Farm Diversification

In general, the market is dominated by a small number of companies, each owning a number brands to capitalise on market segmentation.  The large number of small, local or regional producers marketing their own products adds to the number of brands.

According to market research by Zenith International and quoted by the British Bottled Water Producers, there were 1.682 biliion lites of bottled water produced in the UK during 2010, with 1.626 billion litres of UK bottled water consumed, with an estimated market value of £1.4 billion.  Still water accounts for 86% of the market in 2010 with sparkling water's share stabalised at 14% (having been 30% of the market in 1998).  The latest (2010) figures from Zenith International show a breakdown of the UK market by type of packaged bottled as:

• Natural Mineral Water = 61%
• Spring Water = 28%
• Bottled drinking waters (ie. ‘table’ waters) = 9%
• Purified water = 2%

In 2006, the Food Standards Agencyestimated that the UK take home bottled water market was worth £445m.  In 2005, the three leading brands of bottled water accounted for 15.6%, 13.5% and 6.4% respectively of the volume shares while own-labels volume share stood at 46%. The proportion of UK adults drinking bottled water was approximately 50% in 2004 and the propensity to purchase still bottled water is highest among those aged 15-24 at 58%, and declines with age to stand at just 26% among the over-65s.

The Food Standards Agency also reports that bottled water market in Scotland is worth an estimated £169 million. In 2006 the take home bottled water market in Scotland was worth an estimated £44.5 million which is equivalent to 10% of the total UK take-home market. Scottish brands account for 35% of volume sales of branded water in Scotland, with one leading Scottish brand accounting for 16.7% of the volume market share (source: A C Neilson, quoted by Food Standards Agency). The other three leading brands of bottled water in Scotland are French and account for 16.3%, 9.4% and 4.7% of the Scottish market. Own label sales account for 42% of Scottish take-home volume sales.

The proportion of Scottish adults drinking bottled water was approximately 54% in April 2006. The propensity to purchase still bottled water is highest among those aged 35-44 years, which is equivalent to 519,000 adults drinking bottled water. The consumption of bottled water declines with age, falling to 37.6% among the over 65s. In recent years there has been a rapid increase in the amount of "sport" and "kids" water sold and these innovative markets continue to expand.

Zenith International reported that in 2010 there were 123 bottled water producers in the UK.  Natural mineral water producers are registered and these can be seen at Defra's list of recognised natural mineral waters

• A constant supply of high quality water.
• Abstraction licence from SEPA (Scotland)
• Piped supply of water to the bottling area.
• Bottling and storage buildings fitted out to meet the stringent requirements of Environmental Health Regulations. 
• Planning permission will be required for change of use of existing buildings or the erection of new building

This will vary greatly, depending on size of enterprise, building and piping requirements.  Capital costs to consider include:

• Piping water to bottling room.
• Preparation of bottling room to meet Food Hygiene and Environmental Health Regulations.
• Storage Area & vehicles for handling and delivery.

Total start up costs could amount to excess of £150,000 for full-scale automated system.

Preliminary investigation of the market is the most important prerequisite. Also, water analysis can be costly.  Initial marketing and branding costs should also be considered.

Tests for mineral water can cost up to £2,500 (and have to be repeated regularly).

These will be variable, with much dependent on the particular market being targeted.  For example, distinctive glass bottles compared to standard plastic bottles.

Pre-labelled bottles and caps vary in price depending on type of bottle (glass or palstic), size of bottle (e.g. 250ml or 1.5 litres) and the quantity purchased.  Examples of current prices for different quantities of differing types and sizes of bottles from Aqueous Wholesale are:

There will also be a running cost for labels, boxes / shrinkwrapping, electricity, fuel.
Abstraction licence costs
Also rates (see Valuation of Natural Mineral Water, etc), preliminary water analysis, labour, marketing/advertising.
Preliminary and on-going water analysis.
Adequate insurance cover will be required.

Returns will be highly dependent on volume and price.

The retail price of bottled water varies greatly, depending on the type of water, the volume of sale and the outlet (e.g. retail, food service, water coolers etc).

The use of distributor or agent to help promote sales may also affect the level of return.

Stringent and expensive water analysis required.

Two year lead-time before natural mineral water production can begin – to allow for regulatory sampling and analysis to ensure water is free from harmful microbiological impurities and that its mineral content is stable.
Natural mineral water must be bottled at source.

The  Natural Mineral Water, Spring Water & Bottled Drinking Water Regulations 1999 (as amended) is applicable to the three types of bottled drinking water: natural mineral water, spring water and bottled drinking water. The Natural Mineral Water, Spring Water and Bottled Drinking Water (Scotland) Regulations 2006 are available from the Food Standards Agency along with Guidance Notes on the The Natural Mineral Water, Spring Water and Bottled Drinking Water (Scotland) Regulations 2006  detailing the proposed new (2006) laws with regard to bottled drinking water in Scotland. Producers will also have to comply with

• the Food Safety Act 1991
• Regulation (EC) No. 178/2002
• the Food Hygiene (Scotland) Regulations 2006
• the Food Labelling Regulations 1996 (as amended)

Non-Domestic (business) Rates may have to be paid on the business.  The Scottish Assessors Association (SAA) website has a searchable database (by postcode) where information about the rateable value of businesses in your vicinity can be found. They also provide Scottish Assessor Practice Notes and there is one regarding the the Valuation of Natural Mineral Water Abstraction Rights.

Food businesses have a responsibility to ensure that food is kept safe and free from contamination and this involves compliance with all relevant legislation and regulations.  The Hygiene regulations require food business operators to ensure that food handlers are supervised and instructed and/or trained in food hygiene matters appropriate to their work activities.  In addition, those responsible for the development and maintenance of procedures based on HACCP (Hazard Analysis and Critical Control Points) principles will require to undergo training in the application of HACCP. 

Advice on appropriate training requirements can be obtained from your local authority Environmental Health Department.  Training providers include SAC (www.sac.ac.uk), local colleges and the Royal Environmental Health institute of Scotland (www.rehis.org).

Training in customer service, marketing and website design/maintenance may also be appropriate; Local Business gateway providers may be able to assist with locating courses.

Through the Scottish Rural Development Programme (SRDP) 2007-2013 funding is now available for rural businesses throughout Scotland for diversification and renewable energy projects. Specifically, support is delivered through SRDP Rural Development Contracts – Rural Priorities which was launched in April 2008.