Bottled water company Refresh is raising extra capital to support its continued growth, including further moves into the big interstate markets.
Bottled water company Refresh is raising extra capital to support its continued growth, including further moves into the big interstate markets.
Perth-based Refresh aims to become a genuine national operator by taking on the two big players in the $400 million bottled water market – Coca-Cola Amatil subsidiary Never-fail Springwater and Australian Stock Exchange-listed Palm Springs.
Refresh opened a Sydney plant last year and is now raising $1 million from private investors to fund a Melbourne plant.
Refresh managing director Henry Heng said the company’s intention was to list on the ASX by the end of next year so that it could raise further capital and move into all of the main States.
“Our dream is to open a plant in every city with a million people,” Mr Heng said.
As well as opening up in other States, Refresh is expanding its Perth manufacturing and bottling operations.
It has achieved rapid growth over the past five years, with sales rising by an average of 38 per cent to $2.2 million in the year to June 2004.
Most of its sales are in the home and office delivery (HOD) market segment, which comprises nearly one quarter of the overall bottled water market.
Competition in the HOD market intensified last year when Coca-Cola Amatil completed a $290 million acquisition of Neverfail.
CC Amatil said Neverfail’s annual sales of $70 million gave it a two-thirds market share in the HOD market in Australia.
Neverfail’s market share was boosted by earlier acquisitions, including Perth company Salute, which was acquired for $10.6 million in 2000.
Refresh’s other national competitor, Palm Springs, has battled to trade profitably. It has annual sales of about $25 million and recently forecast an annual trading loss of $2.7 million.
Mr Heng said that apart from Neverfail and Palm Springs, the market was highly dispersed with more than 200 brands and numerous small regional competitors.
As well as its HOD sales, Refresh also sells to a number of retail groups, including Dewsons and Foodland.
A point of difference for Refresh is that it is the only major player selling distilled water, as opposed to spring water.
The company believes its water quality is a strong selling point, and Refresh is the only bottled water endorsed by Kidney Health Australia (formerly the Australian Kidney Foundation).
Trends overseas suggest there is plenty of growth left in the bottled water market.
For instance, per capita consumption of bottled water in the United States is 45.6 litres, about three times the Australian level.
About 30 per cent of US offices have bottled water delivered, double that of offices in Australia, while the difference is even starker for home sales.
