From the smallest island in the Baltic Sea to the heart of the Black Forest, you will find a Revos water cooler in every part of the German nation. Part of a strategy to cover the whole of the country with a localised and personal service, the Revos Watercooler business has grown dramatically since 2001, from just five employees and turnover of around DM 1.7m to 40 staff and turnover of just over €6m at the end of 2012.
On foundation in 1993, the initial business idea was to provide technical solutions for water treatment, in particular for reverse osmosis (RO) water. Consequently, Revos Watercooler offered the technical equipment required to serve RO water, and selling, installing and servicing machines that were connected to the water pipe (similar to today’s mains-fed water cooler systems) was the core business at that time.
In the mid 1990s, the bottled water cooler industry began to grow in Germany. The former owners immediately recognised the great business potential and therefore extended their product portfolio to bottled water coolers in 1996.
One of the key success factors was that Revos Watercooler could now leverage its substantial expertise in RO technology to bottled water coolers. With technical knowhow and experience, combined with the hygienic advantages of RO water, which is still the company’s sole water offering, Revos quickly became one of the key players in the market.
The company is run by joint managing directors Sönke Rocho and Günther Wentzel. It works mainly in the commercial business sector, seeing increased business in water coolers for schools and for the hotels, restaurant and catering sector, with potential for more in the coming years.
Sönke Rocho: The main ambitions that drove the business in the beginning can still be considered as objectives today: top quality and service. By offering high quality water with a variety of water coolers, Revos Watercooler aimed to strengthen its image as a company known for the quality of its products. While our bottled range was first limited to premium, mainly stainless steel coolers, we now offer a significantly larger portfolio of bottled coolers and mains-fed coolers.
At that time, service meant being able to offer a nationwide service and therefore being able to serve customers with branches or outlets all over Germany. This objective has been achieved in the meantime and our unique coverage in Germany is still one of our main competitive advantages.
Sönke Rocho: Compared to our competitors, we have an excellent distribution network, with full coverage of Germany. By dividing Germany into 22 areas, we are always close to our customers and can ensure a flawless, high quality standard service everywhere.
In each of those 22 areas, we are represented by either one of our own branches or by an external partner. Our branches are small offices with drivers, service, internal sales and administration staff people.
Revos Watercooler partners (similar to franchise businesses) are independent companies that work in a business closely related to the water industry. They usually have their core business in vending and/or coffee or in beverage trading and therefore have an infrastructure that fits with the water cooler business.
Whether or not a subsidiary or a partner is located in the area, they all work according to the same standards. All areas have local drivers, service people, in-house salespeople and administration people.
Rather than a centralised customer service centre, our regional system allows a customer in Hamburg to talk to a local representative in Hamburg. This allows us to offer the same service as a smaller company but operate nationally. It is more expensive to work this way, but it helps us maintain a personal relationship with our customers and our quit rate is lower than that of our competitors.
Sönke Rocho: The office commercial sector still offers a lot of potential. I am convinced that the bottled market will still grow in Germany because there is a low installation rate, around 140,000 coolers for a population of 80 million people. In contrast, in the UK there are more than 300,000 installed for a 60 million population.
I believe the market is still less developed because between 2003 and 2008 (our main growth years), we had a great deal of adverse media publicity regarding the hygiene of bottled water coolers and a lot of commercial customers stayed away. But the media attitude has now changed, thanks in part to the repeated hard work of the German Water Cooler Association and companies in our industry. Our image has vastly improved and we have the growth to demonstrate this.
Sönke Rocho: The German market certainly differs from many other European markets and has several unique challenges. As mentioned above, the German consumer is very susceptible when it comes to quality and hygiene topics. Consumer protection has a high priority, not only from a legal point of view.
Partially driven by this, German law for bottled and mains-fed coolers is a challenge for the industry. Two legal regulations are applied to water, where one is valid for bottled water and the other one defines the requirements for drinking water, meaning all water exposed to the public needs to meet drinking water standards regardless of end-use. It is a complex situation and these regulations are often not applied correctly. This often leads to a wrong declaration when water coolers are tested according to the (supposed) legal requirements.
There is an existing small challenge from the beverage stores segment. These are widespread in Germany and often offer a delivery service to private households and the business-to-business industry. Although this is not considered as a core limiting factor, it has an impact on bottled cooler growth. Some offices still decide against bottled coolers as they prefer a supplier who can also deliver other drinks such as juices and soft drinks.
Finally, Germany is a huge market for carbonated water. Despite the slight shift in consumer preference towards still water, more than 60% of market share is still taken by carbonated water. This is a challenge for bottled coolers only, as mains-fed machines are equipped to serve carbonated water.
Sönke Rocho: We try to come up with a new product every year. Our latest development is the infocooler, which is a combination of a water cooler and information desk.
Equipped with a digital display and shelves for print material, this cooler is a great tool for point-of-sale communication. It’s popular in offices and also in retail environments to play adverts for products such as medicines in pharmacies. This way, through sales, the water cooler will pay for itself.
Our next innovation is already in the pipeline: an infocooler with an integrated coffee machine.
Sönke Rocho: We focus on both segments but clearly bottled water coolers is our core business, with 80% of turnover generated by bottled water coolers, water and accessories.
The bottled cooler market in Germany is still growing and will continue to grow over the coming years. The mains-fed market is growing faster and we are part of this too. By 2015, we aim to own up to 20% of total annual new mains-fed installations in Germany.
Sönke Rocho: CSR is certainly important and we play our part, both environmentally and socially. Most important is our vehicle coverage in Germany, as we have comparably efficient routes when looking at kilometres driven to customers. Second, we offer the Ecoblue water cooler from Blupura, which works with a natural cooling liquid and an energy saving function. And third, we have enlarged our product portfolio to include organic cups.
We also support a variety of kindergartens and schools with free bottled water and mains-fed coolers and corresponding products. We think that it’s very important that children and young people learn to enjoy water and develop a healthy lifestyle that hopefully lasts for their lifetime.
Sönke Rocho: The healthy hydration message is very important and as a water company, we strongly believe and support a healthy lifestyle. In a business sense, it also helps us to generate growth. The increasing awareness for healthy hydration of children is one of the key drivers for mains-fed cooler growth in schools. The same applies to offices, where employers recognise the need to provide free water to employees in order to prevent and reduce illness and to strengthen an employer’s reputation.
The industry also has very well developed logistics systems and customer base, so you can extend your portfolio to other products, such as coffee as Eden Springs has done successfully.
Sönke Rocho: Our challenge is to lift ourselves to the next level. We need to optimise our internal processes, looking at new business layers and software systems. We really need to carry out some internal restructuring and optimisation to internally follow our growth.
The next challenge is to realise more potential. We are one of the top three players, along with Nestlé and Aquavital, in bottled water coolers but not even in the top five for the mains-fed cooler market. We are determined to boost our position here.
Unlike in the UK and other markets, most of the growth in the mains-fed market is coming from new business. It’s not cannibalisation. We don’t want to switch our existing customers; we want to rebuild our company to make sure we can approach new mains-fed customers effectively.
We are lucky to have two growth markets – rapid in mains-fed and steady in bottled coolers – but both are still growing and offer excellent potential for the future.
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