A recent advisory issued to New York City residents urged them to run tap water for at least 30 seconds after tests detected the presence of lead, which is leaching into the tap from aging pipes. Last year, consumers learned that traces of prescription medications slip through conventional treatment methods to contaminate many municipal water supplies.
No wonder consumers have become keen on filtration systems that treat water at the source. More than a dozen primary suppliers offer various technologies and devices as part a growing, $2.7 billion business in the United States. Until recently, however, such setups were primarily the domain of home builders, who installed point-of-entry systems that serviced an entire residence. Today, improved technology and growing demand are giving rise to more compact devices that are capable of filtering water at an individual sink, with a separate water faucet, or in the bath, using a shower head attachment.
It's this mid-range, “point-of-service” market that holds potential for mass, club and food retailers.
“It's a newer category, there's less competition and it's off-grocery,” said Todd Bartee, CEO, Aquasana, a manufacturer based in Haltom City, Texas. “The retailers I've talked to are asking us for 50% margins on the category.”
Aquasana, a division of Sun Water Systems, currently sells four tap or shower options at chains like Whole Foods Market. Other companies with a stake in the category include Aqua-Pure, Culligan and Sears Kenmore.
For retailers, the profit lies in selling the replacement filters, which need to be replaced every six months or so. Many operators have seen their bottled water sales fall over the past few years, and have cast about for alternatives to offer their shoppers.
“Even though bottled water has been a massive business for a while, there's been this growing awareness of the plastic pollution associated with bottles,” Bartee said.
Meanwhile, consumers shopping for alternatives to bottled water have expressed frustration at the limited quantity of water provided by pitcher-sized filters, as well as the more frequent need to replace the smaller filters.
Price could initially be a sticking point as the larger systems hit shelves, and the higher cost of point-of-service filters might need some explaining. Bartee estimates it costs 10 cents for the Aquasana system to purify a gallon of water, as opposed to buying a gallon of water, which can cost anywhere from 90 cents on up, depending on the brand.