How Water Service Measures Up In The Vending Industry

Water service is on the rise. It has been in the top 5 new services added by vending, micro market and OCS providers over the past several years and represents 2 percent of overall revenue for vending operators. The revenue number increases to nearly 5 percent for OCS focused operations, a number reported in the 2015 State of the Vending Industry report, and one that has been rising.

With the culmination of numerous consumer trends, forward-looking operators feel the market is prime for water service. The growing awareness and advocacy in providing healthier refreshment options has driven water sales in many locations. Water is considered the healthiest beverage, and with the addition of carbonation and flavors, can be a corporate wellness driven employee benefit in the breakroom.

Water can be healthy and green

Jim Carbone, COO of WORKWELL Food and Beverage, a Chicago, IL-based vending, micro market and OCS provider for over 10 years, has experienced tremendous growth of systems that bring filtered and premium water to the workplace. “The movement towards ‘healthy’ has contributed to this [water service growth],” Carbone said. “As well as companies looking to protect our environment.”

By utilizing water filtration systems also known as point-of-use (POU) water systems, rather than 5 gallon water coolers, operators have been able to meet the need for corporate sustainability. Filters eliminate single-serve plastic water bottles being disposed of in landfills and reduce pollution associated with vehicles transporting the heavy bottled water. “Many businesses these days... are giving their employees reusable water bottles or cups and offering high quality water filtration systems,” Carbone added.

“We have generally seen point-of-use water coolers as a growing trend,” said Gianpaolo “GP” Macerola of Rome Refreshment Services, based in Houston, TX. It’s been an expanding segment for Macerola for the last five to seven years. Filtered water coolers have been very successful for Rome, which only offers the 5 gallon water and coolers to customers who need it due to the area. “The only places we have it [5 gallon water service] is at locations that have contaminated water sources (well water) and locations that are very spread out in an open outside area where access to water sources are scarce,” said Macerola.

Water is trending

The International Bottled Water Association (IBWA) is claiming huge volume increases in water consumption by consumers. It measures PET and 5 gallon water sales across the United States. The segment has been steadily rising since it recovered from the Great Recession. In the IBWA 2013 bottled water sales report, the volume exceeded 10 billion gallons, a first. It is the second largest beverage category by volume. The report also notes that soft drinks continue to decline.

While water consumption and the number of workplaces opting to offer water service as a benefit to employees have increased, there is still much variety in how the services are delivered, and specifically what services sell.
“We utilize the ‘shotgun’ approach to water filtration,” said Macerola, with Texas flair. “We have two base levels for filtration, and then we have two add-ons depending on what [the location] is willing to pay for.” To compete in the Texas market, Rome Refreshment even invested in extra licensing. “Our company is licensed by our state’s licensing committee — meaning we are on par with companies like Culligan when it comes to our ability to filter water,” explained Macerola.

Rome Refreshment primarily uses small pore filters for plumbed in applications. “The chlorine already kills practically all organic matter,” said Macerola. Adding that with the small size pores now available on filters (microns for regular and angstroms for reverse osmosis), Macerola is confident it delivers a fresh tasting, pure water.

Up in the Midwest, Joel Sather, president of Capital Coffee in McFarland, WI, has been almost exclusively using UV water filtration coolers. “We think they are the best machines to satisfy our customers,” he said. These coolers are attached to the water line, use a traditional filter, but then also include an internal UV lamp to sanitize and reduce bacteria growth in the water. Capital Coffee leases the water coolers by the month to locations, and charges a small fee to change the filters twice a year.

Sather sees the increase in interest in point-of-use water coolers as a culmination of a number of benefits. “People care more about pure clean water. And point of use is better for the planet. No bottles made from petroleum, no delivery trucks. No water bottle storage hassles. No changing the bottle issues,” he added.

Sparkling can be a plus

Sather doesn’t have much interest in sparkling water from locations in his area, but not far away in Chicago, Carbone has plenty of takers. “We are definitely leasing more systems with sparkling as an option,” he said. With these systems, WORKWELL sells syrups so employees and customers can create hand crafted sodas and flavored waters. The water for the sparkling options is filtered, but not distilled or sent through reverse osmosis. “As for RO [reverse osmosis] and higher quality water filtration, we use these to complement our high quality coffee equipment more than for drinking water, especially in the Chicagoland area,” Carbone said. In cases where the company has a problem with healthy drinking water, then WORKWELL will offer these more premium filtration systems if desired. For most units, WORKWELL charges a monthly rental fee as well as fee for filter changes.

There have been several systems introduced to meet the sparkling water demand. One was launched at the NAMA OneShow by a long-time coffee brewer manufacturer. The BUNN Refresh, a still and sparkling water unit, captures the spirit of BUNN’s new logo and brand image of transforming water.

“The BUNN Refresh gives consumers the ability to have that clean refreshing water experience,” said Karalynn McDermott, senior vice president, market development at BUNN. The company introduced the machine because of the trends in hydration and being on point with the desire for healthier beverages. The system is plumbed into a water line, the water is filtered and then it can be enjoyed still or carbonated with an inline mistifier, which creates long lasting sparkling waters.

“This type of inline water mistifier also does an optimal job of absorbing flavors,” said McDermott. “We’ve seen companies use real fruit, herbs or flavor drops.” The BUNN Refresh is commercial grade and can deliver a high capacity of water on demand. “The countertop unit can deliver 5.6 gallons of water per hour before the temperature gets above 41 degrees,” explained McDermott. “The tower model delivers 11.25 gallons per hour.”

POU offers cost savings

Water filtration services can also be used as a cost saving tool when businesses are looking for ways to cut costs. “Being in the oil and gas fields, Houston has seen a lot of cutbacks recently,” explained Macerola. “POU water coolers have helped us keep customers by proactively showing them ways to cut costs through water.” He recently shared an example of how Rome Refreshment Services approached a customer hit hard by the low oil prices. They spent roughly $25,000 per year on 5 gallon water coolers. With a water filtration system, the company could still offer pure, clean water for just $5,000 or $10,000, depending on the filtration used.

There are numerous advantages to water filtration. With the variety of quality filters available that can eliminate impurities, chlorine or just improve taste, it’s a flexible option that can fit the needs of many locations. With the addition of carbonation, flavoring and more advanced options, it can be a premium service offering for locations searching for the new and different benefit. Most operators try to lease the equipment to the location, and then charge for filter changes, although this varies by region as well. No matter the specifics, water service is a worthy addition to sell in the next year as the trends move even more towards healthy, sustainable and transparent business practices.