Profitability of a Mineral Water Plant

All the time, we call it “Mineral Water Plant”, it is actually “Packaged Drinking Water” most of the times. As there are many major differences between these two. There is a regulating body, the B.I.S., which controls & monitors the quality of the water produced from every plant in India. You will the I.S.I. Mark mentioned on every bottle in India. Report to the BIS, if you find this mark not visible on a bottle.

There is a difference between a Mineral Water Plant & a Packaged Drinking Plant as far as the profitability is concerned, as the end prices vary. If we talk about the B.I.S. context, there are currently appx 25 Plants which produce and sell “Packaged Natural Mineral Water” and over 5,000 plants for “Packaged Drinking Water”. The selling rates differ. For this article, and as a general guideline, we shall talk on “Packaged Drinking Water”.

The M.R.P. for Packaged Drinking Water

Currently, Packaged Drinking Water is sold at Rs.20/- average all over India. This price is the M.R.P. Maximum Retail Price.It includes all costs involved till it reaches the Consumer. Figure below explains The costs involved :-

The Figure explains Mineral Water Distribution in India. Kindly note that, the cost is different for each point. The M.R.P. is at the Point of Sale. The Price to a Super Stockist (Usually for a city) , is decided by the producer, the plant owner. Even the End Price, the M.R.P. is also decided by the producer, the plant owner. The Super Stockist decides the price to the local area distributors. D2C is “Direct to Consumer“, which is also gaining momentum now, where the producer omits all the other stpes and sells to the consumer directly. We explain this under a special session in our training, called “Smart Marketing”.

M.R.P. defines your gross earning per bottle, not your R.O.I.

To prepare your business strategy, the M.R.P. can be indicative; but don’t commit a mistake to calculate your earning , R.O.I. straight from that. On the outset, Mineral Water Business IS profitable, as there is a growing demand of “Pure Water”; you don’t need to be an expert to know this. But to make Your Mineral Water Business profitable, you need to draw a perfect business strategy & planning suitable for Your Business. You can read a special article we have written on Mineral Water Profit Margin for details.

#Listen to the Audio Interview of a Business Coach who has shared his views on how to create your Business Plans.

Should You Go for Mineral Water Business ?

If you think that there is enough opportunity in the Mineral Water Business, you are right. You should go for a Mineral Water Business. And that too, with proper and a professional way, without repeating the mistakes which the failed entrepreneurs have made in past. Let’s take those as reference examples & create a very profitable Mineral Water Business.

Where to Begin ?

Why not start by learning the basics of the business from the people who have already had an experience of more than 15 years in the field, and who are keen to create Successful Mineral Water Businesses ? Yes, at Mineral Water Project Information, we focus on creating Successful Mineral Water Entrepreneurs through Training Sessions by educating them on various aspects like :-

Why Mineral Water Business, Opportunities, Challenges

Type of Business Models, Attributes of each Model : Own Produce, Distributor, Franchise, Third Party etc.

Profit Margin & Comparison across major models

How to Define Machinery to Suppliers & Decide Specifications

How Can You be different by Smart Marketing Techniques

A little about Us …

We have been doing this from 2015, and going deeper and deeper now. You can watch a video on the history of the trainings, read the About Us section, on who we are, and read Reviews from the past attendees. And can still shoot questions or comments. You can always write to us through the Contact Us Page

5 Steps to Calculate Mineral Water Plant Profit Margin

How Much Profit One Can Earn from a Mineral Water Plant ?

This question is often asked to us by many website visitors from time to time. And it is a very important consideration indeed as far as an investor is concerned. I will say, not just Profit Margin, but also the consider the R.O.I. (Return on Investment) . This profit margin is considered in terms of percentage on the total sales or they say “Cost per Bottle“.

The Downside of Profit Margin Generalisation

You will see many people declare “Cost per Bottle” with a Chart. Even we too, some time back used to publish this on our site & articles. But over the time, have come to know the downside of that. What is that ?

The basis on which the Profit Margin is calculated should be a fixed set of Product Mix which you have decided to produce and their quantities with a stipulated time period. For Example, let’s compare 2 entrepreneurs Ramesh & Suresh head to head :-

Product Mix by 2 Entrepreneurs

	1 Ltr Bottles (Case of 12 Bottles)	20 Ltr Jar	Daily Total Sale	Daily Total Sales
Ramesh	800 per Day @ Rs.80 to Distributor	200 per Day @ Rs. 40 to distributor	Rs. 64,000/- + Rs. 8000/-	Rs. 72,000/-
Suresh	500 per day @Rs.90 to Distributor	500 per day @ Rs. 30 to distributor	Rs. 45,000/- + Rs. 15,000/-	Rs. 60,000/-

(Names are Hypothetical)

From the table above, you will notice a few things :-

To calculate the exact margin of profit, you require further data like how much sale made direct, how much to distributor (their rates also vary)
The actual profit made by selling 1 ltr bottles by both of them is different due to different selling rates.
The Cost for Ramesh and Suresh might be totally different. So the profit as well.
The whole data, if collected should bear certain time period , say 6 months, 1 year etc.
From season to season, the rates differ. Not to the direct customer, but to the distributor. Again the profit money will vary.

(You can read an article where we have discussed whether a Mineral Water Business is really profitable.)

Mineral Water Plant Profitability Costing

Watch the Video and you will understand how we train you on calculating your detailed Plant Cost Calculations. Even existing Plant Owners also attend this Training which actually brushes up their knowledge on this aspect and helps them further on choosing right products in future as well !

5 Steps To Arrive At Profit Margin :-

1) Know Your Business Model

This is the starting point to all. Whether you are going to Produce your own brand, or just to Distribute other’s , Going for a Franchise Model or getting it done from other manufacturer on a Tri Party Agreement. What is your Driving Factor, will decide your Business Model.

# During our Live Training, we conduct a Session in Which We Discuss Various Models and their features in details.

2)Decide the Market

This is also the primary consideration. Market to Market the Selling rates differ, so the Profits as well. The Costs also vary. This too affects the Profit Margin.

3)Define Your Product Mix

This is the variants you decide to introduce into the market, with quantities defined clearly. A Financial Statement can only be drawn on exact figures. Begin with some hypothetical figures, even if you haven’t yet decided this. During our Live Training, we do guide you on how you can do a Local Market Survey Initially.

4)Define Your Costs

Mineral Water Plant Cost is not just the prices of machines put together. It’s normally a totally wrong consideration by entrepreneurs before they are willing to setup their plants. We have explained in details on the following 2 posts very clearly about the subject. Look at them :-

5) Create Time-Bound Financial Projections

As we have seen from the above table; you will arrive at the profit margin percentage only over a period of time. Typically 3 years. Once you are ready with the above 4 steps, you should approach a financial advisor to get the Financial Projections done in a proper way. During our Live Training, we conduct a special session in which we compare 3 popular Models head to head and arrive at the most important consideration :- the R.O.I. which we discussed at the very beginning of this article.

Conclusion

The profit margin calculation is not as easy at it seems. So, do take conscious decision before setting up a mineral water plant. After understanding that almost 50% mineral water units close down every year; we have concluded that they do not close down due to competition; but due to wrong calculation basis, and taking steps in a wrong direction. If possible, attend the next Mineral Water Plant Training.

Watch the Video Below which covers a brief history of the Mineral Water Plant Trainings we have been conducting since 2015.