Bottled water is big business

The bottled-water business in Hawaii generates hundreds of millions of dollars annually. It’s difficult to say exactly how much it’s worth, because there are so many bottled water companies springing up around the state.

In last five years, at least five new companies have come online in Hawaii, others have gone out of business, and some have merged, and are now doing business under different names owned by the same company.

The result has been a mind-boggling plethora of bottled water brands: Diamond Head, Hawaii Paradise Water, Menehune, the Hawaiian Isles Water Company, and Hawaiian Natural Water Company, Inc., which does business as Hawaiian Springs, East Meets West XEN, Aloha Water and Ali‘i Water.

Surprisingly, most water companies draw their water from the same source: the City and County of Honolulu’s drinking supply. Many draw on water from the Halawa Shaft, the base municipal water supply which pumps water via deep wells from the natural aquifer beneath the island of Oahu. Hawaiian Natural draws from wells on the Big Island.

And then there are the five companies out on the Big Island of Hawaii’s Natural Energy Laboratory of Hawaii at Keahole Point, who desalinate, bottle and sell sea water. Three are owned by Japan-based companies with one each owned by Korean and American firms, but all sell their water for a premium, up to $6 dollars per 1.5 liter bottle, making it one of the priciest beverages on the market.

On Kaua‘i, there are two primary companies doing steady business here, Menehune and Hawaiian Isles Water Company. The former draws its water from a spring in Pearl City on Oahu. The latter gets its water from the Halawa Shaft.

Into that fray has jumped Jim Satterfield and his newly licensed Kaua‘i Springs water.

From an 8-inch pipe that runs three miles from a spring at the base of Mount Kahili to the Knudsen estate in Koloa, Satterfield has the capacity to produce 1,000 five-gallon jugs of water per day at his new 1,600-square-foot production facility in Koloa.

In the two weeks his company has officially been in business, Kaua‘i Springs has gleaned 50 steady clients, and it looks like they’re strongly positioned to compete in an industry that has a noticeable dearth of water from Kaua‘i.

Kaua‘i is, after all, the wettest place on earth, so it only stands to reason that someone, someday, would make their move here.

“Think about it,” he says excitedly. “People come here from around the world to experience Kaua‘i. And what kind of water do you think they’ll buy and take home? Kaua‘i Springs, of course!”

Satterfield knows that water bottles with the word “Kaua‘i” on it will sell, but the idea of producing bottled water right here on Kaua‘i isn’t really new. Oahu-based Menehune produced water drawn from Kaua‘i County water as late as early this year, when a fire near their Lihu‘e production facility destroyed operations here. Now, they, like Hawaiian Isles, have their product shipped in from Oahu in various-sized bottles.

Menehune services some 4,000 clients on Kaua‘i, while Hawaiian Isles is sitting steady at about 100 clients here, but produces some 48,000 bottles of water every day. Both companies have a distribution network here that gets their product in nearly every story and convenience mart on the island.

It’s the kind of presence Satterfield hopes to attain some day. Along with his wife and five sons, Satterfield will grow his business slowly at first, distributing only the five-gallon jugs and gathering market share until the smaller bottles become cost-efficient to bottle and distribute.

“There isn’t really much of a profit margin in the small, personal water business,” he said. “I’ll start with the five gallon bottles and develop a market base, then move into the stores slowly.”

Once his market is developed, he’ll be better positioned to produce smaller bottles. Until then, he’ll stick with the lower-cost five-gallon jugs, which he washes, sanitizes, refills and delivers to his customers.

It won’t be easy, say local industry experts, who admit that the water business is extraordinarily competitive .

“It’s really tough to make it on just water alone,” says Victor Watabu, Hawaiian Isles’ branch manager here. “You’ve got to vend other things.”

Hawaiian Isles uses its well-developed statewide network to distribute coffee, snacks and other beverages, where they make their real profit, Watabu said.

A construction worker by trade, Satterfield arrived from Alaska ten years ago where he owned and operated an Alaskan bottled water company.

He made friends with his Koloa neighbor, the Knudsens, who just happened to own one of the few working springs on the island. Striking what he guardedly calls a “long-term” deal for the rights to the water that flows from Kahili spring to Koloa, Satterfield began a tedious, year-long process to meet federal regulations.

Unlike the municipal and county water supply, bottled water companies are heavily regulated: the Department of Health, the Food and Drug Administration and the Environmental Protection Agency — all have stringent requirements, and Satterfield already figures he’s dropped some $200,000 building his business to code.

But it’s all worth it, he says. That’s because he knows that he’s onto something unique — and profitable.

A one-liter bottle of water can go for as much as $1.30 in the stores, and the fancier “flavored” and vitamin-enriched waters now coming on the market can go for twice that amount.

But Satterfield is charging only $7 for the five-gallon jugs while giving the smaller bottles away. By doing so, he’s not only making friends, but advertising.

When was the last time you drank a bottle of water and just threw it away? Satterfield asks.

“That way, those smaller bottles with my logo and name will be out there,” he says.

To get into the bottled water business, it seems, you’ve got to have a pretty good handle on science. Any conversation with Satterfield about water includes a lesson in chemistry. Using terms like reverse osmosis, sediment filtration, carbon filtration, ultraviolet treatments and ozonation, Satterfield argues that his water is the best in the state.

“My water has minerals and goes through the most stringent process,” he says.

Unlike the county supply, he says, no chlorine is used, and his water comes from a closed source, filtered through thousands of feet of natural lava sedimentation. Before bottling, he uses UV light and ozonation to purify it. The county’s water, on the other hand, comes from rivers, reservoirs, lakes and wells, and is chlorinated before being pumped onward.

Avoiding pollutants, along with good taste, offers peace of mind enough for folks to happily dish out big bucks for what is otherwise a nearly free product. And the healthier it sounds, and the more minerals and vitamins that can be listed on the label, the higher the price.

Take the desalinated sea water from the Big Island. The Japanese company Koyo USA Corp. has the only operational bottling plant there, producing 150,000 1.5-liter bottles per day, shipping at least 10 cargo containers each day, Monday through Saturday from Kawaihae to Japan.

At six bucks per bottle, that’s a revenue of $900,000 per day.

“Deep-sea water is already very famous in Asia,” said Koyo USA’s Marketing Manager Yutaka Ishiyama to a local publication recently. “Hospitals started using it for sick people because of its minerals.” More than 20 companies now sell deep-sea water in Japan. While Japan is a long-way off for Satterfield and tiny Kaua‘i Springs, he hopes to do off-island business from his website, www.Kauai springs.com. He’ll ship smaller bottles to people who’ve vacationed here, or relatives of Kama‘aina. Ultimately, he says, he would like to see everyone who comes here sipping Kaua‘i water back on the mainland,