STARTING A WATER BOTTLING PLANT IN NIGERIA

By Taiwo Olowu, ACA

Introduction

Water is an essential part of man’s existence, without water there will be no life. Every human consumes water and needs it to carry on the activities of life. Nigeria is a blessed nation with a large population and rich natural resources. Water is abundantly available and there exists a high demand for water by the rising population.

Setting up a bottled water production plant in Nigeria is a very good investment and highly lucrative as there exists an opportunity to meet the increasing demand for water and make some profits. In Nigeria today, there exist lots of bottled water producing companies, however, because the demand for water is very high and insatiable there is still space in the market to be penetrated by new companies.

The bottled water market already has existing companies and competition, however, there is no threat of new entrants. New companies can easily penetrate the market as there are no entry or exit barriers. There is high demand for clean and pure drinkable water in Nigeria and this demand increases as the population increases. There exists a great profit potential in the bottled water market that’s the reason most top organizations producing soft drinks also venture into producing bottled water.

Starting a Bottling Plant Business in Nigeria

Every business has some basic necessities that must be put in place in order to have a good start. Similarly, there are things one needs to take care of and put in place when one wants to start a bottling plant business. The following should be acquired or provided for before commencing a bottle plant business:

• Market Study
• Have a business plan
• Business registration
• Source for Capital
• Choose a location
• Get necessary equipment
• Acquire Knowledge
• Recruitment
• Marketing
• Get a website

Market Study

Appropriate knowledge of the market or industry one desires to enter is needed to enable one compete successfully and survive in the market. One must understand the competition in the market, the market structure, the consumers’ preferences, the opportunities and threats existing in the market and the relevant government policies to the market/industry.

A perfect understanding of the competitors in a market will help one to better strategize in a bid to perform better than the competitors and secure some market share. The bottling industry has many competitors in existence, however, with the right strategy and plan one will successfully enter the market, compete and withstand its competitors in the market.

Business Plan

A business plan is a formal written document which contains the goals of a business, how it intends to achieve those goals and the time-frame allotted to achieving the goals. You will need to draw up a business plan, wherein you state clearly your business concept, your financial forecast, the financial requirements (capital), your current business position among others.

The business plan of a bottled water business will state in details the financial projections of the business. It shows the amount of funding required and how the funds will be sourced.

Registration and Licenses

It is important for every business to register with the Corporate Affairs Commission (CAC) and obtain all relevant licenses before it commences operation. This gives the business  legal recognition and opportunity to access and benefit from government grants and funds applicable to such types of businesses.

In starting a bottled water business, one needs to register the business with the CAC as a limited liability company. The bottled water business as part of foods and beverages must obtain license from the National Agency for Food and Drug Administration and Control (NAFDAC). After registering with CAC, one needs to start processing NAFDAC registration. This will require strict adherence to the safety regulations set out by the agency. As part of the process, your facility will be inspected as well as the type of machines you use and your production process to ensure it does not default on any standard.

The bottled water business needs to also be registered with the relevant tax authority (Federal Inland Revenue or the State Internal Revenue). You will need to also obtain a license from the State health departments to construct a water production plant within the states.

Source for Capital

The startup capital needed for a bottled water business depends on the scale you want to start operating in. Where one does not have sufficient capital, one can start small and then grow the business into a larger scale as time goes on. Water which is the main raw material needed for the bottled water business is a free gift of nature and abundant in supply. The major expenses to be made will be for the purchase of equipment and the  location of the site.

There are so many sources of capital available to businesses. You can decide to obtain a loan from the bank, get an investor, apply for government grants or a business incubator. As a startup business, you can explore any of the following options in sourcing of capital:

• Personal investment

You can start up your business with your personal savings. As a business owner, you should be the first investor in your business. You can either invest with your cash or with collateral on your assets. Investors and banks will be more convinced of your long-term commitment to the business when they see that you have a stake in it.

• Love money

Love money is money borrowed from friends and family. Such money referred to as ‘patient capital’ will be repaid later as the business profit increases.

• Venture capital

In a venture capital arrangement, investors provide to startup companies and small businesses that are believed to have long-term growth potential with the required financing of the business.

• Angels

Generally, angels are wealthy individuals or retired company executives directly invest in small businesses owned by others. Most times, these angels are leaders in various fields who on addition to the money invested into the business contribute their experience, network of contacts and their technical/managerial knowledge

• Business incubators

The focus of business incubators/accelerators is in the high-tech sector where they provide support for businesses in various stages of development.

• Government grants and subsidies

Grants and subsidies are provided by government agencies for various sectors. Most times, governments provide grants and subsidies to sectors they feel are underdeveloped or not developed at all. The essence of the grants is to encourage businesses to come into the industry and grow the sector of the economy.

• Bank Loan

The most commonly used sources of funding  small and medium-sized firm are the bank loans. Banks will require a personal guarantee from the startups that they can be able to back the loan obtained. A business has to have a sound track record an excellent credit rating to be able to secure loans from banks.

Choose a location

The location of a business is very important. It is essential to locate a business close to its source of raw materials, its suppliers, and electricity among others. This will help reduce operational cost of the business. For a bottled water business, the major raw material which is water is readily available and free. However, in order to minimize cost one should consider locating the business closer to the suppliers and where electricity is constant so the profits can be maximized.

It should be noted that water is an essential commodity and the demand for water can never be saturated or exhausted. There will always exist a portion of the market where one can explore and capture  oneself. People demand for bottled water both in rural and urban areas. The demand for bottled water would however be higher in the city than in the villages as most villagers may not be able to afford to buy bottled water.

When choosing a location for your bottled water business, you should also consider things like the security of the factory, power, access to road, and so on. Your factory can either be leased/rented or bought depending on the capital at your disposal. The location should however be one with enough space to accommodate all the needed plants and machineries, management office, borehole, store for empty bottles & finished products and parking space for vehicles.

Your facility should not be located far from town, if possible, it should be located in town, as long as the law permits and it would not lead to environmental disruption or pollution. It would be easier to make deliveries and to make your product readily accessible to customers when you situate your facility in the middle of the town.

Get necessary equipment

The equipment needed for a bottled water business are:

• Trucks to be used in delivering finished products
• Alternate power supply
• Online batch number printer
• Office equipments
• Fire extinquishers

Acquire Knowledge

To succeed in any business, one needs to be well acquainted with and understand the basic principles of the business and how the business works. To survive in the bottled water business industry, you need to have the basic knowledge about the bottled water production process, how you can make improvements on what is obtainable in firms in the industry, how to stand out among competitors and also how to grab opportunities as they arise in the industry. You have to be at alert to changes in the business environment and adapt quickly to those changes. Also your policies need to be flexible enough to accommodate changes in the environment as they occur.

You can seek the help of professionals in the field and consultants to assist you in setting up your bottled water factory. You can also attend seminars, trainings, workshops and symposiums to learn more about the bottled water business and gain expertise.

Recruitment

You will need to recruit some staff to assist you in your bottled water production business. Staff to be employed include: operators to operate/man the machines, packagers to package the bottled water, cleaners to keep the environment clean and hygienic, drivers to drive the trucks, sales personnel to manage sales of the package water, security personnel to secure the premises and a supervisor to supervise the production process and the staff.

The staff you hire should be well skilled and experienced for the roles you put them. They must possess adequate technical knowledge on how to operate equipment at the plant for effective output.

Marketing

Marketing is an integral part of the success of any business. Any business that does not engage in marketing cannot survive in its industry. Marketing involve carrying out activities that makes your business more visible to your target audience. You can market your business through word of mouth, referral, social media advertising, Google advert etc.

To make your bottled water more visible to consumers, you need to engage in aggressive advertisement and distribution. Advertise your product on television, radio, give free samples of your product to people to create awareness. Aggressively distribute your bottled water to different corners of the city/country, display your bottled water in supermarkets/shops, you can also go from door to door to introduce your water to people.

You need to come up with the best strategy to adopt to penetrate the market and gain ground. One way you can penetrate and generate sales is through supermarkets, eateries, restaurants, schools, hospitals, offices, relaxation centers, big shops and stores. Approach hospitals and supermarkets around you with a proposal to be their official distributor of bottled water. You must have a strong plan of the promotional activities you will engage in to positively influence the consumers’ behavior because the water industry is full of stiff competition.

You need to plan for a very strong distribution network so your product can penetrate and get to the reach of all consumers both the farthest and nearest ones. You also need to have a unique and neat packaging that will attract consumers and pull them towards your product. Most importantly, your bottled water has to be of top quality and clean because that is what will keep consumers coming back to you and purchasing your product.

Get a website

We are in a digital age, where most activities are done through the use of modern technology. You need to create a website for your business to give it more online awareness and to attract online customers. One benefit of creating a website is that it attracts a large volume of traffic to your business. Your website will contain pictures and information about the kind of products you offer to the public. Owning a website makes it easy for other business organizations in need of your oroduct to contact you and make bookings. Also, people can visit your website at any time to place their orders and you keep making sales without physical contact or connection.

Conclusion

We have discussed the basic to start a bottle water business including having  business plan, raising funds, marketing and market study

To learn more how we can help you achieve your vision on starting a business like this, please reach us now on 08023200801, email enquiry@mocaccountants.com or send us a detailed request by completing our enquiry form