Olaf Wilhelm is a typical example of a water business entrepreneur who has come into contact with, and ultimately joined, Waterlogic.
“My natural interest in new opportunities led me to the Aquatech exhibition in Amsterdam in 1998,” he says. “This was my first contact with the mains-fed concept. My primary idea was to supply high consumption accounts with mains-filtered and purified drinking water, achieving huge cost savings against bottled water.”
By 1999, his initial machine trials with Waterlogic showed good results. 60 machines were sold in the first two months, and other heavy-base customers followed. A joint venture between Waterlogic and Olaf Wilhelm’s business was established and Waterlogic Germany came officially into being.
“In those early days, we had four staff: myself, one salesman, one technician and one administrator,” says Wilhelm. “We started with zero sales and zero turnover, but 100% motivation and 100% support from the Waterlogic team.
“I come from a region in Germany called Swabia, and Swabian principles of solid financing (don’t spend money you don’t have) helped the company to grow steadily as well as remaining financially stable. Profits were reinvested in the company to ensure further growth. Today, Waterlogic Germany employs over 40 people and has regional branches in Duesseldorf, Hamburg and also Austria.”
What is the relationship between Waterlogic and PHS Waterlogic?
Moshe Gazit (MG): The PHS Group acquired the UK operations of Waterlogic in 2000 and created PHS Waterlogic, and the two organisations signed a long-term exclusive distribution agreement. By mutual agreement, PHS Group is pleased to supply the Waterlogic product range in Ireland and the Benelux region.
What were Waterlogic’s beginnings?
Olaf Wilhelm (OW): Founder and CEO Jeremy Ben-David researched the industry and saw the huge potential. The emergence of new filtration and purification technologies would enable mains-fed water coolers to offer better water at more economical cost than the traditional bottled water cooler.
In 1992, Waterlogic commenced trading and soon found an excellent market opportunity selling mains-fed coolers to the commercial sector. Having created a successful business in the UK, which was sold to PHS Waterlogic, it grew outside of the UK organically and by acquisitions in Norway, Germany, France, the US, Denmark and Sweden.
When the first factory in Korea was relocated to China in 2004, the international management team gave Waterlogic the critical control over product quality. One of the most notable employees at this time is Colonel Kim, who joined Waterlogic in Korea over 14 years ago and was instrumental in creating the mains-fed dispensers that were key to the success of the business.
Colonel Kim (CK): It may come as a surprise to many that Waterlogic spends on certification (in China alone, excluding the local certifications and approvals that we undertake in France, Germany etc) over a quarter of a million US dollars per annum, and a further several hundreds of thousands on testing products and new technologies. I know that this fact isn’t lost on our customers from the direct feedback that we receive every day.
Does Waterlogic have a working ethic?
Jonathan Ben-David (JBD): If we were to state the key things that are really important to us, they would be:
MG: Many people may have read the management books about virtual organisations. In Waterlogic, we’re living that vision, and it’s a great source of pride to me to be working with such international people. In addition to the factory team in China (made up of Chinese, Korean, British and German staff) and the fact that our CEO is based in Rome, our COO is based near Stuttgart, we also have a Czech IT manager from the Czech Republic, two Lithuanian people run our sales office in Dublin and are supported by a logistics team based in Rome and Korea. As you might imagine, IT connectivity and communication is nearly as important as the water we drink!
What is Waterlogic’s company breakdown?
JBD: It’s quite simple, virtually all our manufacturing is done at our 100% owned and operated factory in China. We have an international team of managers running the business, and our manufacturing is one of the ‘jewels in our crown’ in that it’s the best way in which we can demonstrate our quality and innovation, and is also a truly impressive place to take visitors.
Of the 200-strong team in China, we have over 20 R&D staff dedicated to the next technologies and next dispensers. Their efforts resulted in Firewall, and if this new technology achieves the market acclaim that we expect, then the R&D investment will have been clearly justified.
Since start-up, how has Waterlogic diversified and expanded its offering?
MG: The range has grown, but has always remained in mains-fed water coolers. Today, we have eight core models, which can come in a variety of derivatives.
What financial/production challenges has Waterlogic faced and overcome?
JBD: The factory has been the biggest investment. Moving from Korea to China consumed a huge amount of management focus, but we got through these challenges and we were all stronger because of it. Our factory is a major factor in our sales proposition to our dealers. The fact that we can directly control quality, and that their feedback is acted upon by our team in the factory, means that we’ve struck the perfect balance optimising the cost/quality trade-off.
At a time when most are tightening their budgets, Waterlogic is busy with acquisitions. Why?
OW: Although this is a time of economic uncertainty, Waterlogic is a profitable and cash-generative business. Times like these often provide interesting opportunities for strong companies, and Waterlogic is well placed to realise those opportunities.
In addition to market share (organic) growth, it’s part of our strategy to grow via acquisition. Naturally, Waterlogic is very ‘picky’ in proactively looking for companies that are the right fit, and to that end Waterlogic is less likely to acquire speculatively.
Sometimes, we have acquired to enter a new market sector, for example, the acquisition of Frangart in Germany facilitated access to the health sector. In the case of Health Concepts (as with other acquisitions), the team were retained and could possibly go on to grow into bigger and better roles around the group, should they wish. In the case of other acquisitions like Escowa in Sweden, the previous owners were retiring and wanted to pass on the business into good hands. In all cases, the staff and customers remained loyal to the new group.
What’s Waterlogic’s long-term strategy?
OW: We want Waterlogic to be the most preferred choice in mains-fed coolers. This means expanding our global reach and continually developing our capabilities. Firewall was the result of a two-year project to develop the ultimate water dispenser. We’re really excited by this development. We want to maintain a leadership position in our chosen markets and to continue growing with new products and new technologies, which are the ‘lifeblood’ of our business.
Why isn’t Waterlogic a recognised name in the US?
OW: The name may not be prevalent, but Waterlogic has two separate US operations. Innowave supplies a great many coolers to a strong dealer network across North America. When innowave was acquired in 2006, the name was retained due to a very strong dealer loyalty to the existing company.
Direct to end-customer sales are managed by CoolerSmart (a distinct organisation and brand identity).
Is there plan for further expansion?
MG: We plan to continue aggressive organic growth and to leverage our technologies into slightly new fields (watch this space). We assume that no company would say there are no further plans for expansion, but we’ve been doing this for over a decade now and have learned to expand profitably and to do it in combination (synergistically) with successful acquisitions. We also have the resource (people, strong balance sheet etc) that enables us to do many projects simultaneously and take appropriate risks.
What is Waterlogic working on at present?
CK: Firewall. Please, make no mistake, this purification technology is a world apart from the many tricks we see across the industry. This is a genuine innovation, and a patent application is in process. We believe this to be the most effective water purification system ever seen in drinking water dispensers.
Independent tests on the new purification process showed that the internal firewall UV technology is capable of reducing bacterial and viral contamination by 99.999% overall, and in most cases, by 100%. The purpose of the new purification system was to overcome the inherent weakness of any faucet, which by its nature of being exposed is where most contamination takes place, either by airborne bacteria and viruses, or by human contamination from contact.
As the UV purification system is placed at the point where the water flows from the faucet, no bacteria or viruses that are in the water can get out, and no airborne bacteria or viruses can get into the faucet and infect the water. Hence the name ‘Firewall’. Furthermore, this is the first system to purify ambient and sparkling (as well as cold) water, all to class ‘A’ purification standards.
Environmental pressure is mounting. Does Waterlogic have this is mind?
MG: Yes, absolutely. We in the mains-fed industry are fortunate to be marketing a product that’s fundamentally environmentally friendly.
Our latest machine, the WL4, houses all our latest environmental technologies such as an auto-sleep mode, which stops the heating and cooling after periods of inactivity, and leak detection to prevent waste of water. We have a few developments that we’re launching in Q4 2010/Q1 2011 that will further improve our carbon footprint. Green products are part of what we are. It’s a key part of our competitive edge.
Does Waterlogic have end-of-life recycling programmes or any other ‘green’ commitments?
MG: Yes. In some places we remove machines and then dissemble them at our service centres, separating the parts for reuse or recycling. In some cases, if we can refurbish and hence reuse an existing dispenser, by either replacing some exterior panels or some key internal parts, then we do that too. Not only does this make good environmental sense, it’s good business sense.
Furthermore, some of our customers ask us for details on our environmental actions. We find that many clients are quite sophisticated now in that they can see through the ‘greenwash’ that many of their suppliers quote, and are looking for evidence that we really are practicing what we preach.
Waterlogic in Norway is the first in the industry to be adopting service vehicles powered by biogas. The fleet of vehicles are being welcomed by Scandinavian customers who value the environmental actions of their suppliers very highly.
What do you see happening to the industry in terms of environmental pressures and consumer awareness?
MG: It can only grow. End customers will become more sophisticated and more demanding. This is excellent for the mains-fed industry and very problematic for the commercial bottled water industry. One thing we’ve noticed is that environmental awareness has extended to that of total sustainability. This includes ethical aspects in the way the company operates and also the products provided.
Waterlogic is a signatory of the UN global compact (a widely respected framework on human rights), and for three years running has complied with the reporting requirements of this United Nations framework document.
Waterlogic China Manufacturing has also been given the accolade as an ‘Outstanding Foreign Direct Investment (FDI) Company’. Criteria for the Outstanding FDI Company award received includes: rapid growth, job creation, uncompromising attitude with respect to Chinese regulations, social responsibility and financial responsibility. Waterlogic China not only met, but exceeded all of the benchmarks for these award criteria.
As with any industry, the water cooler industry is going through an unsteady time. How do you feel coolers can weather the storm?
OW: The industry must stick to basic, sound economic principles. Sell a good product at a reasonable margin and service your customers well.
Of course, cost controls are also an element, but many companies take the short-term view of winning deals at any price. These companies will not survive and are harming the industry. A mains-fed product is a food product. It must be properly certified, have good purification technologies and must be serviced regularly and professionally. You cannot do this for $6 a week.
We at Waterlogic have weathered the storm partly due to our sound financials, but also by having the ability to walk away from business opportunities that don’t make financial sense.
Rachel Delahaye is former editor of Cooler Innovation magazine. Subscribe here.
© FoodBev Media Ltd 2018
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