Membrane technologies The pressure driven membrane separation technologies of microfiltration (MF), ultrafiltration (UF), nanofiltration (NF) and reverse osmosis (RO), as a group, provide the greatest range of contaminant removal. As a result, these technologies are often the lynchpins for potable water production systems. In particular, membrane technologies possess certain properties that make them unique when compared to other solid or liquid separation operations. These include: * Continuous process, resulting in automatic and uninterrupted operation * Low energy use involving neither phase nor temperature changes * Modular design – no significant size limitations * Minimal moving parts with low maintenance requirements * No effect on form or chemistry of contaminants * Discreet membrane barrier to ensure physical separation of contaminants * No chemical addition requirements Simply put, these technologies are continuous filters. The type of contaminant removed is a function of membrane polymer selection and its pore size. Although they all provide separation of contaminants from the solvent (usually water), each performs a specific function and has advantages and disadvantages when compared to the others in a particular application. The development in filtration technology known as “crossflow” or “tangential flow” filtration allows for continuous processing of liquid streams. In this process, the bulk solution flows over and parallel to the filter surface. Because the system is pressurised, water is forced through the filter medium and becomes “permeate”. The remaining water exits the membrane device as “concentrate” and carries out the contaminants rejected by the membrane. Turbulent flow of the bulk solution across the surface minimises the accumulation of particulate matter on the filter surface and facilitates continuous operation of the system. Microfiltration Generally, microfiltration involves the removal of particulate or suspended materials ranging in size from approximately 0.01 to 1 microns (100 to 10,000 angstroms). Ultrafiltration Ultrafiltration is used to separate dissolved, non-ionic materials typically smaller than 0.01 micron (100 angstroms). The removal characteristics of UF membranes can be described in terms of “molecular weight cutoff” (MWCO), the maximum molecular weight of compounds that will pass through the membrane pores. MWCO terminology is expressed in Daltons. Basically, ultrafiltration is used to remove dissolved organic contaminants, while suspended solids are removed by microfiltration. Nanofiltration This is an intermediate process between ultrafiltration and reverse osmosis. The molecular weight cut-off (MWCO) properties of nanofiltration membranes are in the range of 400 to 800 Daltons (<10 angstroms). Ionic rejections vary widely depending upon the valence of the salts; multivalent salts such as magnesium sulfate (MgSO4) are rejected as much as 99%, while monovalent salts such as sodium chloride (NaCl) may have rejections as low as 20%. This process will remove almost all dissolved organic (non-ionic) solids with molecular weights above approximately 100 Daltons, as well as a high percentage of ionic materials. **Reverse osmosis **Membranes are not perfect; they will typically remove 95 to 99% of the ionic contaminants.

Sustainability and the environment The furore surrounding global warming and climate change has reached an unprecedented high as businesses increasingly come under fire for the effects that their manufacturing activities are having on the environment. cooler innovation explores what can be done to tackle the problem and unveils some of the innovative products and services that are making a move in the right direction. Michael Barnett of the British Water Cooler Association (BWCA) kicks off the discussion by outlining the issues that are facing the planet as a whole, as well as looking more specifically at the role the cooler industry must play in helping to offset its own carbon footprint. Global cooling - The challenge ahead “Climate change and its specific effect, known as global warming, is said to potentially be the biggest environmental threat facing the universe and mankind today. “Extensive media coverage, environmental groups and regulatory lobbyists have added fuel to the global warming debate, and in the process have driven it to the very top of the public agenda, forcing governments and politicians to embrace it for reasons of political and social correctness. “Major corporations have not been immune to this debate and have in fact been among the first to incorporate environmental policies and strategies into their future plans. It is said that as many as 80% of the FT Global 500 companies. (the world’s largest companies) acknowledge the importance of the global warming debate and identify it as a business risk. In excess of 35% are already said to be taking appropriate action. The water cooler industry is therefore not alone in facing the challenge ahead. Nevertheless, it may have to go it alone in seeking some solutions, which are most appropriate and unique to the industry. “To date, the issues tackled by the Industry have related mainly due to regulatory, quality and safety issues and have evolved relatively slowly, allowing time for the Industry to adapt to the challenges in a manner which will reduce their commercial impact. The environmental challenge before the industry now, however, is one which has not arrived totally unexpectedly. It has been on the horizon for a few years, but its ascent to the top of the public agenda over the past 12 months has been nothing short of meteoric. “Global warming has provoked fierce scientific debate. Not that anyone in the scientific community ever questions, or disputes, that the universe has entered a period of global warming, with the consequences of rising sea levels, drier hotter weather and increasing holes in the ozone layer. These facts, we are advised, are indisputable and accepted by both sides of the scientific community. What is hotly disputed, however, is the root cause of climate change and global warming. “The real question being debated is whether global warming is manmade or a natural phenomenon – the latest one of several cycles of warming and cooling, eg ice ages, which the universe has been through in its 20 billion years of evolution since the Big Bang? The facts “Whichever is the right answer, the inescapable conclusions are that: - Global warming is occurring - Mankind can contribute to its reduction “Environmental groups and government agencies worldwide regularly inform the public about how one can individually contribute to reducing global warming and combat the threat to the universe by doing the following: Use energy efficient light bulbs and turn off electrical appliances properly Drive fewer miles and convert to electric or battery powered vehicles Cut down on short haul flights and taking holidays in far off destinations Buy more seasonal and locally produced food Recycle household waste The terminology “To quantify and analyse the impact of global warming, new terminology has evolved and requires a brief introduction. Ecological footprint An estimate of the land and sea (earth) area that the human population needs in order to provide all the energy, water, food and materials to fully support itself for a period of ONE year. Bio-capacity An estimate of the total energy, water, food and materials that the earth can provide to support the human populations of the world for a period of ONE year. It is said that mankind’s current ecological footprint exceeds the earth’s bio-capacity by over 25%. In other words, mankind’s activities on earth are unsustainable in the long term. Sustainability Is an activity which meets mankind’s present needs without compromising the ability of coming generations to meet their own future needs. “The inability of mankind to balance his present needs with the ability of the earth to provide them on a sustainable basis is not a new phenomenon. Scientific sources have charted these needs against the earth’s capacity to provide them since the early 1960s and it is estimated that sustainability ceased in approximately 1988. “It is further forecast that mankind’s current rate of activity will increase by over 100% over the next 25 years, as industrialised nations such as China evolve into fully fledged consumer societies. “Mankind’s demands on the earth’s resources are varied, each with its own adverse impact and sustainability value. To measure and quantify these demands and their impact and effect in an ecological context, footprint analysis is of growing importance. “Mankind’s ecological footprint is a composite of many contributing factors each with its own footprint. Popular with the media has been the carbon footprint. Carbon footprint A measure of the impact of mankind’s activities on the environment in terms of the amount of greenhouse gas produced. It is measured in units of carbon dioxide (CO2). Greenhouse gases: are component gases of the atmosphere, most of which occur naturally, while others result from manmade industrial activities, eg water vapour, methane, nitrous oxide, ozone and CO2. Greenhouse effect: an occurrence whereby solar heat is trapped within the earth’s atmosphere as a result of the presence of greenhouse gasses, causing the temperature of the earth to rise. “The greenhouse effect (at least at levels which occur naturally) is generally considered to be good, since it keeps the earth at a habitable temperature for humans. However, it is said that by clearing forests and burning fossil fuels such as coal, gas and oil excessively, humans have dramatically increased the amount of CO2 in the earth’s atmosphere, causing temperatures to rise too high and thereby bringing about global warming. The water cooler industry “How does the water cooler industry contribute to the increase of greenhouse gasses and thereby global warming? “The key is the industry’s carbon footprint, which with respect to water coolers (both bottled and POU) comprises of the: Manufacture and shipping of water coolers and related products worldwide. Extraction, bottling and delivery of bottled water (bottled water coolers). Extraction, processing and distribution of municipal water (POU coolers). Electrical energy consumed by water coolers in refrigerating, or heating the water. Recycling of materials such as water coolers, bottles and filters at the end of their life. “Each of these will contribute to the industry’s carbon footprint and will result in emissions of CO2 gas into the atmosphere. These emissions are measured in tons of CO2 for the industry as a whole, or in grams of CO2 per litre of water dispensed from the water cooler. “What measures can the water cooler industry take to reduce its carbon footprint and its adverse impact on the environment through bringing about global warming? “Firstly, what is needed is to determine the industry’s current carbon footprint? While an average value can be approximated worldwide, it will most probably vary from one continent to another and country to country, due mainly to the logistics of distribution. A national, carbon footprint value is probably the most significant value at this time. “Having established a baseline level for the industry’s current carbon footprint, there are several courses of action which may be employed. These may be implemented simultaneously to achieve the fastest impact on CO2 emissions, or consecutively, resulting in a slower impact. The decision of which course to follow will be largely influenced by both economic, as well as operational, considerations. The following are steps in the process to reduce the industry’s CO2 emissions, both directly and indirectly: Carbon offset: - a method to balance, or indirectly reduce, the carbon footprint through the purchase of carbon credits. Carbon credit: - a currency which is tradable on the international market with a monetary value equivalent to ONE tonne of CO2. “There is much controversy about ethical carbon credits, however, they are normally linked to emissions reduction projects such as energy efficiency, green power, renewable power technology and forestation, where the outcome of the investment in carbon credits has a visible and measurable reduction in greenhouse gasses. The credits are available through carbon offset providers. “The optimal state is one where the industry’s greenhouse gas emissions are balanced by an equal offset and the adverse environmental impact is reduced to zero. It is also referred to as being carbon neutral. Carbon neutral: - a state whereby using a carbon offset programme, carbon credits are purchased to a value balancing CO2 emissions. BWCA “The BWCA recognises its role in pioneering the UK industry‘s obligations in reducing global warming. This recognition is not new. It was as long ago as 2004 that the BWCA introduced the Environmental Recycling Charge (ERC) in response to EU Directive of 2003 on WEEE, and mandated members to financially provide for the recycling of water coolers at the end of their useful life. “Polycarbonate 19 litre water bottles used by the bottled water cooler industry are multiple-use containers, which bear deposits to ensure their return to the distributor. These have a life of some 50 to 70 round trips over approximately five years, in marked contrast to one-time use PET bottles used by soft drinks suppliers. “The BWCA Environment Committee is currently analysing the UK industry’s carbon footprint for both bottled and plumbed-in water coolers. While it may appear that the bottled water cooler has a larger footprint due to the requirement to deliver bottled water, it is apparent from early desk research that the electrical consumption of both bottled water and POU water coolers in refrigerating the water plays an extremely significant role in energy consumption terms, bringing about an almost balance of the two footprints. “The BWCA has drafted the following environmental statement:“ The BWCA has identified climate change and the water cooler industry’s carbon footprint as a priority agenda item for its members. The association, through its membership, is committed to: a) Reducing the industry’s carbon footprint. b) Investing in and implementing alternative low carbon technologies for the industry. c) Funding a carbon offset programme to neutralise the industry’s carbon footprint. The BWCA recognises its pivotal role in directing industry resources to reduce members’ carbon emissions in an effort to reduce global warming. It works with stakeholders, corporate advisors and government agencies to attain socially responsible, environmentally sustainable, energy efficient carbon footprint reducing policies and strategies for its members. The above comments were made by Michael Barnett, of the Hydropure Group, and Chairman of the BWCA Annual General Meeting on 25 April 2007 Environmental ethos If the cooler industry wants to cut down its contribution to global warming in the long term, developing new products that reduce waste, use less energy and are reusable, could be an effective way of achieving its goal. As well as the products that it offers, components, spare parts and consumables provider Abbeychart has given its entire company policy a green overhaul. Sourcing goods from companies who share the same ethos, the firm carries out environmental audits to ensure that its suppliers are also aiming to make their business operations carbon neutral. The products themselves will only be taken on board if they have been manufactured in an energy efficient way or will help to reduce power consumption. Examples within the company’s portfolio of environmentally friendly products include the biodegradable Bioguard cleaning range (left), and the recyclable sanitary quick change EcoAquaFlow water filter that offsets the carbon impact of conventional plastic or polypropylene head and cartridge systems, which are difficult and expensive to recycle. It has also developed an energy saving vending light for backlit display panels. The low voltage LED lights are an improvement on using fluorescent tubes as they offer 80% less power consumption, with a seven times longer lifespan. “Vending machines operate 24/7 and are being used in ever-increasing number, satisfying consumers’ vending needs at work, at school, and during leisure time. Accordingly, improving the energy efficiency of vending machines is of the highest importance,” said Sales and Marketing Director Steve Slark. “We believe the reduced environmental impact of Abbeychart’s LED display panel will be highly attractive to manufacturers, operators and consumers alike.” Further initiatives include promoting the use of unbleached or oxygenated coffee filter papers, as opposed to papers that are bleached white using environmentally harmful chemicals; reducing the waste generated by its own business premises by 30%; and implementing a tree planting programme around its newly built warehouse. Another company that believes its ethos could influence its customers and help support their environmental policies is PHS Waterlogic. The water cooler and dispenser company has praised the recent move by the UK government’s Food Standards Agency, Department for the Environment, Food and Rural Affairs, and Department of Transport to use filtered tap water in its offices, claiming that it will cut the energy required to manufacture plastic bottles, reduce the carbon emissions produced by bottle transportation and prevent plastic waste generation. Calling for central, local and regional government offices to make the switch, the firm believes that its machines offer greener water access as they feature a sleep mode, which saves on electricity when they are not in use, as well as compressors that use eco-friendly gas. PHS also has a recycling programme in place for reusing returned units’ spare parts and supports the Save A Cup scheme by actively helping its customers to participate. For some cooler companies, helping the environment has been central to their raison d’être since their inception. After launching its first environmentally friendly water dispensing system 17 years ago, Vivreau has continued to design solutions that assist companies with reducing their environmental impact. Managing Director Stephen Charles, believes that companies who neglect their environmental responsibilities and focus solely on commercial gains will have to step out of their comfort zone if they want to continue to compete. “Any business operating in today’s competitive marketplce needs to be aware of the green issues,” he said. “Our clients are becoming more open about their corporate social responsibility and not being able to respond with a like minded approach would be a major drawback. Many companies, especially the larger blue chips, now have an environmental policy, which includes an assessment of suppliers’ green credentials.” Vivreau’s original Table Water Bottling System, which is now used in the board rooms of around 40% of the UK’s top 100 companies, dispenses filtered, mains-fed water into reusable glass bottles to reduce packaging waste, as well as the “water miles” totted up by transporting bottled water. It incorporates LinkLine technology that enables an entire building to source its water from one central unit that uses one filter. This is preferable to installing individual systems that use more energy and require separate filters. All of its systems, including the latest VR3000 (left) and VR4000 models, are also fitted with power saving options as standard to reduce their electricity consumption, and are returned to Vivreau’s premises after use, where most components, such as the cooling, carbonation and boiling mechanisms, are refurbished and reused. Holding the view that being carbon neutral doesn’t go far enough in tackling the problem, Stephen said that the company will continue to implement new initiatives until it becomes carbon positive. He is optimistic that environmentally friendly dispensing systems will become commonplace in the future, saying: “In 10 years time they will be the norm, not the exception as they are now.” Vivreau’s original Table Water Bottling System, which is now used in the board rooms of around 40% of the UK’s top 100 companies, dispenses filtered, mains-fed water into reusable glass bottles to reduce packaging waste, as well as the “water miles” totted up by transporting bottled water. It incorporates LinkLine technology that enables an entire building to source its water from one central unit that uses one filter. This is preferable to installing individual systems that use more energy and require separate filters. All of its systems, including the latest VR3000 and VR4000 models, are also fitted with power saving options as standard to reduce their electricity consumption, and are returned to Vivreau’s premises after use, where most components, such as the cooling, carbonation and boiling mechanisms, are refurbished and reused. Holding the view that being carbon neutral doesn’t go far enough in tackling the problem, Stephen said that the company will continue to implement new initiatives until it becomes carbon positive. He is optimistic that environmentally friendly dispensing systems will become commonplace in the future, saying: “In 10 years time they will be the norm, not the exception as they are now.” Ebac hot on reducing energy consumption Recognising that energy efficiency is an important concern among its customers, Ebac has addressed the large power consumption discrepancy between cook & cold and hot & cold coolers by developing a new product. Under Energy Star guidelines, acceptable levels for cook & cold models are 0.16kW hours per day, but for hot & cold the figure rises to 1.2kW hours per day, which is almost a 10 fold increase. Caused by the refrigeration function having to work harder to compensate for the heat given off, the difference in energy consumption for hot water coolers also brings about an additional electricity cost of around £50 each year. Based on the Thermos flask concept that keeps hot beverages warm, Ebac’s insulated hot tank aims to reduce the energy consumption needed by 30 times and in turn increase the efficiency of refrigeration systems. Constructed from robust stainless steel with an Incaloy element, it features a vacuum insulated jacket with two layers, as well as a bottom entry supply tube and cool well portion to minimise heat transfer. Electronic proportional control maintains a constant delivery temperature, while its plug in/plug out operation facilitates simple maintenance when required. Offering a typical daily stand-by power consumption of 0.03kW hours and running costs of £0.03, the hot tank comes as standard in Ebac’s FMax and EasyLoader coolers, and can be fitted in the remainder of its existing models. * Fully biodegradable plastic from Metabolix* Metabolix and ADM are joining forces to produce a range of natural, biobased plastics that are sustainable and biodegradable. Mirel is a line of plastics developed from renewable resources such as corn sugar that biodegrade back to nature in a wide range of environments including soil, compost, rivers and oceans. Oil based plastics are made using almost 10% of total US oil consumption – about two million barrels a day. They contribute to greenhouse gas emissions and negatively affect the global ecosystem, as they do not biodegrade. “Today marks an important step in providing consumers with products made of plastics that don’t harm the environment,” explained Metabolix President and CEO, Jim Barber. “We are now commercialising biobased, renewable alternatives to petroleum based plastics that will reduce our reliance on oil and the impact petroleum use has on climate change.” Mirel plastics can be used for various packaging processes including injection moulding, cast film and sheet, blown film and thermoforming. Metabolix is now working with over 40 prospective customers on more than 60 applications for the material. The company said that although cooler bottles have not been produced yet, they are a real and definite solution for the future. The two companies will be marketing Mirel through their Telles joint venture which is currently constructing its first commercial scale plant in Iowa, US. Expected to begin operations in 2008, the facility will output Mirel at an annual rate of 110 million pounds.

Dairy Innovation Editor Geoff Platt takes a look at a select group of dairy organisations, their history and their work.

Hannah Oakman investigates why every business in the cooler industry needs a strong public relations strategy. The first impression many people have of PR is one of extremes, either political spin doctors or the absolutely fabulous, champagne drinking of Patsy and Edina from British TV comedy Absolutely Fabulous. In fact, PR is pretty simple. If your company is successful, people will want to tell others about it and this is the kind of word of mouth advertising which helps your business grow. Put simply, public relations is about reputation. It is the result of what you do . . . what you say . . . and what others say about you, either to your face or, quite often, behind your back It is also a planned and long term effort to communicate with those people who are important to your business, such as existing and potential customers, local authorities, associations, governments and employees. PR is made up of a number of different methods. Most people immediately think of media relations or writing press releases but there are several other methods which may not immediately spring to mind. Firstly, you can aim to position yourself as an industry expert. Once you start to become known as an expert on a subject, journalists will start to interview you for story background. Being mentioned or quoted in a major industry article can be a great boost for you and your business. You could also look at local or national sponsorships of events and charities. Showing an outside interest, other than your core business focus, can make your business seem more appealing and lends itself to stories and media interest. It is important to chose an activity which reflects the personality of your company’s brand - ie sports suggests an active lifestyle while arts sponsorships may imply a more cultured focus. Offering something different, particularly an environmental or sustainable stance, or perhaps a unique attitude to staff training or customer service, will also help you to stand out from the crowd. * Media relations - a guide* As Editor of this magazine I receive a lot of press releases. Some are great but some are not. The main problem most of the time is identifying the story quickly. If I am struggling to find the story after 15 seconds I am tempted to give up and this is the case with most media, especially busy newspaper desks which receive hundreds of press releases a day. So how can you make your press release stand out in the pile? The following should be useful as a starting point. • A good press release answers the five Ws (who, what, where, when, why) providing the reader with all the information they need to retell the story. • Start strong - your headline and first paragraph should tell the story. The rest of the press release should provide the detail. This means you capture the reader’s attention straight away. • Pick an angle. It often helps to make your press release timely. For example, if you have just acquired another company or launched a new product, how might this tie in with recent developments in the industry or legislation? • Your press release should include comment from a relevant spokesperson. Rather than just expressing pleasure at the launch of a product, try and say something meaningful such as why you are pleased and how it will have a beneficial effect in real terms. • Avoid exclamation marks, capital letters and other alarming punctuation. Remember the exclamation point is your enemy and is the easiest way to destroy your credibility when writing. • Your press release should end with a short paragraph, otherwise known as a boilerplate, which describes your company, products, services and a short history. You should also always include a relevant contact person - telephone number and email address for a journalist to get in touch. • The phrase “a picture tells a thousand words” is often true. While we may not have glamorous travel images or fashion shots in this industry, a clear, high resolution photo from your company of your key spokesperson or new product will really help your chances of coverage. • And finally . . . it’s all about deadlines. You might have the best story in the world, but if you miss the deadline it won’t appear. When looking at different types of media this varies. If you are working on a story with a local, weekly paper, they will have the same deadline day every week so it is worth ringing to check. Magazines, meanwhile, tend to work at least two months ahead of the distribution date.

As more traditional vending companies begin to offer water coolers to customers, does this activity present as many opportunities as threats to the water cooler industry? In this special report, cooler innovation invited opinion on the key vending issues for the future. As a member of the water cooler industry, or simply an interested observer, it is becoming clear that in today’s market place, the distinction between service company offerings is becoming more than a little blurred. So with more vending companies now offering water coolers, and some activity in the opposite direction, whereby a handful of cooler companies are beginning to realise the vending opportunity, where does this leave the larger cooler industry and how does it respond? One key issue is standards. With more player moving into the cooler industry, the entire industry needs to maintain vital aspects of customer service and hygiene standards, to avoid any future issues. The single portion service of bottled water vending is obviously a very different prospect to water coolers but there seems to be a general consensus within the cooler industry that it must be proactive rather than reactive in order to protect its market share. When looking at the key issues in the vending industry today, it is easy to see why it is growing. The workplace remains the key vending location and the convenience offered by vending is vital to the up-coming generation of young consumers. The focus is also shifting towards healthier products - and as readers of this magazine will no doubt agree, water is as healthy as you can get. While traditional vended products such as coffee and cigarettes are not proving as lucrative as in the past, innovation in the areas of healthy products and new brands will be the key to future growth. View from the cooler industry Blue Direct, run by Managing Director James Anderton, (recently appointed President of the European Point-of-use Drinking Water Association), offers a small amount of vending services including vended drinks and snacks. Vending has always been a peripheral part of the business due to the specialist equipment variants and man power commitment needed. When questioned how he perceived the vending industry to differ from the water cooler sector, James replied that vending companies were usually focused on higher value machines with the bulk of revenue driven through ongoing ingredient sales with leased equipment. “The total deal value and profitability for vending companies is higher than water and therefore has a lower overall cost of sale. The water cooler aspect for the vending companies is often seen as very peripheral as the margins are low and it adds little on-going revenue stream,” James continued. “In theory, service should be more efficient as vending companies are often going to customer sites daily. However, the investment in direct training for water coolers has so far been low - looking at the number of vending companies that are members of the EPDWA - therefore current service levels and quality of service must be questionable.” So does bottled water vending have any advantages over traditional bottled water cooler or point of use cooler provision? “Bottled water vending is only practical in sites requiring payment for product and some public areas,” James added. “It is unlikely to be adopted as the only option in offices where water is currently available free of charge. It has been offered in these environments with limited success where the supply of water is either erratic or where there is a snack or can machine on site.” A new focus One of the UK’s major players, Eden Springs UK is already considering the issues raised by the vending industry. As Commercial Director Graeme Caruthers explained: “We are very aware that other sectors, such as vending, are looking at the bottled water cooler and point of use market. At the end of the day, every single company is looking for revenue growth and sustained profitability. They will look for synergies in other markets where they can use their skills. “I’m sure the vending industry must be visiting its customers and seeing water coolers available - and questioning why they don’t try to get a piece of that business themselves,” he continued. “We see ourselves as a hydration solutions company - which includes bottle fed coolers, point of use, small pack, and as an extension to that, vending. We are not vending experts but it could be up for discussion,” Graeme added. He reported that Eden Springs UK had spoken to vending companies previously to see if it could use referral systems whereby Eden could refer clients to them and vice versa. “Ultimately, if we see vending companies taking share from the point of use market, it will sharpen our focus because we will all be vying for the same customers.” Michael Barnett, Managing Director of Hydropure and the British Water Cooler Association Chairman commented: “Bottled water vending does have some advantages over traditional bottled water cooler or point of use provision in some locations such as gyms and some institutions and where provision of water can not be free, such as airports and railway stations. Hydropure recently tested plumbed in, coin operated water coolers for dispensing water with and without flavourings. The company found that normal water cooler usage or free-vend was, as expected, the most popular by far. For the paid-vend system, water consumption decreased noticeably and flavoured paid-vend had very low usage and was perceived as having novelty value only. Vending as partners Moshe Gazit of Waterlogic, which sponsored the European Vending Association Brussels conference “Healthy eating: vending solutions” earlier in 2006, meanwhile commented that while the company only provided POU services, it worked very closely with vending and office coffee service businesses. “We have many clients offering vending products and have designed some of our products to accommodate this, such as POU fed machines and special units. This is a growing and important aspect of our business through our dealer network. “We see the vending industry as our partners in the market, and our intentions are to continue building synergies with the vending industry”, Moshe added. On the matter of service, he believed service to be crucial in both industries. “Client satisfaction is the key,” he added. “The vending industry differs primarily as they charge per drink. The combination of vended drinks and water is crucial and most vending companies would view bottled water as competition.” Does bottled water vending have any advantages over traditional bottled water cooler or point of use cooler provision? “We think vending is a very diverse industry with water provision selected according to the clients needs. Bottled water vending is more appropriate only in areas where free cup dispensing is being avoided (i.e. airports) and the vending company wants to make profit on selling small bottles.” Does Moshe think there are greater financial gains to be had in vending that watercoolers? “No. Efficiently run POU businesses can certainly earn very handsome returns. Vending is a very competitive business and adding POU to a vending company will inevitably increase their margins. We have dealers in the vending industry who have notified us that the POU part of their business is by far the most profitable. There are also far less technical issues if a quality POU dispenser is installed than a standard vending machine,” he revealed. Via its contract with the University of Birmingham in the UK, Quench Water Systems has worked to install the Brita Rehydration Zone, which dispenses chilled water using a microchip monitored filter, as well as traditional vending machines for snacks. “As members of the water cooler industry, it is important to remember that small pack water is extremely popular and we have to meet this demand too,” commented Managing Director Fred Cairns Palmer. “However, with vending it is important to consider your capital expenditure carefully. You have to be in it for the longer term than say, an average point of use contract, where you will probably regain your money more quickly. “Vending also has its own range of technical issues to consider, which differ from water coolers. “Machines such as bean to cup coffee machines can mean daily upkeep for your business so you have to be able to respond to this challenge. A German perspective For the last four years in Germany, vending companies have begun operating in the water cooler sector. Soenke Rocho, Managing Director at revos, a major German water cooler company explained that there are some big players in vending, including companies such as Asb Beuck, which have around 2,000 coolers in their portfolio. Asb Beuck is still primarily a vending company, which is very strong and the surrounding area. The company has joined as a member of the German Bottled Watercooler Association, showing its commitment to the sector. “A lot of other vending companies in Germany offer water coolers as well but it’s a small part of their business and standards can vary. I would estimate that between them they only hold a maximum 5% share of the market. “So this is not really a threat to the water cooler industry in its own right as it is not their main focus,” Soenke continued. “But the varying standards in hygiene they offer could be a potential problem to the entire industry, in the event of a crisis.” Vending companies with a cooler interest are, Soenke added, mainly focusing onpoint of use. “They are much more involved in this than bottled water coolers. A lot of their customers want to be able to offer free water to employees and clients and for them, the POU machine already fits in with their existing coffee and drinks vending machines. “Vending is a different industry to the water delivery business, and most vending companies also don’t have the storage and delivery logistics to handle five gallon bottles.” Although it does not operate in vending directly, revos is a member of BDV, the German vending association, because of its sales partners, the only water cooler company in Germany to belong to the association. * Fit to serve* As part of the trend, several manufacturers working in the vending industry have moved into producing products for the water cooler industry. French manufacturer Fisapac, which has been active as a supplier in both the water cooler and vending fields, has recently launched a series of new water cooler and cartridge machines. The company now offers a new version of its Georgia free standing and table top, which offer flavoured drinks as well as tea, coffee and water. In addition, Fisapac has launched the Diviniris, billed as a “water cooler vending” machine. The Diviniris model automatically recognises each product cartridge as soon as they are placed into the machine and can then process this data to show cartridge expiry dates, allowed usage time of the product once opened, the preset number of cups for each cartridge (to prevent refilling) and traceability of every product. Fisapac hope these sales statistics will help distributors keep track of consumption rates for each cooler out in the field. The system also offers various payment methods: the basic version includes a card payment system, but a coin system can also be added and they can both work as a cashless system. Vending specialist Bravilor Bonamat, based in the Netherlands, has a range of vending products including the FreshGround, which can grind beans as well as serving a range of coffees. In a move to offer customers more, the company recently launched the Chiller, a filtered point of use drinking water cooler machine now on offer. As the company explained, the chiller has proved appealing to existing customers of its coffee systems because they are already familiar with the company’s brands and products. “With the new Chiller machine, we are providing a solution for the latest trend for healthy hydration and boosted water consumption,” commented Marketing Communication Specialist Miranda Korten. Serve yourself According to the history books, vending began back in 215 BC when the Greek mathematician Hero invented a holy water dispenser for the Egyptian Temples. What is vending? Put simply, vending is automatic retailing. It covers the sale of products and services through a machine operated by introducing coins, banknotes, payment cards, tokens or other means of cashless payment. Although subject to much criticism lately, particularly in the schools sector where new legislation has seen much vending banned in schools across Europe, the US and Australasia, vending is only a means of distribution rather than a product in itself - a self service shop. An increasing desire for on-demand catering has led to the number of machines expanding even in locations with other catering facilities, such as hotels and hospitals. As with any industry, there are a lot of technical issues affecting vending such as cashless technology, Bluetooth, coinage (Euros, counterfeiting and fraud issues) and EU legislation such as the WEEE & RoHS legislation. Why vending? There are a number of advantages to vending as opposed to traditional food and drink service. These include: • Convenience: vended goods are available 24 hours a day and machines can be sited exactly where needed. • Hygiene: with vending, as with water coolers you receive a clean cup every time and avoid washing up. • Recycling: the Save a Cup scheme in the UK provides a ready way to recycle used vending cups into durable items for the office. • Variety: vending machines offer a whole range of different products. Drinks vending machines can offer not just black and white coffee and tea but can also make the drink weak or strong according to taste. Fresh brew, cappuccino and chocolate drinks are also available. According to the Automatic Vending Association in the UK, there are around 511,000 refreshment vending machines in use in the UK. Consumers spend an annual £1.5 billion on vended products, with eight million cups of coffee and two million cups of tea vended every day. In total, vending uses 1.5 billion litres of water a year. As a plus point for the vending industry, the association also reports research figures showing that the average size business with 50 staff could be spending more than £85,000 of its annual wages bill in time spent by employees making their own tea or coffee. Meanwhile in the US, vending is a $30 billion-a-year industry, employing 700,000 people who work at an estimated 13,500 companies. Around 100 million Americans will use one of seven million vending machines each day. While 16.3% of all vending machines are located in schools and colleges, most vending machines are found in manufacturing settings.

The European Point-of-use Drinking Water Association is seeking government clarification on the Waste Electrical and Electronic Equipment (WEEE) directive, following predicted costs of up to £30 per water cooler. In this issue, the EPDWA's President James Anderton explains its case. The WEEE legislation (Waste of Electronic and Electrical Equipment) will come into full effect on 1 July 2007 and for the water cooler industry, like many others, the situation is becoming serious. The EPDWA has added its voice to the Department of Trade and Industry (DTI) consultative process, which ended on 17 October, to ensure that the interests of the water cooler industry are defended. Depending on the way the WEEE legislation is implemented, it is estimated that it will cost the industry between £20 and £30 per cooler for recycling - for an estimated 100,000 coolers per year, this will mean a total cost to the industry of up to £3 million per year. These are substantial sums which no one in the industry can be expected to absorb, and inevitably the end user will have to pay. Most distributors are already building up a “war chest” by charging an environmental surcharge on their invoices. If you represent one of the few companies which is not doing so, the EPDWA would urge you to consider it very seriously - experience suggests that the great majority of end users readily accept the need for recycling and any related cost. What are these costs? The cost of WEEE can be split into three distinct elements: 1. freight 2. recycling 3. administration of the process Based on the following assumption, it is possible to calculate the total cost of WEEE for goods shipped directly from the distributor to the recycler. • 75 miles distance from the recycler to the distributor or “producer”. • 100,000 units to be recycled per year. • WEEE collection and disposal by Environmental Services: £11.50 per unit per pallet of 12, plus a Hazardous Goods charge of £25.00 per shipment - £13.60 per cooler. • Administration cost: based on the assumption that two additional heads at £40K would be required for every 5,000 units, the cost per cooler is £8.00. The cost per cooler therefore comes to £21.60. The cost to the industry for 100,000 coolers is £2.1 million - and the environmental cost of WEEE is 750,000 WEEE transport miles. If, for an unknown reason, WEEE needs to be returned by the distributor to the “producer” (the UK manufacturer or importer) who then has to pass the goods on to the recycler, the cost escalates significantly as follows: • WEEE collection and disposal doubles, because of double handling, to £27.20 per cooler. • The administration costs again double to £16.00 per cooler. The total cost per cooler therefore comes to £33.20. The total cost to the industry for 100,000 coolers comes to £3.32 million - and the environmental cost of WEEE doubles to 1.5 million WEEE transport miles. WEEE is currently considered Hazardous Goods. This means that it has to be accompanied by a Hazardous Goods Notice with the name of the driver and the vehicle registration number. This means new coolers can be shipped by normal transport, but WEEE can no longer be shipped normally. This is a strange anomaly, especially in view of the fact that all coolers must be RoHS (Restriction of Hazardous Goods) compliant. Few of this industry’s transport companies would be able to cope with this – but of course everything is possible at a price! WEEE represents a massive challenge to the industry, not only in cost but also in administration. Every cooler needs to be traceable and registered with the authorities, although it is not clear yet with whom. There is a suggestion to have a “bond” set up when the cooler is first placed, to cover the cost of future recycling. This will involve more administration. Then imagine you will need to take away and recycle around 20% of your coolers per annum – assuming an average cooler life span of five years. The EPDWA has arranged to meet with the British Water Cooler Association to agree on a common industry position to be put forward to the DTI. We are, of course, not the only industry to lobby the DTI – but we will do our best to represent you.

UK cooler company Water for Work is investing heavily in boosting the hydration message to customers both in the office and at home. Following a busy summer period, cooler innovation Editor Hannah Oakman took a trip to the company’s Kent headquarters to find out more from founder and Director Ben McGannan. Water for Work, which is in the process of changing its name to Water for Work and Home to reflect the dual approach of the business today, is what you would describe as a pretty large cooler company. In fact, with around 9,500 coolers out in the field, it is the UK’s largest independent company. With just over 100 employees, the modern day business is now firmly focused on its core mission to be drinking water specialists, servicing customers with whichever hydration solution they are looking for. Rather than a home and office delivery company, Water for Work actually began as family engineering business, George S Clayton, making plant machinery and lines for the bottled water industry. The company worked extensively with Perrier UK, then Buxton Mineral Water, and when Buxton launched its water cooler business in 1990, George S Clayton manufactured its purpose built plant. At the time, the idea of starting up a cooler business was still rather a niche one, but with hindsight, things were set to change rapidly in the UK water cooler landscape. Unlike his father, Ben McGannon, while involved in the engineering and supplier side of the business, was not an engineer by trade and realised the company might need a new focus in the future. A water cooler industry colleague and friend, Alan Cornford, had started a company called Water at Work, based in London and a fortuitous meeting between Ben, Alan and his wife Pauline, sparked the idea of setting up in the cooler industry. With Water at Work’s help with a business plan, and following a six month period spent persuading the family that going into water coolers was a good idea, the company Water for Work was founded. The company has been based in Marden, Kent ever since. starting out of the engineering office, sitting on the phone making calls for trials with the noise of banging and machinery in the background. Ben admits this was not ideal, but a start. The company then relocated to small premises and began to focus on the new Water for Work business, which has gradually grown to its current size. Ben’s wife Liz also worked for the business for over 12 years before taking a step out to concentrate on other ventures. The Marden depot is the company’s main servicing location, but with customers in London as an increasing focus, due to potential for growth, there are plans to open a second depot in Hadlow in 2008, closer to one of the company’s water sources. Two further depots in Melton Mowbray and Brandon, Suffolk, cover the rest of the deliveries. On this particular rainy October morning, the Water for Work plant is still managing to looking cheerful, thanks to an almost complete make over to brighten up the offices and reflect the hydration theme for employees and visitors to the plant. While Ben admits that the company has kept a somewhat low profile over the last few years, they now feel ready to open up the business a little more to visitors and spread the news about what direction it is headed in. The bright blue walls are soon to be decorated with artwork from a local college, commissioned to design canvases which reflect the healthy hydration message. Although Water for Work is a large company, there is a friendly, informal buzz in the air, part of what Ben tells me is the key to the business and its success - its people. Regular pub quiz nights, staff training, even white water rafting trips, keep employees on their toes and involved in the communication process. Ben recognises that the business has moved a long way from its beginnings in the 1990s. He explained more about the journey to the present and what the next phase involves. cooler innovation interview Which areas of the water cooler business do you mainly focus on? “Our main focus is still bottled water coolers. We do offer point of use, and it is an area we obviously have to take more seriously as the industry has grown. One of the shifts we have made as a business recently is to be more driven by giving choice to customers. We’ve moved from a simple 19 litre, cold cooler, cups or cones offering to responding to customer’s needs in terms of water, coolers and other choices. We also now deliver small pack glass bottled water, sports bottles and other items to people in their homes and offices.” You already offer a range of coolers - but are you always looking for the next breakthrough model? “Yes, definitely. Long term, I think the residential market is going to need something more. Ebac have done some good work here with the Slimcool. I think this area will still need more research as there is always room to improve the domestic offering, although we realise this is a big investment for manufacturers too. “We are planning a research project this November specifically to look at how people drink water in the home. We want to understand people’s usage better. If you put them in an environment with a fridge tap, water cooler, bottle of water and a filter, which age and gender will chose which product? Hopefully, this information will be useful in the future.” Do you think people are more open now to the idea of a water cooler in the home due to their proliferation in the workplace, certainly in the UK? “I think there is still catching up to do between how nice a water cooler can look and what the majority of them do look like. The traditional white box water cooler serves its purpose but it doesn’t look great. I think the general public still need educating about the great looking coolers we can now offer.” “When we started out, we had to educate people in the workplace about what exactly a water cooler is - and now we are having to do the same in the residential sector.” “The water cooler is also still something people take for granted. If you ask someone with a water cooler who their supplier is, they wouldn’t have a clue. It’s only when the cooler is empty or has a problem, that people find out who their supplier is!” How important is the home side of your business? “Water for Home is still very much a project. We believe there is massive potential out there and we are trying to get our offering right. Each year we do some new research into this. We have tried hosting stands in shopping centres and direct mail campaigns to attract the residential customer. “We now have around 2,500 domestic customers and we see it as a totally different marketplace in terms of how we operate. We offer both 12 litre and 19 litre bottles - surprisingly the 19 litre bottle has proved more popular. “The feedback we have from people with a cooler in the home is fantastic. They tell us their children are drinking lots of water and it is so convenient. But making residential customers realise they would like a cooler in the first place is the tough bit. “We estimate there are around 100,000 customers drinking from our water coolers in the workplace, so cross selling to these people in the home is a vital part of growing the residential side.” Do you offer any other products in the home? “We did have a link with English Wines which was quite successful but when we looked at our key hydration message, this was a bit at odds with it! We do deliver the small pack water, sports bottles and apple juice to customers.” Will this residential sector be profitable enough? “The potential is massive. We don’t see it as a rental market, it’s more about how efficiently you can distribute. It’s also not such a price sensitive market. The historical price cutting which goes on in the office sector does not really apply. I think you need a minimum of 10,000 residential customers to make it really profitable.” As the hydration message and importance of water becomes more mainstream, will this will help the home delivery side? “We took a long look at our business last year and conducted a complete review regarding this. The hydration issue is still an area which we feel is not taken seriously enough. People pay lip service to hydration but are not really that passionate about it. This in an area where we have even commissioned scientific research to prove the benefits of hydration. We really want to know what we are talking about and building our fact base. There is a huge amount of information about water and cancer, heart disease, benefits for the elderly and children and so on.” Are you favouring bottled water in your focus on healthy hydration? “Not at all. We would never knock tap water. At the end of the day, people need to be hydrated full stop. The message is more important than where the water comes from.” Do you work at all in the hospital and schools sector? “We do a lot of work with schools and hospitals here in Kent, with both bottled coolers and point of use. We also have several research projects underway looking at the tangible benefits of hydrating children in the classroom. As a major player in the UK market, how do you compete? “We have always focused heavily on customer service. We must not let our customers down. If they see our messages about healthy hydration and then we don’t deliver water on time, this is deadly for the business.” “Good service really pays off - around 70% of our new business is recommendations or additions from existing customers. “One of the best things about our company is the people. We have route drivers who have been here since the very beginning and a lot of key people who have been here for over ten years. I would say we are all quite passionate about the business.” Do you think the UK cooler market is in a healthy position now? “I would like to think there is a less of a focus on slashing prices to win business in today’s market. There will be companies who have done this and are not making money as a consequence. “The frustrating thing is that to give good service costs money - and companies need to make a profit. We try to invest a lot of money back into the business to improve service, but when we are competing with silly pricing, it is difficult. Are you involved in any other businesses today? “We do have a series of joint ventures - Edgars Cool Water, just outside Brighton, Office Watercoolers South West and Waterline London, based in North London - which came more out of friendships and desire to help others in the industry, than financial gains. We chose to set up joint ventures rather than have franchises because it’s all about the people; each business is run by people who are passionate about what they are doing.”

Already a well established player in the marketplace, cooler manufacturer Cosmetal has its sights set on even bigger and better things. cooler innovation Editor Hannah Oakman visited the company at its Recanati headquarters to find out more. Total drinking water solutions is the current mantra of Italian cooler company Cosmetal, but it has not always been so. The name Cosmetal is a shortened form of costruzioni metalliche (literally metallic constructions in English), reflecting the company’s past interests in manufacturing metal components for the office market. To discover the real roots of the company, you really need to visit Cosmetal’s headquarters, based just outside Recanati, a short journey from the busy port town of Ancona on Italy’s Adriatic coast. This is a relatively unspoilt part of the country, a beautiful area of sunflower filled fields, rolling hills and a coast line sparkling in the sunshine. As the birthplace of famous Italian romantic poet Giacomo Leopardi, it is not hard to see where he found inspiration. But along with lovely scenery, the area is also famous for manufacturing, from lighting specialists to musical instruments, including companies such as Clementoni, still around to this day. In fact, this is how the company founder Sen Morilli (the father of the current Chairman Fabio Morilli) started out in the 1950s, as a specialist maker of keyboards for electric organs and harmonicas. An original keyboard still sits proudly in Fabio’s office, a reminder of Cosmetal’s roots. Today, as most people in the industry are aware, Cosmetal is one of the best known and ubiquitous water cooler manufacturers both in Europe and on an intercontinental scale. The company employs around 80 people and had turnover last year of around €17 million. It shipped out around 80,000 water coolers from its wide range last year, with the majority staying in Europe, including vast new markets in Russia, along with customers in the US, Japan, where they are reportedly increasingly attracted by classic Italian design, and as far away as Australia. In fact, the company has always had an “export spirit” with exported products accounting for a very high percentage of sales. Cosmetal is currently enjoying a great deal of success in parts of the Middle East, with many units sold in Israel, Oman and Saudi Arabia, working mainly on a non exclusive basis with both local distributors and the well known multinationals. A visit to Cosmetal’s offices and plant clearly shows that working atmosphere is an important part of the business. The purpose built facility, which opened in early 2005 is light and airy, with brightly painted walls in the company’s signature blue. Even the production floor, which you might expect to be noisy and dull, is surprisingly quiet and light, due to the fact all machines are fully hand assembled and staff can enjoy the views of the Italian hills out of the windows. Tiled corridors with open plan offices off to each side reveal sales and technical teams hard at work, plus design teams using the latest computer aided design software to develop “fly throughs” of potential new cooler designs. Including this new facility, Cosmetal currently has two production sites. The older facility, nearer to Recanati is due to be relocated next to the new one, offering an 8,000 square metre production site, set to open early in 2007. Current output is around 250 machines per day, with an impressive 800 variations in the models when taking into account customers’ various preferences for colour, water types and sanitisation methods. cooler innovation interview Cosmetal Sales and Marketing Director Daniele Nava explained more about the evolving nature of the business. How did the company move from musical keyboards and metal parts manufacturing to water coolers? “In the 1970s, the company became involved in refrigeration and related projects in the catering business, which is more in line with the current business. In fact, the first coolers were produced for the catering industry. Around this time, Cosmetal launched the Niagara, the first point of use (POU) machine for the catering industry and the longest serving product in our current range. At the time, POU was a very new concept so, without really knowing it, we started to do something different. Following this came a range of fountains, including the River, aimed at schools, hospitals and the municipal market.” When did manufacturing of bottled water coolers begin? “Around the mid 1980s, we began to look at bottled water coolers, launching the Rio - a classic square water cooler. “We later brought out the Avant and Connect models, investing a lot more in these two products. The design for the Avant cooler arose from wanting to create something a little more inspired. We realise that a cooler is a cooler, and there are limitations, but we looked at developing the rounded shape, with multiple pieces which are easier to replace singularly, plus a more aesthetic built in cup dispenser. You have to combine practicality with ergonomics.” What has been the focus of some of your more recent designs? “In 2003, we launched the Jet, a POU product with hot, cold, ambient and sparkling water, using ice bank technology to produce a continuous six litre supply. The Jet is suitable for all sectors, with particular suitability to professional and industrial customers. “Sanitisation obviously remains a top priority. We offer Self Sanitising Technology (SST) to provide the highest safety levels and prevent bacterial growth within the cooler. The system has a removable reservoir which can stay in the cooler for 12 months. “We believe that we have to push the hygiene message hard. While the SST technology means distributors may not have so many opportunities to visit and sanitise their customers’ coolers, the cost can be built in by distributors, saving time on their part.” What are the most important aspects of the design process? “As well as always considering the ergonomic aspects of any new model, we are also looking at environmental issues as these are a reality and do have cost implications. We already comply with the RHOS restrictions here in Italy and the WEEE Directive is having an impact across European markets.” Which areas of the business are growing at the moment? “We are having a lot of success with our POU machines, while maintaining our share of the bottled water cooler market, which obviously has a much larger base. It does seem that POU will continue to be more and more important, but the bottled market is huge and still very important, so we cannot lose sight of this. In Italy, for example, the POU market is just starting out and the issue of poor tap water quality, perceived or otherwise, is one of the biggest barriers to growth. “We are still looking at the residential market and have plans for further innovation here. While the Jet cooler has recorded 80% of its sales in the home, it probably offers too high an output for the average family and, size wise, is still a little big for European kitchens. “In other sectors, such as schools and hospitals, the Niagara model has proved a success. With water becoming a more popular drink in schools following successive bans on soft drinks in vending around Europe and in the US, we believe this will continue to increase.” How do you win new business? “We have a certain advantage as we have been in this industry for over 30 years and have a wide range of products. In a lot of countries, Cosmetal is a well known name and we have been working with some distributors for over two decades. We are of course looking to acquire new clients, which happens through various contacts and marketing activities.” Do you face much competition or barriers to growth in the market? “We are not afraid of fair competition - it is normal practice in any industry. Competition helps our research and development teams to come up with new ideas, our sales team to be better, and our production to be more effective. It boosts the industry and means we do not focus purely on price. “But what does bother us, to a certain extent, is low price imports from certain markets. We do not know how long these imports will last but we still have to plan how we can compete. “The reality is that we are losing some clients in certain markets. They are buying cheap models and keep Cosmetal models to attract customers at the high quality end, while pushing the cheaper cooler harder. Again, this is not all bad news as it forces us to look at more efficient production methods - we have already become more competitive as a result. “The threat also varies from market to market. For example, we see the Middle East as very much a price market, whereas European distributors tend to display a bit more loyalty.” Can you compete on both quality and price? “We believe that the industry must aim to maintain quality standards. If we all just focus on price, this is the beginning of the end. It all comes down to whether price or quality issues are most important. “We made a choice that the quality is the most important. In the long term, I believe that if you don’t have quality, you will run into problems. We realise that “quality” is a word which everyone uses frequently, but we really mean it. We will not produce cheap coolers. Of course we will always look at our efficiency and staying competitive, but we will not cut quality to cut price.” Is manufacturing in West Europe now more expensive in general? “Yes, of course, more so than other areas, but we are lucky here that we are in an area where we can be competitive. If we were based in Milan, for example, our overheads would be much higher. The introduction of the euro here in Italy has affected the general cost of living but this is all relative in terms of manufacturing costs. “I do believe there are advantages to being an Italian company, as we have a great heritage of manufacturing in this country, not just in water coolers, but in many other well known household and industrial appliance brands.” How do you work with distributors? “We are willing to create exclusive agreements with distributors located globally. For example, in the UK, Spain and Ireland, there are distributors who are committed to our products and we are committed to them. We will not sell our products to anyone else, within the same product range. “However, sometimes when we become involved with the big players it can be difficult because they do not tend to create agreements. We believe in partnerships which are reciprocated and wish to create a network of partners. We always wanted to have our own independence, rather than be at the whim of the fortunes and acquisition activities of the big players.” Do you have a wish list for distributors? “Our ideal distributor is the one which values our products above others. If we are only 1% of their turnover, it’s difficult for us to have real loyalty from them. “It is a reciprocal thing. We are more than happy to work closely with distributors to look at different markets and see what the best strategy would be. We don’t want to be just supplier and client, we want to be partners looking together at co-marketing activities, trade shows, special promotional items, email marketing. In doing so, we can boost the entire market.” What does the future hold? “We are set for a busy period, with our new 8,000 square metre site due to open next door in 2007. We are also looking at expanding our marketing and sales department. While we already have managers responsible for each geographical area we focus on, our strategy for partnerships means we already need more people on the ground. “We are always looking to new markets. This includes improving our position in West Europe and developing in East Europe, with Russia as one main focus. “We want to be a truly global company and now have the capability, finances and desire to achieve this. We will expand our sales network and maybe open new operating subsidiaries in certain markets. We certainly believe our future will also be based on acquisitions, so watch this space . . .”

Many of us have visited water bars, but what about total concept of an entirely Water Shop? In 2001 José and Floriane Barroca launched Vital’ Eau in Switzerland. Claire Phoenix asked how, almost five years on, they are making water work as a retail concept. In 2001 Floriane and José Barroca launched the new concept of a Water Shop, selling originally from a car, with warehouse storage in a garage. Today their shop Vital’ Eau sits 1,000 metres above sea level opposite the station at La Chaux de Fonds in Switzerland and stocks some of the latest ideas in bottled water. It is frequented by customers who believe in its healthy ideals and by many more who utilise its nationwide delivery service. Vital’ Eau now holds stock from around 200 water and watercooler suppliers - promoting the latest in coolers, mineral waters, flavoured and functional waters, with many of the waters in beautiful collectible bottles. Products can be collected directly from the shop or is delivered by the company to homes, offices, fitness clubs, hotels and restaurants throughout Switzerland – and in the past to Aqua-Expo for its water bar. Brands currently held include Evian, Valser, Volvic, Perrier, Eptinger, Hydroxydase, Hildon, Badoit, Ty Nant, Wattwiller, Highland Spring and around 200 others. * A flavoured future? * Floriane’s idea at the beginning was to sell lemon and orange flavoured water – which she could see was part of the future for bottled water. “We soon decided to buy premises – just 50 square metres at first, which has now grown to 150 square metres. The idea was daring, but many water brands gave us strong support right from the start - they believed in us and in our unique idea.” Floriane and José were convinced that there was a future in bottled water, but saw it working differently to the traditional concept of a bar or boutique. “Mineral water producers were keen for us to communicate with those who, like us, believe in this vital element. As a result the company has a well designed website from which customers can order.“ Being a relatively small concern, the company is often willing to be flexible. For example boxes of mixed varieties of water are supplied to hotels and restaurants. Last year the company offered a mixed ‘discovery pack’ to highlight new variants in bottled water. The shop is also designed to make buying water simpler. “Our shop is divided into four sections – standard bottled and flavoured water, designer bottles, water coolers and point of use and vending. A wide range of coolers are sold including those by Ebac, Cosmetal, Dieau, Mistral and Saeco – its best selling water cooler. Recent developments have taken them into the POU and vending sectors. Each season a part of the shop is dressed to focus on a certain area of the globe. For instance this summer it was Tahiti, with bottled waters arranged to complement the theme. “Our next idea is to venture into 'Lié a l’eau'" explained Floriane. “We still believe strongly in our concept that good water is essential to a balanced lifestyle and that we need to make room for it in our homes and day to day businesses.”

Output of St Kiraly is expected to reach 150 million litres by the end of this year and the brand aims to be Hungary’s market leader in both the still and sparkling segments. Features Editor Claire Phoenix spoke with Szentkirályi CEO Levente Balogh about the battle for market leadership in Hungary. Szentkirályi Mineral Water Ltd of Szentkirály, a tiny village south east of Budapest, bottles its St Kiraly brand from a mineral water spring sourced 206 metres below the ground. This company, relatively unknown elsewhere in Europe before 2000, has recently surprised the market leaders with its aggressive price cutting tactics and innovation programme. For some years Nestlé Waters has held pole position in Hungary, with its well known Theodora and Aquarel brands. The appearance of St Kiraly in bulk on many supermarket shelves rocked the acknowledged leaders’ stable position and has engendered a year of major promotional spend in order to combat this increasing competition. Suitable for mothers and babies, being low in sodium and high in calcium and magnesium, with a mineral content of 520 mg per litre, Szentkirályi has a strong story to tell, along with its willingness to sell at a lower than premium price. To its credit, Szentkirályi also won an Eauscar prize in 2004 at the Paris Aqua-Expo for the taste of its water. The company is now looking for export markets in Europe and further afield and, through its now established relationships with the major supermarkets, looks likely to succeed. Interview Features Editor Claire Phoenix spoke to Szentkirályi CEO Levente Balogh. What is your view of the bottled water market in East Europe and where is Szentkirályi currently placed? “East Europe, especially the landlocked Carpathian basin, has the largest sweetwater reserves in the world. This is due to the fact that, throughout the rest of Eastern Europe, undersurface rivers typically end up in the seas and oceans. “By 2050, several Central East European mineral water producers will become major players in global markets. Mineral water consumption is on the rise worldwide, with forecasts of a boom in sales for the next 15-20 years. "Although we have experienced an increase in lobbying activity from processed water producers, aimed at counterbalancing the growth potential of mineral water producers in the Eastern European region, we have also seen an increase in consumer awareness in sensing the difference betweeen purified and natural mineral water products." “Our combined share (carbonated and non-carbonated mineral waters) in the local market jumped from 0.2% at the end of 2003 to 12.2 % in May 2005.” Who are the major players in your market? “Most major international producers, such as Nestlé, Danone, Coca-Cola and PepsiCo are present and active in Hungary. Besides these, there are several small privately owned mineral water companies. In such a competitive market - according to the figures from the international market research firm ACNielsen - Szentkirályi took the market leading position in the non-carbonated water category, with a total market share of 18% in May 2005. “We estimate that by August 2005 Szentkirályi will be maintaining a 20% share in the local non-carbonated mineral water market and we also expect to take the lead in the carbonated water segment in the second half of 2005.” What are the current major issues for Szentkirályi? “The three burning issues for the company are increasing production capacity, launching new products and strengthening the brand both inside and outside Hungary. “When we received the Eauscar award in 2004, our production output was 4,500 litres per hour. In early June, we finalised the expansion of our plant, increasing its capacity to 600,000 litres a day - 25,000 litres an hour. We expect that our output of St Kiraly will reach 150 million litres by the end of this year. This is about one quarter of the total local mineral water consumption of 650 million litres. “The plant is also unique in terms of its state of the art filling facilities, offering sterile conditions for production. Our strategic plan is to increase annual production to around 300 million litres by the end of next year. Of this, 200 million litres will be sold in Hungary, the rest abroad.” “Since mid 2004, we have launched a new product every three months. Earlier this year, we launched a refreshing natural mineral water facial spray as well as a flavoured and functional mineral water product. “For 2006, we are planning to launch an international media campaign – the first time in our history. This will be aimed at increasing our brand presence both in this region and West Europe.” How has Szentkirályi achieved such good distribution through the major multiple supermarkets? “Our former holding company Vitapress Kft had been operating in the local market since 1989. Vitapress supported us throughout the process of being listed by all major retailers in Hungary and our strong marketing activity also helped us reach the retail chains.” Tell me about your recent flavoured water launch. ”This year we were awarded the Paris Aqua-Expo Eauscar prize for our rose flavoured mineral water, which is already available in the shops. ”The water is flavoured exclusively with natural ingredients, such as rose oil and herbal extracts, and so does not contain any preservatives. “Most recently we also launched a lemon mint flavoured water. Now both types are also available in 33 cl bottles. In fact, these are the first two functional water products in Hungary that have been made available for the horeca sector in suitable packaging. “We expect to see a major rise in the consumption of such flavoured and functional waters. They offer an alternative to those that do not find the taste of natural mineral waters acceptable, but are committed to leading a healthy lifestyle. The consumption of these products will increase at the expense of soft drinks that contain sweeteners, artificial flavours and colourings.” What do you see as Szentkirályi’s strengths and weaknesses? “Szentkirályi is a dynamically growing, small private enterprise, whose simple corporate structure ensures flexible operation and a quick response to changes in the marketplace. “The competitive edge of the company is the quality of its water: it has outstanding purity, a fine taste, an ideal dissolved mineral content and, regardless of age, anyone can drink it. “On the other hand, Szentkirályi is not a multinational company with unlimited cash to invest, so we can only increase our production capacity in line with actual growth in demand. This requires us to plan all development projects carefully and to keep an eye on the market at all times.” Which markets do you see as being right for Szentkirályi? “Besides the local marketplace, our major target markets in terms of sales volume are the Central and West European countries. As for international brand building, we are primarily targeting the US market and various countries in the Middle East. “Currently, we have export contracts in 13 countries, including the UK, Croatia, the Netherlands and Dubai in the UAE. “The East European markets are equally interesting. We are negotiating with potential partners in Ukraine, Latvia, Lithuania and Estonia.” Where do you see Szentkirályi in five years’ time? “I envisage that Szentkirályi – the absolute local market leader by then – will grow into one of the five largest mineral water producers and exporters in the Central East European region in five years. By the end of 2006, we shall double our production capacity to 300 million litres a year, which we expect to double again by the end of 2010.”

As in any rapidly developing market, the challenge to attain and maintain the top slot produces intense competition. While Szentkirályi claims to have risen quickly to number one, rival market leader Nestlé Waters’ Kékkúti believes otherwise. While the numbers contradict, Kékkúti has plans to ensure its position is secure. The bottled water market in Hungary has changed a great deal in recent years, with the private label sector rapidly gaining ground. This has led to a strong reaction from the major players - from competitive pricing structures to major television and outdoor advertising initiatives and product redesigns. At the forefront of this response to market change is Nestlé Waters’ Kékkúti. “Although the Hungarian mineral water market experienced some unfavourable changes last year, Kékkúti managed to remain strong,“ commented Kékkúti Marketing Director Noémi Csete. “Not only did the company succeed in holding market leader position in take home by reaching 13.2% in volume and 19.2% in value shares, but Theodora was also the most efficient player on the market." The brand reached 11.4% volume and 16.5% value share. According to ACNielsen, it also held its number one position in the horeca segment with 35.4% volume share. “The company’s other brand Nestlé Aquarel was launched in 2002 and has been gaining reputation among consumers ever since. According to ACNielsen, the spring water doubled its market share since January 2005 reaching 3.8% in April. Aquarel is sold as being suitable for the whole family, with a quality guaranteed by Nestlé standards and an acceptable price.“ Talking specifically about the recently revamped packaging for the Theodora range, Ms Csete added: “The Hungarian mineral water market has become highly fragmented, with many new competitors. We cannot afford to wait and see. We are constantly monitoring consumers’ needs and try to do the best we can to meet their expectations. “We launched the Theodora campaign with press, television and billboard support to increase sales activity. As well as celebrating the redesign, the main messages include the brand’s heritage and the vitality Theodora gives the human body each day” A seasonal label for the horeca sector on 33cl returnable bottles is a new move for Theodora. As for Nestlé Aquarel, a new 25cl litre bottle was launched in March 2005 for horeca distribution. “Hungarian mineral water consumption has increased rapidly in the last couple of years – reaching over 60 litres per person each year. “With the help of our carefully planned marketing activity, we will do our best to keep Theodora as a trusted brand in consumers’ minds. In a survey last year by TNS 2004, 94% of consumers knew the brand. It is the best known and most often consumed mineral water on the market,” continued Ms Csete. “Quality has never been an issue for Theodora and Aquarel. These waters derive from the Káli Basin, one of the most beautiful and harmonious landscapes in Hungary and home to the perfectly reserved Balaton Upland National Park. Both versions are bottled carefully on site without spoiling the balanced mineral water and trace element composition. “Kékkúti has recently opened an eight kilometre long educational Theodora trail through the Káli basin, with 15 information stations on the region’s natural resources and water base.” Theodora was recently selected as the ’Most Trusted Brand’ in the mineral water and soft drink category by Reader’s Digest subscribers for the second time and also won Superbrand status - awarded by communication professionals to brands with strong consumer trust. * Hungary for success?* With a steadily improving economy and consumers spending proportionally more on luxury goods and eating out, the challenge presented to the established bottlers by discounters and private label has created a vibrant and exciting market, with two players battling for the number one slot and others keen to catch up.