes Final FSMA Proposed Rules (Part 1) What will be the impact of FSMA’s Food Defense Plan on bottled water VALUE OF IBWA MEMBERSHIP

32 | Reverence for Referrals Ryan Heiken (Crystal Clear Water Company) explains to Bottled Water Reporter how the referrals his website receives from IBWA’s website (www.bottledwater.org) is worth the membership dues.

DEPARTMENTS CHAIRMAN’S COMMENTARY................................2 PRESIDENT’S MESSAGE.......................................4 WATER NOTES.....................................................6 SPECIAL FEATURE: HOD MARKETPLACE...........9

TABLE OF CONTENTS

CEU QUIZ..........................................................30 ADVERTISERS.COM............................................31 CALENDAR........................................................31

14 | Large Company, Small Company

CLASSIFIEDS.....................................................31

In the home and office delivery (HOD) segment of the bottled water industry, there are roles to be played by large and small companies. Large corporations have an easier time building brand value, have cash more readily available, and can leverage customers and vendors; small businesses are nimble and can satisfy niche markets. Sharing best practices from both is a way we can help organizations—of any size—achieve more. By Steve Keim

CONNECT WITH IBWA

20 | This Ain’t Your Grandpa’s Bottled Water Industry

BOTTLED WATER REPORTER, Volume 54, Number 3. Published six times a year by The Goetz Printing Company, 7939 Angus Court, Springfield, VA, 22153, for the International Bottled Water Association, 1700 Diagonal Road, Suite 650, Alexandria, VA 22314-2973. Tel: 703.683.5213, Fax: 703.683.4074, www.bottledwaterreporter.org.

What we can learn from both HOD enterprises

How all HOD bottlers—large and small—can use technology to their advantage If you want to be a successful HOD business in the bottled water industry, you must have a distribution system that is efficient. The best way to build such a system is to invest in some technology. By Damon Grant

Subscription rate for members is $25 per year, which is included in the dues. U.S. and Canadian subscription rate to nonmembers is $50 per year. International subscription rate is $100 per year. Single copies are $7. POSTMASTER: Send address changes to Bottled Water Reporter, 1700 Diagonal Road, Suite 650, Alexandria, VA 22314-2973.


CHAIRMAN’S COMMENTARY CAN YOU HANDLE THE TRUTH?

The home and office business model IBWA members have worked within for decades is staring over the edge of a major paradigm shift. Two major macro business developments are soon to influence how our customers interact with us: (1) the increasing ability of companies to take electronic orders, online or mobile, and make next day (or same day!) deliveries and (2) the entry of both large retailers and nimble start-ups in the home delivery business. If we think competing against the “best in class,” big HOD companies is daunting, consider competing against them in your market and Amazon, Walmart, Staples, Office Depot, PeaPod, and start-up services such as Instacart, Munchery, and Blue Apron. These businesses have high quality water offerings, broad office coffee offerings, soda, and snacks. The big guys like Walmart and Amazon sell these competing products inexpensively (if not downright dirt cheap). And, to make it even harder, these emerging competitors can bundle our HOD offerings with office supplies, basics (like diapers, groceries), and virtually every other consumer need. Each of these entities is currently pouring enormous resources into developing its home delivery systems—combining current warehousing and bricks-and-mortar locations with new expanded delivery abilities and technology. So, what’s your average HOD business to do? Start thinking forward and don’t be caught flat-footed when your Millennial (and GenX and Baby Boomer) customers opt for speed and convenience. The good news is technology has gotten much cheaper and the Big Boys and Girls can’t as easily muscle the smaller fry. Tablets and iPads, linked with GPS and telecommunications, can be had fairly cheaply. Apps for ordering and interacting with customers can be developed locally and mass distributed to customers and potential customers with the click of a button. Scan codes used by smartphones can be slapped on marketing materials, trucks, and packaging—and they are free. Route books are gone. Online ordering is growing. Don’t be surprised when customers decide they want push button ordering and won’t deal with the perceived hassle of route delivery. Change is near.

GET ONLINE Breck Speed IBWA Chairman

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Scan this QR code to read about the experiences other IBWA members have had when implementing online bill payment and ordering systems.

IBWA

International Bottled Water Association OFFICERS Chairman Breck Speed, Mountain Valley Spring Company, LLC Vice Chairman Dave Muscato, Nestlé Waters North America Treasurer Bryan Shinn, Shinn Spring Water Company Immediate Past Chairman William Patrick Young, Absopure Water Co., Inc.

BOARD OF DIRECTORS Joe Bell, Bell Sales, Inc. Page Beykpour, CG Roxane Dan Bush, IGO Direct Premium Water Coolers Philippe Caradec, Danone Waters of America Tom Harrington, DS Services Brian Hess, Niagara Bottling LLC Doug Hidding, Blackhawk Molding Co. Dave Holdener, Nicolet Forest Bottling Co. Scott Hoover, Roaring Spring Bottling Dan Kelly, Polymer Solutions International Dave Muscato, Nestlé Waters North America Greg Nemec, Premium Waters, Inc. Chris Saxman, Shenandoah Valley Water Co. Bryan Shinn, Shinn Spring Water Company Robert Smith, Grand Springs Distribution Breck Speed, Mountain Valley Spring Company, LLC Lynn Wachtmann, Maumee Valley Bottlers, Inc. William Patrick Young, Absopure Water Co., Inc.

IBWA EXECUTIVE COMMITTEE Chairman, Breck Speed, Mountain Valley Spring Company, LLC Joe Bell, Bell Sales, Inc. Philippe Caradec, Danone Waters of America Tom Harrington, DS Services Henry R. Hidell, III, Hidell International Scott Hoover, Roaring Spring Bottling Dan Kelly, Polymer Solutions International Dave Muscato, Nestlé Waters North America Chris Saxman, Shenandoah Valley Water Co. Bryan Shinn, Shinn Spring Water Company William Patrick Young, Absopure Water Co., Inc.

COMMITTEE CHAIRS Communications Committee Jane Lazgin, Nestlé Waters North America Stephen Tischler, National Testing Laboratories Education Committee Glen Davis, Absopure Water Co., Inc. Bryan Shinn, Shinn Spring Water Company Environmental Sustainability Committee Philippe Caradec, Danone Waters of America Jeff Davis, Blackhawk Molding Co. Government Relations Committee Shayron Barnes-Selby, DS Services Gene Belcher, Misty Mountain Spring Water, LLC Membership Committee Allen French, Edge Analytical Kelley Goshay, DS Services State and Regional Associations Committee Joe Cimino, ChoiceH2O Ross Rosette, H2Oregon Supplier and Convention Committee Brian Grant, Pure Flo Water, Inc. Dan Kelly, Polymer Solutions International Technical Committee Andy Eaton, Eurofins Eaton Analytical Kevin Mathews, Nestlé Waters North America


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PRESIDENT’S MESSAGE HOD: BACKBONE OF THE BOTTLED WATER INDUSTRY Within IBWA, the majority of our members focus primarily on home and office delivery (HOD) of bottled water and other related products. Whether large, medium, or small companies, they are the backbone of the bottled water industry—and they consistently provide safe, quality, convenient bottled water to help consumers meet their daily healthy hydration and refreshment needs. Part of IBWA’s mission as a member organization is to help create a favorable business, public affairs, legislative, and regulatory climate so our member companies can be more successful. With that in mind, for our cover story, “Large Company, Small Company: What We Can Learn From Both HOD Enterprises” (p. 14), we went to Steve Keim, a package beverages expert with more than 30 years of experience in the bottled water industry. According to Keim, he’s learned one clear lesson from working with large corporations and smaller operations: both have their advantages. The question becomes, What best practices do they have to offer? An obvious advantage larger businesses have is capital. But according to Damon Grant, in “This Ain’t Your Grandpa’s Bottled Water Business” (p.20), you don’t have to make a huge lump sum financial investment in technology to ensure your bottled water business runs as efficiently as it can. Grant, who sees technology as a must-have for all HOD businesses, has this advice: it’s okay to take baby steps. In our Government Relations column (p. 24), we acknowledge—along with fictional Springfield Mayor Quimby, that (somehow) elections are upon us, again. You may think we never left the last election cycle—what with continued dissemination of political ads and flyers and requests for contributions. But nonstop political campaigning can be a positive thing— because it gives citizens many opportunities to get involved. The Communications column (p. 26) discusses how bottled water is “Winning the Hearts and Minds of Consumers”— despite continuing activist efforts to restrict the sale or purchase of these products. Here, we identify the many reasons consumers continue to increasingly choose bottled water over other packaged beverages. And finally, our Technical Update column (p. 28) takes an in-depth look into how the sixth proposed rule of the Food Safety Modernization Act (FSMA)—“Focused Mitigation Strategies to Protect Food Against Intentional Adulteration” (aka “the Food Defense Rule”) will affect the bottled water industry. In this special HOD edition of Bottled Water Reporter, we present a unique feature in the Water Notes section: HOD Marketplace. IBWA supplier members were invited to share information on their products that are particularly helpful to HOD businesses. I hope you take a little time to review these innovative offerings and contact the participating suppliers for more information.

Joe Doss IBWA President 4

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IBWA

International Bottled Water Association BOTTLED WATER REPORTER is published for: International Bottled Water Association 1700 Diagonal Road, Suite 650 Alexandria, VA 22314-2973. Tel: 703.683.5213 Fax: 703.683.4074 www.bottledwater.org

IBWA STAFF President Joseph K. Doss jdoss@bottledwater.org Vice President of Education, Science, and Technical Relations Robert R. Hirst bhirst@bottledwater.org Vice President of Communications Chris Hogan chogan@bottledwater.org Vice President of Government Relations Kristin Pearson Wilcox kwilcox@bottledwater.org Chief Financial Officer Michelle S. Tiller mtiller@bottledwater.org Director of Conventions, Trade Shows, and Meetings Michele Campbell mcampbell@bottledwater.org Director of Science and Research Tamika Sims, PhD tsims@bottledwater.org Director of Government Relations J.P. Toner jtoner@bottledwater.org Manager of Publications and Special Projects Sabrina E. Hicks shicks@bottledwater.org Manager of Member Services Dennis Carpenter dcarpenter@bottledwater.org Education and Technical Programs Coordinator Claire Crane ccrane@bottledwater.org Executive Assistant Patrice Ward ibwainfo@bottledwater.org Bottled Water Reporter Layout and Design Rose McLeod rozmack@gmail.com Tel: 315.447.4385 Editor Sabrina E. Hicks shicks@bottledwater.org Advertising Sales Stephanie Schaefer stephanie@bottledwater.org


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WATER NOTES

MEMBER ACHIEVEMENT

Stewart Allen Made Honorary Life Member of IBWA

During the 2014 IBWA Winter Board of Directors meeting in Long Beach, California, the Board agreed by a unanimous vote to make Stewart Allen an Honorary Life Member of IBWA. Stew has made, and continues to make, important contributions to IBWA and the bottled water industry. For more than 30 years, he has been a tireless bottled water

advocate and the list of his accomplishments at IBWA is long and impressive. Stew has served on the Board of Directors and Executive Committee, has been IBWA chairman, has received the Bottled Water Hall of Fame award, served on numerous committees and task forces, has been a trustee at the Drinking Water Research Foundation (DWRF) for many years, and has been one of IBWA’s representatives to the International Council of Bottled Water Associations (ICBWA) and is now serving as chairman of that group for an unprecedented third time. Stewart Allen will soon retire from DS Services (formerly DS Waters). He intends to remain active in the bottled water industry, and we look forward to his continued involvement in IBWA.

THE NEXT BIG STAR

A Match Made in (Television) Heaven? Bottled Water and Politics

Brian Flaherty (second from right) appears in the Season 2 finale of Netflix’s “House of Cards.”

It seems like a certain, extremely popular small screen breakout hit has a thing for bottled water, and we’re flattered! Take, for example, the case of Nestlé Waters North America’s Vice President of Public Policy and External Affairs Brian Flaherty. No rookie to the limelight, Flaherty spent eight terms as a state representative in the Connecticut legislature before moving to the corporate world. Since representing his constituents in Hartford, Flaherty has been involved with local Connecticut media as a regular contributor on the television program “Face the State,” which covers hot political topics in the Nutmeg State. Now, he has taken his talents to a new level with a cameo appearance in the Season 2 finale of the critically 6

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acclaimed and widely popular Netflix series “House of Cards.” This show follows fictional Congressman Frank Underwood (Oscar winner and Emmy-nominated actor Kevin Spacey) as he exacts revenge on those who betrayed him in his attempt to be appointed Secretary of State. Flaherty admitted it wasn’t necessarily his past work that gave him this opportunity but rather his relationship with a childhood friend from Watertown, Connecticut, who runs a casting company based in Baltimore used by “House of Cards” producers. Flaherty has a small speaking role, playing a member of the House Judiciary Committee. Flaherty hasn’t given any indications of additional forays into acting, but everyone at IBWA will be glad to support him and congratulate this first big step. And it’s not just people in the bottled water industry having cameos but also products from IBWA member companies are feeling the love from the show. In a scene with Spacey himself, viewers are treated to the sight of a Nestlé Waters cooler and bottle with the signature Prostack blue handle, a Polymer Solutions International product. Note to “House of Cards” producers: Hey, that’s just a couple of our great members. We have plenty more that would be glad to help in making the show an even bigger success. Have your people call our people!


WATER NOTES

MEMBER UPDATES

DS Waters Changes Its Name to DS Services

On March 4, 2014, IBWA member DS Waters of America, Inc. announced that it has changed its name to DS Services of America, Inc. For several years, DS Services has been developing a powerful new strategy to become a broader direct-to-consumer services provider, and its leadership determined that the company’s name should better reflect its evolving portfolio of comprehensive products, brands, and services. “In addition to expanding our position in the bottled water home and office delivery business,” says Tom Harrington, president and CEO of DS Services, “we have also created meaningful market positions in the coffee service and water filtration industries.” After acquiring Standard Coffee, a nationally recognized purveyor of brewed beverages, in 2012, DS Services demonstrated its commitment to offering customers a broader selection of coffees and teas, which includes many popular consumer brands such as Javarama, Green Mountain Coffee, Starbucks Coffee, Caribou Coffee, Peet’s Coffee & Tea, ALTERRA Coffee Roasters, and Luzianne Coffee and Tea. In preparation for the official March 1 launch date for the new name, DS Services refined the company’s new brand identity—rolling out a new name and logo that better communicates the company’s position in the market as a single-source beverage services provider across multiple lines of business. DS Services is now poised to provide flexibility for continued line expansions into new and emerging beverage and non-beverage categories.

Great Range Capital Acquires Mountain Valley Water Company

Great Range Capital announced on March 3, 2014, it recently led a team of investors, including company management, in acquiring Mountain Valley Water Company of Hot Springs, Arkansas. Mountain Valley, an IBWA member, is the oldest continuously operated bottled water company in the United States. It competes in the premium segment of the bottled water market and serves individual consumers, major retailers, and food service operators in all 50 states and selected international markets. According to Breck Speed, CEO of Mountain Valley, “Our partnership with Great Range Capital positions us well for continued growth and success. We now have an even greater ability to deliver the high quality products and services our customers have come to expect from Mountain Valley.” “Mountain Valley provides a top-tier domestic alternative to imported premium bottled waters. The company’s historic brand, glass packaging, and superior taste and mineral content resonate strongly with today’s conscientious consumers,” says Ryan Sprott, managing partner of Great Range Capital. “We are pleased to partner with Mountain Valley and its employees and look forward to building upon its legacy as ‘America’s Premium Water,’” adds Paul Maxwell, managing partner of Great Range Capital. Great Range Capital (www. greatrangecapital.com), a private equity firm based in greater Kansas City, primarily targets controlling equity investments in Midwestern companies with revenues ranging from $10 to $150 million.

SOCIAL MEDIA TIPS

Summer Hydration Tweets

IBWA members can use their company Twitter accounts to help spread the word about healthy hydration during the summer months. If you are new to social media messaging and just don’t know where to start, feel free to retweet the tweets listed below…or tweak them for your own purposes. • Mother’s Day is May 11. Know what makes Momma happy? A healthy you: stay hydrated with #bottledwater. • June 1 marks the start of Hurricane Season - Have you stocked up on #bottledwater? #BePrepared • DYK most boil alerts occur in the summer months? Stock up on reliable (& fully regulated) #bottledwater and drink safe! • Summer begins on June 21! Drink #bottledwater to stay healthy and hydrated! #URH2O • #hydrate smart with #bottledwater! #DrinkUp • Summer and #bottledwater go together like hotdogs and baseball! #DrinkUp the summertime fun! • Read these interesting facts about #bottledwater (& clear up some myths) www.bottledwater. org/education/myths • Important to keep bottled water accessible for all those who need it. “Meet Norman” www.youtube.com/ watch?v=xmGhFn7bkEY

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WATER NOTES MEMBER EXCELLENCE

Your CPO Status: You Wear It Well IBWA would like to congratulate the following bottled water professionals who successfully passed IBWA’s certified plant operator (CPO) exam in 2013. We hope you wear your CPO patch with pride!

A Better Water Monticello, IN Robert Brewer

Culligan Bottled Water Brooklyn Park, MN Melissa Jacobson

DS Services Lindenhurst, NY Daryl Holzman

Absopure Water Company Plymouth, MI Karri Drinka James McCroan Julie Silva

Culligan of Denver Englewood, CO Damian Sands

DS Services Los Angeles, CA Tracy Tang

Culligan of NWA Lowell, AR Timothy Carter

Illinois Pure Water Ottawa, IL Apryl McDermott Jeff McDermott Blake Shaughnessy

Advanced Refreshment Mercer Island, WA Steve Gober Daniel Gorman Aqua Falls Fairborn, OH Robert Kennedy AQUAQUEEN International Sydney, Australia Steve Penson CG Roxane Moultonborough, NH Joe DiArenzo CG Roxane Salem, SC Brad Talley

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Culligan of Perryville Perryville, MO Diane Geile Culligan Water Conditioning Fort Wayne, IN Scott Smith Culligan Water Conditioning Pocatello, ID Blake Jones Culligan Water Services Kingsland, GA Greg Windover Drink More Water Gaithersburg, MD Bob Perini

CG Roxane Weed, CA Anne-Sophie Boizard Sato Mitsuru

DS Services Fresno, CA Fernando Garcia

Culligan San Diego, CA Jack Cale

DS Services Lakeside, CA Robert Craig

WWW.BOTTLEDWATER.ORG

McCardel Culligan Traverse City, MI Cameron McCardel Misty Mountain Spring Water Abingdon, VA Rufus Gilbert

Niagara Water Missouri City, TX Art Miramontes Janine Romo Niagara Water Ontario, CA Tyler Probst Michael Tran Premium Waters Douglas, GA Roberta Brinkley Shinn Spring Water Company Birdsboro, PA William Gaugler Robert Gerhard

Mountain Brook Water Kentwood, LA David Ainsworth Pamela Gill

Silver Springs Bottled Water Company Silver Springs, FL Joseph Barton David Fredericks Frank McAdams Michael White

New Dutch Water Elmsford, NY Steve Wilson

Southeast Texas Water Beaumont, TX Summer Morse

Niagara Water Aurora, CO James Barker

Southern Beverage Packers Appling, GA Brian Hatcher

Niagara Water Groveland, FL Mijan Hears Jarrett Levy

The Water House Blue Ridge, GA Sylvia Carroll Tom Carroll


WATER NOTES SPECIAL

HOD Marketplace

IBWA Supplier members provide innovative solutions to the many common and unique challenges bottlers face. Check out these problem-solving offerings from IBWA Suppliers and contact them today to help you grow your business. Boost Your Buying Power, Join Allied Purchasing Today! Allied Purchasing is a member-owned, not-for-profit purchasing co-op, specializing in the beverage industry. When you become a qualified member, you will immediately enjoy savings when you purchase your bottles, caps, racks, water coolers, cups, and other supplies you need to operate your business more efficiently. In addition to saving money on your purchases, Allied’s team of experts will save you valuable time. Place one call to Allied and order from several suppliers at once. The Allied team will also research the best products and locations to purchase items, then present you with the information for you to make the best decision possible. If you want to buy like the big boys, join Allied Purchasing today and build better margins by reducing your expenses! Call Kari Mondt or Steve Husome at 800.247.5956 for more information, or check out the company’s website: www.alliedpurchasing.com.

Safety First With Arctica’s Blue Ring Seal Arctica Industries’ newest development is the Arctica Blue Ring Seal. Traditional foam gaskets in bottle caps are made using azodicarbonamide (ADA) as a blowing agent. Consumers who are concerned about ADA will be happy to hear that the Arctica Blue Ring Seal is ADA-free and is made of a specially formulated thermoplastic elastomer (TPE) material, designed to replace the foam gasket found in 5-gallon bottle caps. The Blue Ring Seal retains flexibility and therefore provides superior sealing capabilities compared to traditional foam gaskets, in particular on older bottles. Older bottles may suffer from uneven contact points due to repeated use and traditional foam gaskets are often unable to properly seal this uneven edge, which results in leaks. Put your mind at ease and ask for the Arctica Blue Ring Seal foam free cap. For more information about the Arctica Blue Ring Seal product, contact Ray Thé: 604.516.6166 or ray.the@arcticagroup.com.

Ideal for You: CapSnap Bottling Systems, Equipment, and Service

CapSnap Equipment is the leading provider of high-quality HOD water bottling equipment and service, producing automated water bottling systems for washing, sanitizing, filling, and capping of 3-, 4-, 5-, and 6-gallon water bottles. The automated systems range from 150 to 3,000 bottles per hour (BPH) capacities, providing an ideal fit for water bottling operations of all sizes. All equipment meets or exceeds IBWA and FDA standards, and is also NSF foodzone component certified. CapSnap Equipment provides full water bottling system design, production, installation, and integration services. CapSnap Equipment also provides global support service for water bottling equipment, spare parts and field servicing (emergency shut down, routine and preventative maintenance) options. CapSnap’s PortaPlantTM 3,000BPH (shown above) is built for high production and maximum efficiency, automatically rinses, sanitizes, fills, and caps. • Automatic load and unload mechanisms • Customizable wash sequencing of pre-wash, wash, rinse, and sanitization to meet your requirements • Independent capper with overhead hopper, feeder, chute, presser belt and controls • PLC/HMI with touch screen operator control system • Standard Allen Bradley electrical components • Inverter duty conveyor motors • Multi-level float devices in wash tanks • Sloped floors in washer tanks with marine-style clean-out doors For more information, contact CapSnap Equipment: 517.787.3481 / www.capsnapequipment.com. MAY/JUNE 2014

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WATER NOTES SPECIAL

Greif Water Bottles—A Better Bottle. A Better Value.

understanding of the customer’s business objectives and a detailed assessment of the vehicle’s operational environment. The final product exceeds expectations for Greif is the strength, functionality, quality, and appearance. Scale A. Useleading this version of the logo forStandard any size world’s Mickey features: greater than 1" wide. manufacturer of • Low-profile design water bottles, • All-Weather Door LocTM system most notably in • All-aluminum, uni-body construction Europe. And today, as more and more customers discover • Full-length, single sheet floors the company’s advantages, Greif is quickly becoming the • One-piece rear and front panel skins preferred solution for bottlers here in America. The reasons • All-aluminum corner and intermediate machined castings B. To maintain legibility use this version of the logo for any size less than or equal to 1" wide.warranty are simple: • 12-year Never scale the logo to less than 1/2" wide. • Quality – Greif’s blow molding and finishing processes are For more information contact, Tom Arland, some of the most advanced of their kind in the industry. And VP Sales: tarland@mickeybody.com / 800.334.9061 / as a rule—no Greif water bottle leaves the plant before it has www.mickeybody.com. been quality checked for fit and finish. • Lowest Overall Cost – Does Greif provide the cheapest water bottles out there? Not always. Will you get more for PhoneTree: Keeping You your money when it’s all said and done? Without a doubt. Connected to Your Customers Because when you factor in unit cost, trips per bottle, and PhoneTree® can help overall service life and durability—the competition is hardreduce operational pressed to beat Greif’s proven value. costs and increase • Customer Focus – The Greif approach to customer revenue keeping your service is singular: you’re the boss. Accordingly, Greif customers connected works to deliver what you want, when you want it, and and informed. where you want it. With 25 years’ experience, PhoneTree has provided HOD Water Bottles – 3-gallon and 5-gallon Handled and organizations nationwide with cost-effective and reliable Non-Handled Bottles. Single Trip and BPA-Free HOD water automated communication. Through phone, text, email, and bottles available soon. For more information on Greif prodsocial media, the company’s VoiceWave® solution provides a ucts, call 740.357.6585 or email rick.volker@greif.com. direct line of communication to your network of customers. VoiceWave ensures timely, accurate delivery of everything Deliver Your WATER, WATER from delivery notifications to maintenance reminders and EVERYWHERE With a Custom-Built collections—all while freeing up staff time to focus on other Body From Mickey important responsibilities. Plus, there are never required contracts or monthly fees. Whether you deliver bottled water com• Delivery notification mercially, residential• Annual maintenance reminders ly, or up-and-down • Service reminders the street—through • Route efficiency the front door, from • Collections the parking lot, or For more information and to see how a VoiceWave solution off a curbside—a can help you reduce costs and increase revenue, contact custom-built Mickey truck body is the most driver-friendly a PhoneTree sales executive today: sales@phontree.com / and efficient way to get the job done. Everything from www.phonetree.com / 877.259.0652. 8-ounce bottles to 5-gallon containers. Mickey’s unique Service Delivery Model combines engineering expertise with a century of vehicle manufacturing innovation to turn your requirements into bottled water delivery solutions. It all starts with a clear 10

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WATER NOTES SPECIAL

Revolutionary Rack by Polymer Solutions International Polymer Solutions International, Inc. has developed a revolutionary New Home and Office Delivery rack system to transport 36/5- or 3-gallon bottles in an up-right (stand-up) position. The 36-bottle rack (32”Wx42D”) is molded from durable and easy-to-clean HDPE, stackable by layer in the vehicle and warehouse, and one of the lightest per bottle delivery systems. Two trays and a base pallet make up the rack, which is also nestable when empty for organized storage and economical return trips. Soft elastomer support rings with elevated profiles protect each bottle, especially PET. Each tray can have the

Polymer Solutions International, Inc. Where Ideas Become Solutions

option of internal partitions to securely orientate the bottles in-between posts or a flat surface to allow the bottles to slide freely across the bottom for easy removal. This new rack is perfect for Direct Store Delivery and smaller delivery vehicles—empty bottles can now be easily stacked. It can replace distribution systems that use a wood pallet and wood or corrugated tier layers as a stable, cleaner, safer, and more efficient way to transport and return 5- or 3-gallon one-way and returnable HOD bottles. For more information, please contact Polymer Solutions International, Inc.: 877.444.7225 (RACK) / www.prostack.com.

MORE SUPPLIERS ONLINE When looking for trustworthy vendors who are experts in all-things-bottledwater, look no further than the IBWA Supplier members listed in the IBWA Online Buyers’ Guide. You’ll find the quality products and services you need to be a success in the bottled water industry. To view IBWA’s Online Buyers’ Guide, scan this QR code.

Simple Strong Smart Engineered plastic modular rack systems for the transportation, delivery and storage of bottled water.

Bottle-Up Storage and display solution for home, office and retail.

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WATER NOTES SPECIAL Mailing Services and More SureBill® provides comprehensive, turn-key print and mail services to the bottled water industry, as well as many others. Their clients are located across the country, and the company does regional and national mailings every day. Once you are a SureBill customer, all you send to them is a data file output from your billing system, and they do the rest. SureBill prints any preprinted forms or inserts that go with your mail package, and they manufacture the envelopes, so you do not have to do any procurement or inventory planning of these materials. As part of their offered services, SureBill checks your addresses against the USPS National Change of Address Database and provides an exact PDF replica of all bills. The company is also USPS certified to offer mail presorting services, so SureBill will get you a significant discount on postage. Outsourcing the printing and mailing of your bills will provide cost reduction in key areas: office floor space, personnel, inventory, equipment leases, and postage. SureBill also offers mail piece design support and graphic design services, so they can help

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you take the appearance of your bills and statements to a higher level for branding purposes. Please call or email SureBill today! 770.623.5188 or www.surebill.net. C

Custom Solutions for Your Unique Challenges Zephyr Fluid Solutions has successfully designed and launched numerous patented consumer products in partnership with one of the largest beverage companies in the United States. Zephyr Fluid Solutions focuses on addressing the unique requirements of the consumer goods, bottled water, and beverage industries. Its mission is to create functional, creative, and effective distribution, storage, dispensing, merchandising, and recycling solutions for brand owners and consumers. Zephyr’s extensive background in engineering and consumer products, together with its familyfocused culture, makes Zephyr Fluid Solutions a leader and innovator in the marketplace. Contact Zephyr Fluid Solutions for more information about its products or to discuss a custom solution: 866.937.4971 or info@zephyrfluidsolutions.com.


WATER NOTES

NEW MEMBERS

IBWA Welcomes New Members When new members join IBWA, they bring added energy to the organization and help us respond to the demands of the marketplace and see industry challenges with fresh eyes. Please help IBWA make these new members feel welcome.

BOTTLERS

SUPPLIERS

Ferrarelle USA 1 Selleck Street Norwalk, CT 06855 Telephone: 203.822.9022 Primary Representative: Ron Salerno

Continental Water Laboratory a Division of DS Services 8631 Younger Creek Drive Sacramento, CA 95828 Telephone: 916.379.2323 Fax: 916.383.8593 Primary Representative: John Bernatchy

Offering its product in varying sizes (glass bottles: 1 liter, 0.75 liter, 0.5 liter, and .33 liter; and PET: 1.5 liters, 1 liter, 0.5 liter, and 0.25 liter), Ferrarelle has been the only naturally sparkling water enjoyed in Italy since 1893. Ferrarelle— with its source in Naples, Italy—has now entered the international market, and the company aims to achieve a prominent position through the export, above all, of its naturally sparkling water, which is exported to more than 40 countries worldwide, including the United Kingdom and the United States. The company aspires to gain a foothold in the away-from-home segment, especially in delicatessens, top hotels, and restaurants, carving a niche for itself among a small number of selected consumers in order to keep brand perception high. For more, email info@ferrarelleusa.com or visit www.ferrarelleusa.com. Langlade Springs Water Co. LLC W6933 Street, Hwy 64 Polar, WI 54418 Telephone: 715.623.9170 Fax: 715.623.7471 Primary Representative: Jenny Sieghold Langlade Springs is a one-stop source for the highest quality private label specialty bottled water and beverages. Their natural alkaline mineral spring water offers refreshing taste with one of the highest natural 7.8+ pH factors available, so it’s naturally healthy. Centrally located in northern Wisconsin, Langlade Springs manufactures and bottles right at the source. Significant investments in their facility, equipment, and processes, including IBWA certification, allow them to custom mix, cold-fill, label, palletize, and ship from one location. Customers can choose from a variety of sizes and styles of 24-pack, single-serve, 100-percent recyclable PET bottles, as well as eco-friendly RPET and ENSO biodegradable options. For more, visit www.langladesprings.com.

PhoneTree 301 N. Main Street, Suite 1800 Winston-Salem, NC 27101 Telephone: 800.951.8733 Fax: 336.722.6877 Primary Representative: Todd Jones PhoneTree® can help reduce operational costs and increase revenue keeping your customers connected and informed. With 25 years’ experience, PhoneTree has provided organizations nationwide with cost-effective and reliable automated communication. Through phone, text, email, and social media, the company’s VoiceWave® solution provides a direct line of communication to your network of customers. VoiceWave ensures timely, accurate delivery of everything from delivery notifications to maintenance reminders and collections—all while freeing up staff time to focus on other important responsibilities. Plus, there are never required contracts or monthly fees. Use PhoneTree for delivery notification, annual maintenance reminders, service reminders, route efficiency and collections. For more information and to see how a VoiceWave solution can help you reduce costs and increase revenue, visit www.phonetree.com.

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COVER STORY

LARGE COMPANY

WHAT WE CAN LEARN FROM By Steve Keim

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small company BOTH HOD ENTERPRISES Since 1982, I’ve had the privilege to work in the home and office delivery (HOD) segment of the bottled water industry alongside of large corporations (Belmont Springs when it was owned by the Coca-Cola Company), large entrepreneurial businesses (Sierra Springs before it was sold to Compagnie Générale des Eaux, a French conglomerate), international bottlers (Neverfail Springwater in Australia), and smaller entrepreneurial HOD businesses (Abita Spring Water, Norway Springs, and Primo Water). I’ve also provided management consulting services to dozens of other U.S. and international HOD businesses during the last 30 years. For some of those years, I had the pleasure of working with Hidell International, which further developed the breadth of my international experience. From all of that industry experience, one thing has become clear: large corporations have advantages over entrepreneurial businesses, but entrepreneurial businesses also have distinct advantages over large corporations. If we take the time to review each, we might just learn something from each other.

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FAST REACTION TIMES GENERALLY CATCH SLOWER COMPETITORS OFF GUARD AND CAN BE A BIG PLUS FOR THE AGILE COMPETITOR. Big Opportunities for Small Businesses So, what are the biggest strengths of a successful, small to mid-sized, entrepreneurial company? Small companies can start in a heartbeat. On-the-ground decision makers in smaller companies can think outside the box, develop a new idea, and act on it. A leader can decide, fairly whimsically, to try a new product, service, package deal, or sales/marketing campaign—and just “see how it works.” But he or she may do things a bit too casually. A smart company leader will remember that execution still requires three things: planning, selling it to the team, and communicating effectively to the potential prospects. A good idea ruined by poor execution can cause a company to learn the wrong lesson. Fast reaction times generally catch slower competitors off guard and can be a big plus for the small business. I’m a firm believer in the “first in” advantage. Being the first company recognized for doing a new and innovative service, product, or pricing structure goes a long way in building positive word of mouth. Larger companies, because they require multiple levels within the organization to endorse a new idea before advancing it, generally act more slowly. Change takes time and serious analysis—however, that is a process that leaves larger companies vulnerable. Let’s look at an example. The first companies to offer truly valuable “package deals” to their prospects and customers made a substantial positive impact on their businesses. One company introduced a package for existing watercooler 16

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owners: “four bottles per month, replacement insurance on the cooler, and a case of PET to start—requires monthly delivery, credit card payment, and costs $X per month.” The company introduced the deal in the spring and added approximately 500 new customers by the end of the season, which was a 15 percent growth. Although the competition reacted the next year, the damage was done, and the first-in company became the growth leader in that market for several years. The offered deal was a good value, and, in return, the company got steady customers who did not quit, delivery scheduled for every four weeks (instead of three or two), steady payment with essentially no bad debt, and an insurance policy that helped them rotate cooler inventory. For that smaller company, it took about one week to go from idea to implementation: the team had the idea, began rough advertising, created a small flyer, and offered the deal at a trade show. Customer service representatives had a new sales story, and, for corporate account representatives making cold calls, they could sell a cooler to a company and then establish them as repeat customers with this service. About a month later, the offer was available on the company’s website. Smaller companies can stop on a dime. Being nimble is also an advantage if an idea fails miserably and you want to stop the program. It does require someone admitting to a mistake, but, as long as the internal consequences are not too risky for the individual, that can be done fairly quickly and easily. Further, there are benefits to admitting a mistake.


HOD BEST PRACTICES If consumers reject your company’s plan, you have to concur that the customer is always right—and then do what the customer wants and modify company offerings or behavior. Often, the decision maker can acknowledge that he or she didn’t listen well enough to the customers or the employees, and that is why the idea failed. Simple honesty goes a long way in building team spirit and reminds everyone that the objective is to meet the needs of the customer, profitably. Rarely does a big company perform that way. It seems the nature of large organizations is to never admit mistakes; therefore, they delay (almost indefinitely) the decision to stop a failing program. By the time a decision is reversed, typically there has been major share loss, major capital investment lost, and often the result is the termination of the decision maker and the person who came up with the idea. Smaller companies can fill small niches. Smaller companies can make a good margin on small volume in niche markets where larger companies cannot. From a geographic perspective, this is evident in any smaller and non-strategic market: Cape Cod, San Pedro Island, the Upper Peninsula of Michi-

gan. A small entrepreneur can capture those markets profitably, while a larger corporation cannot afford the resources to do it right where there are so few actual prospective customers. Small companies can more often determine their own time horizon. If you are running a smaller operation, you can develop return-on-investments (ROIs) that meet organizational needs and are not subject to having monthly, quarterly, and annual reports that determine investor sentiment. Therefore, leaders in smaller organizations can base their decisions more on customer needs, competition, and the reality of the marketplace. I do not mean to overlook the critical issue of constant cash flow requirements facing the smaller company, which doesn’t have as much of an impact on a larger company. Cash availability is obviously one of the big company advantages.

Small Details a Large Corporation Advantage So, what are the biggest strengths of a larger, more corporate entity?

THE LIFEBLOOD OF SUCCESSFUL COMPANIES: INNOVATION I’ve heard some say the home and office delivery (HOD) business is no fun because there’s no innovation. Well, that’s patently untrue—as demonstrated by the polycarbonate bottle, varied bottle sizes, PET bottles, improved and smaller bottling lines, improved handhelds and measuring systems, new social media marketing, and the advent of cooler sales and 5-gallon exchange at the retail level. In addition, significant experimentation is underway with broader product lines for distribution to both homes and offices—and no one really knows where that exploration will end up. If you want more innovation in the HOD industry, then do something different to meet your customers’ needs—and do it better than your competition. Find an unfulfilled need in a segment of your population base, and figure out how you can solve their problems profitably: • Make it a company goal for staff to identify unfulfilled (or under-fulfilled) customer needs. • Have key managers collect the suggestions and discuss them to identify valid opportunities. • Ask if your customer base is large enough to warrant taking action on the identified efforts. • Select one to three projects that appear worth developing. • Assign responsibility (even if to yourself) to build a plan of action to test the projects out. Because innovation is crucial to company success, make it part of your company’s mission. I suggest you create the goal of having one or more innovative changes every year as part of your budget process. Some years will generate better ideas than others, but it adds an element of fun to the business. It also shows you are listening to your prospects as well as your employees—and it might just lead to being your “first in” (see page 16 for more) with something truly impactful. MAY/JUNE 2014

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LARGE COMPANIES MEASURE KEY PERFORMANCE INDICATORS— THEY KNOW WHEN A ROUTE IS UNDERPERFORMING AND CAN ACT QUICKLY TO FIX IT. Big companies are single-mindedly committed to building brand value. This is a great asset for a larger company because it means every employee working there is always focused on building brand awareness and linking the benefits they sell with the brand name. They recognize the value of branding and will do whatever possible to promote their brands. That is why you never see a major company sell advertising space on its route trucks to another company: they want to keep that prime marketing real estate under their control, marketing their most valuable brand on their own prime real estate. The corollary to that strength is one of Corporate America’s biggest weaknesses, as related to HOD: they consistently believe that their brand name should be distributed all over America. They routinely expand their geographical reach, thereby always maintaining a large outside ring of territory that is losing money. The difficulty in growing effectively a long way from home is partially due to the nature of population and demographics: the further removed from a large city, the lower the population density. In this case, the strategic imperative of most large corporations is in conflict with maximizing profitability. Large companies are good at tracking financials and measuring KPIs. By measuring key performance indicators (KPIs), they know when a route is underperforming (too many out-of-stocks, too many customer calls, too large a churn rate) and can act to fix it more quickly and with greater precision than a company where the manager “just has a feeling” that service quality has dropped in an area. By measuring financials carefully, many important things can be spotted early. A classic example (because of the huge consequences) was when Coca-Cola and Pepsi aggressively launched retail water products. Suddenly, it was easy for smaller bottlers to sell their small-pack water through their local retailers. Everyone jumped on the bandwagon. Everyone saw their revenues suddenly start growing by 10-20 percent instead of the “normal” 5-7 percent being experienced in HOD growth at that time. It was an exciting one or two years for the industry. 18

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Only a handful of the smaller companies conducted accurate financial reporting by product line (i.e., cost accounting). Those that did quickly became aware that, while retail water was driving their revenues sky-high, they were losing a few cents on every case sold. Without cost accounting, the P&L in Year 1 simply shows much higher revenue, and a slight reduction in overall profit for the company. By Year 2, there’s a huge increase in revenue and a noticeable reduction in overall operating income. By Year 3, it is a crisis. With cost accounting by product, it would have been apparent by the middle of the first year that the retail business needed to be fixed or abandoned. Without cost accounting, some companies drove themselves into bankruptcy. I have spent much of my consulting life helping smaller companies generate financial and operating data in formats that allow this to be actionable information, not just data. Setting up that data is not easy, but it is imperative to do so. Your business future and prosperity depends upon it. Larger companies are generally very good strategically. Smaller companies tend to do 80 different things all at once, many of them non-strategic. They can be victims of the old adage, “Having lost sight of the objective, they redoubled their efforts.” Large companies are more focused. Strategic focus is good because it ensures that everyone on the team understands the corporate objective— everyone is rowing in the same direction and measures success by the same criteria. Large companies have cash availability. Large companies can outlast smaller companies, giving them power in competitive pricing and bidding situations. They can also invest in bigger decisions, which can be good and bad. (It can lead to bigger mistakes.) Sometimes, large corporations make large investments that a smaller company would not, and could not, consider (which can be a good thing). Larger companies have leverage with customers, prospects, and vendors. Having that leverage does give them a


HOD BEST PRACTICES competitive advantage. But that can backfire because there are customers and vendors who detest working with a large company with that much power.

Lessons Learned If you are the owner or senior manager of an HOD business, what can you learn from those examples? Don’t rest upon your status quo. Many people (myself included) believe that service is the single biggest point of differentiation in the HOD industry. Although smaller companies are thought to be better at “service” than larger companies, I would point to Disney, Trader Joe’s, Google, FedEx, and Marriott as examples of large companies that do “service” extremely well. All players, large and small, constantly refocus on ways to meet the service needs of their target customers. Here’s what you can do: grade yourself and your company on the variables discussed above. Think through past situations that could have been prevented or improved upon had your company been stronger in one area or another. Be objective—and try to think of specific examples that support the very good or very low grade you give yourself. You should also develop an “action list” containing two or three areas that show opportunities for improvement. For example, if you are a small company that does not track operating performance from one year to the next, you may make that a KPI for the balance of 2014. Believing that “what you don’t measure, you can’t manage,” I place a high priority on tracking such information. You can easily spot the route sales representative who is not leaving enough water for customers (out-of-stock numbers go up) or who is not servicing well (churn rate goes up with no particular explanation). You can spot when a salesperson’s cold call ratio falls from .92 new cooler rentals per day to .53 over the course of a full month— and take actions to address the problem.

team discussion can be an eye-opener—and can mark the start of a positive dialogue amongst the entire staff. Lastly, after you have set some goals for the rest of 2014 to improve your company’s skills in certain areas, be sure that you review the results of that exercise in late 2014 as you plan for 2015. For most companies, this effort never really ends, and the process will help improve performance. The HOD business is not rocket science, but it is one of the most complicated management businesses around. No one piece is difficult, but there are thousands of pieces moving at the same time. Without excellent communication, clear strategic and operating vision, and strong team commitment to doing whatever it takes to make the customer happy, the HOD business can become frustrating, painfully hard, and unprofitable. If you find yourself in that position, take inspiration from these suggestions and implement a few successful strategies used by your competition. Steve Keim has more than 30 years of marketing and general management experience in service and consumer goods industries, with emphasis on the HOD segment of the bottled water industry and enhanced/nutritional beverages. His domestic and international experience help make his blog, www.keimmunications.blogspot.com, a useful resource for industry professionals. Contact him at ckeim@triad.rr.com.

From a larger company perspective, test greater and faster risk taking. Consider implementing two or three new ideas in a local branch for a few months. As the Nike slogan says, “Just Do It,” but do it right: support the effort and commit the branch to success. Don’t make it a corporate project that involves several layers of management. If it fails, you will have to take responsibility for the test that did not work. But if it goes well (you hero, you!), you can roll out the idea quickly and positively, having confidence that (if executed properly), it should work as well or better during rollout. But don’t go it alone: involve your team in considering areas for improvement—and discuss the inspiration you can get from your large or small counterparts. Together, take a full day to develop your group’s next steps. This kind of in-depth MAY/JUNE 2014

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This Ain’t Your Grandpa’s Bottled Water Industry How all HOD bottlers—large and small— can use technology to their advantage By Damon Grant

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TECHNOLOGY

“Obviously, the highest type of efficiency is that which can utilize existing material to the best advantage.” – Jawaharlal Nehru It’s a well-known adage within the bottled water industry that most companies don’t sell water as much as they sell distribution. You could sell all the bottled water in the world, but, if it’s not delivered in an efficient manner, there is very little profit to be made. While that’s not earthshaking news to industry veterans, it bears repeating for any newbies in the business. The bottled water industry is all about distribution efficiency, and countless vendors offer a wide range of solutions to our complex issues. But this is not your grandpa’s bottled water industry any longer. If you want to be a successful business nowadays, you have to embrace technology. This is a subject I feel comfortable writing about, and I’m happy to share my insights with you. Companies that want to not only survive but also thrive must maximize their delivery system’s efficiency—and pull out all the technological stops to make that happen. But what does this mean in a practical sense?

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April over prior year. That review produced useful statistics that helped management and the sales team see progress broken down into the eight main sales channels we employ (e.g., sales team new start, route salesman new start, online new start, etc.). The management team quickly saw a glaring need, and we were immediately able to put plans in place to react to our new data. I don’t share that story to be applauded for my savvy computer skills or chart-producing abilities but rather to illustrate how quick and easy a good route management and reporting software suite can make tangible differences in understanding your companies and your customers.

Helpfulness of Handhelds

“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” – Bill Gates Get Centralized Most companies have moved their customer data to electronic form, and, as that’s the basis for all further technology, it’s an important starting point. If you want to improve your distribution system, my first suggestion is that you place all customer account information on a centralized server. You can have your pick of several technology suppliers who will be more than willing to help you get your customers organized 22

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electronically; you might want to use industry-standard SQL-compliant databases with software for each computer or mobile device to easily access that data in smart, intuitive ways. With easy access to your customer data, you can spot trends and gather important sales and distribution information— and that translates directly into profit. Recently, I spent about 20 minutes gathering sales data for the month of

Once you have your centralized server up and running, I suggest you connect the handheld computers used by your route salespeople to the customer database. As I’m sure you are painfully aware, today’s distribution methods—handling multiple routes and employees—are complex. Delivery drivers can no longer rely on a binder of paperwork that contains all the information they need to complete their daily tasks—everything from directions to their scheduled stops to previous delivery data and customer information. Such paperwork has to be updated constantly, obviously, with new stops and customer-related information, which leads to long hours of manual data entry by an employee whose time would be put to better use gathering new business and growing the route. While those same delivery details and information are as important today as ever—they are far more accessible thanks to technology. All you need is a modern smartphone. The widespread and open platform that Android has brought to the table is a game changer for deploying technology into the field,


Imagine how prosperous your business could be if front-line employees are connected to your database of customers, your customer service and accounts receivables departments, and your management team. Dream for a few moments how much you could increase efficiency when the moment a payment is made in the field, your staff back in the office is notified and all the account information is updated automatically as the delivery day progresses. Think of the increase in efficiency when you are able to make, on the fly, immediate changes to routes by simply adding or removing delivery stops for each individual route. What if a route salesperson’s delivery truck has a mechanical issue and he can’t complete his stops—no problem. The manager can simply reassign the remaining route stops to a nearby route and suddenly those stops are intelligently added to the new salesman’s handheld computer. All wirelessly through current 3G and 4G mobile networks. Real-time data can be an incredibly powerful tool! Some of those examples might sound impossible and expensive, but you’d be surprised at how affordable they can be. Anything that can upgrade efficiency has a huge potential for profit increases.

TECHNOLOGY

but other platforms (such as Windows Mobile and Apple iOS) are equally capable. Software is available or can be written that allows your employees to ditch the paperwork and begin entering in their sales information right into their smartphones with just a tap or two. Instead of paper receipts, route personnel can simply email customers their invoices with the click of a button. All that data is compiled and everything from company-wide sales figures to immediate salesman revenue reports can be generated by management. Customer call-ins, day of delivery skips, and route changes can be sent to the driver within seconds.

MAINTENANCE TRENDS FOR MEDIUM DUTY TRUCKS Work Truck magazine spoke with subject-matter experts from fleet management companies ARI and PHH Arval to get their outlook on current and upcoming challenges in maintaining medium duty trucks. They identified the following seven trends to help fleet managers navigate the current and future truck maintenance landscape: • New diesel emissions technologies are driving higher maintenance costs and more downtime in certain applications. • Drivers are increasingly more responsible for proper maintenance protocols. • While tire costs are increasing, new technology offers improved fuel economy and lower operational costs. • More original equipment manufacturers are offering disc brakes, increasing replacement intervals over drums. • Enhanced synthetic lubricants increase preventive maintenance intervals. • New greenhouse gas 2014 (GHG14)–compliant engines are expected to increase maintenance costs. • Improved vehicle quality will eventually drive lower maintenance costs. For more information, visit bit.ly/MedTruckMaintenance.

What does a simple 5 percent increase in efficiency mean for your company over the course of a day, a month, a year, a decade? Many of these technology upgrades can be done, as our company has done, in small increments over the course of three to five years.

Don’t Be Scared: Jump In Of course, some technological advancements might require a huge investment of time and research—and you might not want to just dive in. It’s likely you’ve already made a jump and purchased some helpful techie gadgets and products, and you’ve already seen an increase in efficiency. I would argue that one good jump into the lake of technology deserves a serious look at yet another. As distribution costs continue to rise, so too must our efficiency in order to keep prices stable. But beware: acquiring more technology does run the risk of over-spending, over-complicating, and making current problems only worse.

Bill Gates once said, “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” Here’s the takeaway: before spending a lot of time, capital, and effort towards new technology, be sure your business is already in order and efficient. I like to think of it as steps: it is important to keep taking steps, but be sure you’re finished with your current step before taking the next.

Damon Grant is the director of marketing and technology at Pure Flo Water (www.pureflo.com). Contact him at dgrant@pureflo.com.

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Election 2014: It’s Closer Than You Think Mayor Quimby’s Aide: “Election in November. Election in November.” Mayor “Diamond” Joe Quimby: “AGAIN?” “The Simpsons: Homer vs. the 18th Amendment (#8.18)” (1997)

As mayor of Springfield, the fictional town in the long-running cartoon “The Simpsons,” “Diamond” Joe Quimby might harbor some ill feelings about the often misunderstood U.S. electoral process. You may agree that the election cycle seems to be an ever-present, rather than occasional, occurrence nowadays. Candidates start campaigns earlier, media coverage begins earlier, mailboxes are flooded with political flyers earlier, and, chances are, you’ll get approached to make a campaign contribution much earlier than you may expect. While not the perfect system, the U.S. electoral process does work well—given one major condition: citizens must get involved—and get involved earlier. Although Mayor Quimby isn’t a fan of elections (or the citizens who elect him), he does know the importance of both. Believe it or not, real-life elected officials value both as well. In fact, a 24

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Connecticut State Representative I once worked with often offered this humorous line when speaking about his political life: “I only thought about my reelection once—every night before I went to bed.”

Representing You Now Is . . . Because elections—and thus political campaigning—are a constant, daily process for lawmakers, voters must give more thought, more often, to the lawmakers they want to represent them. You can probably feel this process in full swing for 2014. While midterm elections may not usually have the cachet of a presidential election, this year is likely to be different. Why? Because a host of lawmakers are retiring, which will have a significant impact on the makeup of Congress for the next several years. Among those retiring are several allies

of the bottled water industry; legislators with whom we’ve work hard to build solid relationships with during the last few years, educating them about our issues. But with a new crop of candidates sprouts the opportunity to enlighten more elected officials about our bottled water businesses and industry. If your previous experience with the electoral process extends only to voting, this fresh start presents an opportunity for you and your company as well. You could start up a Get-Out-The-Vote (GOTV) campaign within your organization to not only support candidates but also motivate employees to be more involved in the process.

Get Out the Vote Before you start a GOTV campaign, talk with your employees to find out how much they understand about the

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GOVERNMENT RELATIONS political process. Are they well-versed and up-to-date on current events, issues, and people? Have they never voted? Do they fall somewhere between the two extremes? Kick off your GOTV campaign by sharing with employees some basic information—how to register to vote, where to vote—to help ensure everyone feels included in this important process. Make sure, however, that you are aware of your state’s process: several states allow online voter registration, but others do not. The U.S. Election Assistance Commission provides information on state requirements and a national voter registration form. (For more info, visit http://bit.ly/EACvoteinfo.) Once your employees are registered, provide them with information about the candidates vying to represent them. You could also set up a voter registration drive in your office lobby or break room: ask for volunteers to work the table and provide candidate flyers and voter registration information. If employees request additional instruction, tell them about the League of Women Voters website (www. vote411.org), which is a valuable resource to help them understand the electoral process. This website can also help employees register to vote and find their polling sites. Prior to Election Day, consider inviting candidates to visit your company, meet employees, and discuss industry issues and community concerns. Don’t forget to provide employees with information on the candidates: What is his/her stance on the issues? Who is supporting him/ her? There’s nothing like a meet-andgreet with a candidate to get employees excited about the political process.

Show Up to Vote But all of that is only half the job. Once people are registered, know their polling place, and have an understanding of

MIDTERM ELECTIONS IN 2014 WILL IMPACT THE MAKEUP OF CONGRESS FOR YEARS TO COME. the issues and candidates, they actually have to go and vote. Here’s how you can encourage your employees to do their civic duty: • Allow for flexible scheduling on Election Day. • Provide transportation to polling sites. • Arrange for absentee ballots to be available for employees who frequently travel. • Hold an election night party or a contest to pick the winners.

Distribute materials reminding people to vote in payroll envelopes. • Display GOTV posters. If you are looking for additional ideas to encourage employee participation in the electoral process, contact me, J.P. Toner, IBWA’s director of Government Relations: 703.647.4616 or jtoner@bottledwater. org. I can offer other unique and proven GOTV suggestions. Because, before you know it, Election Day 2015 will be right around the corner! •

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Winning the Hearts and Minds of Consumers By Chris Hogan, IBWA Vice President of Communications

Despite recent activist efforts to ban or restrict the sale or purchase of bottled water in a few municipalities and college campuses, the sale and consumption of this safe, healthy, and convenient product continue to grow. According to preliminary numbers from research firm Beverage Marketing Corporation (BMC), in 2013 the total U.S. bottled water consumption increased to 10.1 billion gallons, up 4.3 percent from 2012. In addition, per-capita consump26

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tion was up 3.3 percent in 2013, with every person in America consuming, on average, 31.8 gallons of bottled water. Bottled water sales increased by 4.1 percent over 2012 figures. Comparing those numbers to other packaged beverage categories, it becomes clear that bottled water’s growth shows a “shift-in-consumption” trend, with the carbonated soft drink category experiencing its ninth consecutive year of volume loss in 2013.

BMC CEO Michael Bellas predicts that bottled water could overtake soda as America’s most popular packaged beverage within the next decade. (Bottled water currently holds the No. 2 packaged beverage spot.)

Why Choose Bottled Water Consumer enthusiasm for bottled water can be attributed to many factors, including its reputation as a safe, regulated product; its


COMMUNICATIONS environmental sustainability; its standing as a trustworthy emergency relief product; and its acclaim as the best healthy hydration option. Safety. Some U.S. consumers prefer bottled water because it is comprehensively regulated by the Food and Drug Administration (FDA) as a packaged food product, providing a consistently safe and reliable source of drinking water. By federal law, the FDA regulations governing the safety and quality of bottled water must be at least as stringent as the Environmental Protection Agency (EPA) standards that govern tap water. And, in some very important cases—e.g., lead, coliform bacteria, and E. coli—bottled water regulations are substantially more stringent. Sometimes, consumers opt for bottled water products because, frankly, other drinking water sources could be harmful to their health. For example, persons with compromised immune systems: the U.S. Centers for Disease Control and Prevention (CDC) recommends that individuals with compromised immune systems drink bottled water. That’s because FDA regulations require bottled water to meet strictly defined microbiological and chemical safety standards, which provide a safe, consistent, and reliable source of water. Environmental sustainability. The bottled water industry, which has an established history as a good steward of the environment, has taken many innovative steps that should impress “green” consumers. For example, PET plastic bottled water bottles use less plastic than any other packaged beverage. In fact, according to BMC, between 2000 and 2011, the average weight of a 16.9-ounce PET plastic bottle declined 48 percent, saving 3.3 billion pounds of PET resin since 2000. Bottled water companies continue to push container innovation, with many using recycled plastic in their bottles and some

CONSUMERS CONTINUE TO CHOOSE BOTTLED WATER. HERE’S WHY. producing 100-percent recycled product PET water bottles. Consumers concerned about environmental sustainability can also feel confident about choosing bottled water because our containers are 100-percent recyclable. The recycling rate for single-serve PET plastic bottled water containers (16.9 ounce) now stands at 38.04 percent. According to the latest-available bail study from the National Association for PET Container Resources (NAPCOR), bottled water bottles are the most frequently recycled PET beverage containers in curbside recycling programs. Emergency relief. Unfortunately, sometimes crisis situations dictate that consumers have no other source for water than bottled water because delivery systems for safe drinking water are interrupted. Our industry has provided millions of bottled water servings in response to natural and manmade disasters, including Hurricane Sandy and, most recently, the Elk River chemical spill in Charleston, West Virginia. But bottled water won’t be available during crisis situations such as those identified here if we don’t sustain a viable industry throughout the year. Healthy hydration. For those looking to lead a healthier lifestyle, bottled water remains the packaged beverage of choice. Drinking zero-calorie, sugar- and caffeine-free bottled water is regularly cited as a key component of a healthy diet. Promoting greater consumption of water from all sources, including bottled water, will support the efforts of consumers striving for a healthier lifestyle. That’s why IBWA

signed on as a supporter of Drink Up, a joint campaign effort between First Lady Michelle Obama and the Partnership for a Healthier America (PHA) that encourages people to drink more water more often. This national campaign continues to draw attention to the important role that water plays in everyone’s lives. For 2014, Drink Up has many exciting events planned. For example, last April, Drink Up launch a new advertising campaign: #spreadthewater. This creative campaign shines a spotlight on the fact that water doesn’t get the credit it deserves for its humble, yet influential, role in peoples’ lives. Using timeless icons that transcend generations, this campaign highlights how water has helped shape history.

Bottled Water’s Good Story So, IBWA members, if someone asks you how the industry is faring when it comes to telling bottled water’s story and getting out the facts, tell them our numbers show that we are winning. We have a great story to tell, and, when the facts are heard, consumers are choosing bottled water. And consumers are making their voices heard in the marketplace. IBWA will continue to work hard to create a favorable business and public affairs climate for the bottled water industry and to protect and advance the interests of all IBWA member companies.

MAY/JUNE 2014

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FDA Publishes Final FSMA Proposed Rules (Part 1 of 2) By Bob Hirst, IBWA Vice President of Technical Relations, Science, and Education

Since January 4, 2012, the U.S. Food and Drug Administration (FDA) has published a total of seven proposed rules under the Food Safety Modernization Act (FSMA): 1. Current Good Manufacturing Practice and Hazard Analysis and Risk-Based Preventive Controls for Human Food (“CGMPs and Preventive Controls Rule”) 2. Standards for the Growing, Harvesting, Packing, and Holding of Produce for Human Consumption (“Produce Rule”) 3. Accreditation of Third-Party Auditors/Certification Bodies to Conduct Food Safety Audits and to Issue Certifications (“Third-Party Accreditation Rule”) 28

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4. Food Supplier Verification Programs (FSVP) for Importers of Food for Humans and Animals (“FSVP Rule”) 5. Current Good Manufacturing Practice and Hazard Analysis and Risk-Based Preventive Controls for Food for Animals (“CGMPs and PCs for Animals Rule”) 6. Focused Mitigation Strategies to Protect Food Against Intentional Adulteration (“Food Defense Rule”) 7. Sanitary Transportation of Human and Animal Food (“Sanitary Transportation Rule”). The rules that most directly impact bottled water are #1, #3, #4, #6, and #7, although to varying degrees. Rules #3 and #4 are intended to apply to food imports, which

impacts a small number of IBWA members. IBWA will focus its efforts on rules #1, #6, and #7, educating members on addressing CGMPs, preventive controls (HACCP), food defense plans, and sanitation of vehicles and containers used to transport bottled water. In this Technical Update column and the July/August column, we will review the two most recently published rules: Intentional Adulteration Food Defense and Sanitary Transportation. We’ll start in this issue with the Food Defense Rule.

Impact of Rule #6 on Bottled Water Since September 11, 2001, FDA has issued numerous guidance documents


and developed resources to assist industry in its efforts to protect the food supply against intentional adulteration (rule #6). Until now, however, efforts regarding food defense have been voluntary. This proposed rule implements Sections 103, 105, and 106 of FSMA to mandate food defense plans for many food facilities. FDA’s proposed rule on intentional contamination uses a HACCP framework and has a parallel structure to the preventive controls rule, with key differences in terminology reflecting the different type of threat being addressed. Highlights include the following: • The proposed rule would cover all facilities registered with FDA under the Federal Food, Drug, and Cosmetic Act (FFDCA), Section 415—i.e., the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (“Bioterrorism Act”)—including those facilities exempt or partially exempt from proposed preventive controls requirements (e.g., seafood, juice, low-acid canned food, and dietary supplement facilities). • The focus of food defense activities would only be on potential acts of terrorism that could cause “massive” public harm. • Rather than focus on particular types of foods at high risk of intentional contamination, FDA identifies four potentially vulnerable activities involved in manufacturing, processing, packing, and holding food: (a) bulk liquid receiving and loading, (b) liquid storage and handling, (c) secondary ingredient handling, and (d) mixing and similar activities. Facilities that conduct any of those operations would be presumed to need a food defense plan in accordance with the proposed regulations. Bottled water is one of the foods that will be required to comply with the rule. • Each facility would be responsible for preparing a food defense plan that

TECHNICAL UPDATE

FDA’S PROPOSED FOOD DEFENSE RULE USES A HACCP FRAMEWORK. includes: (a) actionable process steps (corrective actions in HACCP); (b) focused mitigation strategies (preventive measures); and (c) procedures for monitoring, corrective actions, and verification activities. • All food defense activities would be documented and subject to FDA inspection. • FDA proposes to exempt: (a) all food storage facilities (except liquid storage); (b) packing, re-packing, labeling, or re-labeling activities where the immediate food container remains intact; (c) activities subject to the produce safety regulation; (d) animal food facilities; (e) certain alcoholic beverage facilities; and (f ) “qualified facilities” (i.e., very small businesses with under $10,000,000 in annual sales). Very small businesses would be required to maintain documented proof of qualification for the exemption. • Compliance dates from publication of the final rule would be staggered based on company size, with one year for large businesses, two years for small businesses (less than 500 employees), and three years for very small businesses (less than $10,000,000 in annual sales). The proposed Food Defense Rule is considerably broad in scope. Rather than identifying foods at high risk of intentional contamination by food type, FDA focuses on foods that are high risk of intentional contamination because of certain steps in the manufacturing process. Further, those steps that FDA has identified—key activity types—are

likely to take place at almost all food manufacturing facilities. In particular, we expect that most food manufacturing facilities engage in either secondary ingredient handling or mixing activities. Accordingly, all food companies will need to review the proposed rule carefully to determine how it would affect their facilities. In addition to liquid storage and transportation, many bottled water facilities engage in mixing secondary ingredients (e.g., fluoride and mineral salts). FDA is not proposing to require facilities to implement “broad mitigation strategies”—those general food defense measures that apply at the facility level and are intended to minimize a facility’s vulnerability as a whole, regardless of the type of food being processed (e.g., physical security, personnel security, securing hazardous materials, crisis management planning). In this way, FDA’s approach to food defense is akin to requiring HACCP systems, while leaving it voluntary for food manufacturers to implement basic foundational programs, such as sanitation and good manufacturing practices (GMPs).

LEARN MORE In the July/August 2014 issue of Bottled Water Reporter, the Technical Update column will review proposed Rule #7: the Sanitary Transportation Rule.

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CPO QUIZ

IBWA

certified plant operators (CPOs) are encouraged to complete the following quiz for ½ IBWA continuing education unit (CEU). The questions are derived from material presented in this issue of the Bottled Water Reporter, the IBWA Plant Technical Reference Manual, and the IBWA Bottled Water Code of Practice. Submit this quiz to Claire Crane, IBWA Education and Technical Program Coordinator, 1700 Diagonal Road, Suite 650, Alexandria, VA 22134. Look for additional quizzes in future issues and earn additional IBWA CEUs! Name______________________________________________________

Company_ _________________________________________________

Address____________________________________________________

City_______________________________________________________

State/Province_ _____________________________________________

ZIP/Postal Code_ ___________________________________________

Check your selection for each question

1|

The Food Safety Modernization Act (FSMA) consists of _____ proposed rules at present.

OO OO OO OO

4 7 2 10

2|

Which of the following FSMA rules applies primarily to imported foods and beverages?

OO OO OO OO

preventive controls for human food food supplier verification programs intentional contamination sanitary transportation

3|

The IBWA Code of Practice provides for use of equipment shared between water and dairy products.

OO True OO False

4|

Which of the following is true about the FDA bottled water microbial rule?

OO FDA has a standard for total coliform only. OO Presence of confirmed E. coli in source water does not require any action. OO FDA maintains standards for both total coliform and E. coli in finished product water. OO The FDA microbial rule remains less stringent than the USEPA Total Coliform Rule.

5|

Which two of the following analytes/tests is considered an indicator of possible leaking underground gasoline storage tanks?

OO OO OO OO

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Methy tertiary butyl ether (MTBE) Vinyl chloride Magnesium hypochlorite BTEX (benzene, toluene, ethylbenzene, total xylenes)

WWW.BOTTLEDWATER.ORG

6|

The proposed Intentional Adulteration (IA) Rule would focus on contamination events that could cause _____ public harm.

OO OO OO OO

light standardized massive minimal

7|

Rather than focus on the vulnerability of individual food products, the proposed IA rule will require assessment of _____.

OO OO OO OO

processes treatment equipment employees facility security

8|

Before a previously microbiologically contaminated source can be used again, FDA’s “bottled water microbial rule (Dec. 2009) requires 5 consecutive coliform-free samples collected over a 24 hour period and analyzed.

OO True OO False

9|

A measure of water’s ability to neutralize acids is known as _____.

OO OO OO OO

acidity hardness conductivity alkalinity

10|

The process of reducing the amount of hardness ions in water by replacing them with sodium or potassium is called ______.

OO OO OO OO

deionization softening reverse osmosis filtration


ADVERTISERS

CALENDAR 2014

Allied Purchasing . . . . . . . . . . . . www.alliedpurchasing.com . . . . . . . . . . . . . 19

Analytical Technology, Inc.. . . . . . . www.analyticaltechnology.com . . . . . . . . . C3 Blackhawk Molding Co.. . . . . . . . . www.blackhawkmolding.com . . . . . . . . . . C2 Crystal Mountain . . . . . . . . . . . . . www.crystalcoolers.com . . . . . . . . . . . . . . C4 Edge Analytical. . . . . . . . . . . . . . . . www.edgeanalytical.com . . . . . . . . . . . . . . 31 Pacific Ozone Technology . . . . . . . www.pacificozone.com . . . . . . . . . . . . . . . 25 PhoneTree. . . . . . . . . . . . . . . . . . . www.phonetree.com . . . . . . . . . . . . . . . . . . 5 Polymer Solutions International . . . www.prostack.com . . . . . . . . . . . . . . . . . . 11 Quality Truck . . . . . . . . . . . . . . . . . www.qualitytruckcompany.com . . . . . . . . . 12 Tech-Long. . . . . . . . . . . . . . . . . . . www.tech-long.com . . . . . . . . . . . . . . . . . . 3

MAY 14 - 17

Northwest Bottled Water Association Convention & Trade Show Red Lion at the Park Hotel Spokane, WA

MAY 19 - 21

California Bottled Water Association Annual Educational Conference and Tabletop Trade Show Shelter Island San Diego, CA

JUNE 9 - 12

IBWA June Board of Directors and Committee Meetings Hilton Alexandria Old Town Alexandria, VA

SEPTEMBER 11 - 13

Northeast Bottled Water Association Jiminy Peak Resort Hancock, MA

NOVEMBER 10 - 14

IBWA Annual Business Conference and Trade Show (co-located with the NAMA CoffeeTea&Water show) Hyatt Regency Dallas, TX

CALENDAR 2015

APRIL 16 - 18

South Atlantic Bottled Water Association Annual Meeting and Trade Show Pawleys Island, SC

CLASSIFIEDS FOR SALE Cap Snap 5-Gallon Water Line, Model ADAPTA-600, New 2001, Decapper, Bottle Washer, Filler, Capper, Conveyors, Boiler. Phone: 860.567.2011 Email: ric@litchfieldpackaging.com MAY/JUNE 2014

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VALUE OF IBWA MEMBERSHIP RYAN HEIKEN OPERATIONS MANAGER CRYSTAL CLEAR WATER COMPANY DES MOINES | IOWA ALL ABOUT RYAN When Ryan isn’t working, you might find him on the golf course. He loves to use his impressive Spanish skills when the opportunity arises. At least once a year, Ryan likes to hit the slopes on his snowboard, a winter activity that once saw him get hit by an out-of-control skier.

Ryan Heiken has been involved in the bottled water industry his entire life, but it was only in the last 4.5 years that he made it a full-time part of his life. Crystal Clear Water Company is his family’s business, and, during his younger years, Ryan spent school breaks helping out in every facet of the operation. Today, he is part of management, returning to the family business and working as the operations manager after a stint with an industrial electrical equipment manufacturer in Mexico and Oregon. Crystal Clear prides itself on providing water and coffee solutions to businesses, so they can focus on what they do best. More often than not, their customers are surprised to discover that Crystal Clear Water Company is a local, family owned business and not part of a larger franchise, perhaps because of its share in the local market and its professionalism. Ryan, who knows a good deal when he sees one, recognizes the value of membership with IBWA. When listing membership benefits that Crystal Clear values, Ryan points to the number of leads his company has acquired from the IBWA bottledwater.org website. “I didn’t know this until it was sitting right in front of me on my Google analytics,” says Ryan. IBWA’s website bottledwater.org is the No. 1 referring website to Crystal Clear Water Company. “People pay a lot of money for any amount of leads, and, when you look at the cost of being a member of IBWA, it’s almost worth it just from the leads standpoint from what I am seeing.” The quality of IBWA’s resource information and being part of a united front for the bottled water industry are other important benefits noted by Ryan. “IBWA gives us access to people that we can call when we have questions about anything going on in the industry,” he says. And when students at a local university began talking about banning bottled water, Ryan used IBWA videos—such as “Meet Norman” (http:// bit.ly/MeetNorman)—in social media and comment sections of online media and blogs to educate his community. “The communications team at IBWA knows what we are going through, the battles we are trying to fight, and, by coming together, especially for us as a smaller bottler, it makes it possible for us to have access to a professional package like that.”

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Bottled Water Reporter  

Home and Office Delivery Issue May/June 2014

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