An H2O market gusher

Water: Bolstered by success with Safeway and Costco, a Clarksville company aims to expand.

March 11, 2002|By TaNoah Morgan | TaNoah Morgan,SUN STAFF

To Thomas Pignataro, water never tasted so good.

More than a decade after starting Brick House Farm LLC and several starts and fits with former partners, Pignataro is finally ready to see his Clarksville bottling company advance in the water market.

With new partners, $700,000 worth of new equipment, plans for acquiring more land and a waiting list of customers, Brick House Farm is positioning itself for expansion.

Only one other water company in the state - Green Spring - has both a bottling operation and a source in Maryland.

Deer Park Spring Water, owned by Nestle SA, still uses its Western Maryland source in Deer Park, but it shut down its bottling operation last year. The company trucks the water from Maryland to its new bottling plant in Pennsylvania.

"We can compete now," Pignataro said, showing off the new bottling, labeling and capping equipment the company recently purchased. "I worked 10 years and I haven't gone anywhere. Now I want to go somewhere."

The company, which bottles its water under Safeway's label, last month began selling water in Costco warehouse clubs in Pennsylvania and Maryland under its own Brick House Spring label.

And there is demand from other grocery chains for the firm's water, particularly for distilled water. So Pignataro said he plans to buy a second water storage tower within six months and set up three distillation plants that would produce nearly 72 million gallons of distilled water a year.

A small distillation plant, to be operated in Brick House's production room will produce about 1.8 million gallons a year, and will be up by the end of the month, he said. He has plans to erect two other, larger distillation plants on another property.

"As soon as we get the distill machine running, it'll open the door," he said. "We'll have the best location on the East Coast."

The bottled-water industry has been growing tremendously over the past decade. Between 1990 and 2000, production and sales more than doubled, according to the International Bottled Water Association.

About 500 companies produce bottled water in the United States. Most of them are small, regional operations catering to the home and office markets. Last year, the bottled-water industry was a $6.5 billion wholesale market, according to Beverage Marketing Corp., an industry research and consulting group.

The bottled-water market does not show signs of slowing. According to the IBWA, Americans drank 18.3 gallons of bottled water per capita in 2000, and they are projecting that figure to grow to 23 gallons per capita.

The hottest market segment in retail is the single-serve size, said Stephen Kay, vice president of communications with IBWA.

"The largest growth is in the single serve, with a rate just under 30 percent," he said. "It is predicted that bottled water will be second behind carbonated soft drinks by 2005."

That's good news for Brick House, which is also entering the single-serve market through its contract with Safeway.

But while the bottled-water market has been soaring, Brick House Farm has had ups and downs.

Pignataro started the business in 1990 with four partners and $3.5 million in equipment - most of which Pignataro financed personally - to tap into the Cockeysville Marble aquifer that runs beneath his property in Clarksville, pump the water, filter and bottle it. The company did not start selling water until July 1992, but it got off to a fast start.

A month later, Hurricane Andrew ravaged Florida, and Brick House Farm gained some publicity locally when it donated water to the victims.

A year later, the water took third place at a tasting contest in Berkley Springs, W. Va., and in 1994, it took top honors. By that time, the company had a contract with a drink supplier to 4,000 restaurants and convenience stores in Maryland, Washington and Virginia, and its Brick House Spring brand water also was sold in Valu-Food stores.

The company's other label, the "premium" Taro brand, was on the shelves at 10 Giant Food stores, and the water company was expecting revenues of $6 million.

But revenues soon dried up.

The drink supplier company and Valu-Food went out of business, and the Giant deal went sour because of problems with the distributor, Pignataro said.

Brick House had not turned a profit, and the company was unable to follow through on plans that focused on airlines and theme parks and starting a delivery service to offices and homes. To make matters worse, disagreements between Pignataro and his partners became so large that Pignataro shut down for three months in 1996.

By 1999, the company picked up some steam.

Brick House gained a contract with Safeway to bottle spring water under the grocery chain's label. The contract started small, but it put Brick House in the black for the first time, with revenues of $707,000, and profit of about $100,000, Pignataro said. The growth has continued.

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