Water Companies & Bottled Water - Finland

Finns tap arctic water supply for Arab exports
Tuesday, April 13, 2004
By Daniel Frykholm, Reuters

HELSINKI The land of a thousand lakes wants to sell you some of its water. With a seemingly
endless supply of the cleanest ground water in the world, Finland's capital Helsinki has set
up a company that bottles and sells what Finns get through the kitchen tap.

Nord Water won its first bulk order in January, to deliver 1.4 million bottles of water to
Saudi Arabia, and is now vying for an extension that could multiply its business in the parched
desert country tenfold. The company's head, Ismo Raty, returned to Finland in March from negotiations
in Saudi Arabia's capital Riyadh. "They were very positive. We've been trying to get a frequent supply
contract, and we are very close now. It could be something like 12 million bottles per year," Raty said.

The eight-staff firm has quite a way to go before it can claim to compete with heavyweights like Danone which sells 1.5 billion litres of top brand Evian every year, but Nord Water says it has a competitive edge in coming
from a country that topped the United Nations 2003 water quality indicator."Our quality is very high. We've tried to build an image of this arctic northern country with clean nature and clean water," Raty said. "We try to position ourselves in the premium class, but we have to be a bit cheaper to compete."

Hundreds of millions of liters of water are processed every day at the Helsinki water authority, where Nord Water has its bottling plant, after surging through a 120-kilometre (75-mile) rock tunnel from Lake Paijanne up
north. The source is one of more than 56,000 sizable lakes in the sparsely populated Nordic country, one-tenth of which is covered with water, and Helsinki Water has environmental clearance to use five times more than the
70 billion litres it produced in 2002.

Water the Next Oil?
The United Nations expects booming populations, pollution, and global warming to cut the average person's water supply by one-third in the next 20 years and says water scarcity could affect 7 billion people in 2050. The market for bottled water is also growing rapidly, not just in developing countries where it is needed because it is clean, but in the west where it is a lifestyle choice among increasingly health-conscious consumers.With this in mind, the export organization Finpro has studied if water could be Finland's next export success story, after Nokia's mobile phones and the pulp and paper from the vast forests that cover two-thirds of the country.
"There are big opportunities because there is a shortage, and also, there's the trend. Here in Finland I'd never have thought I'd be so stupid as to buy water by the bottle, but now you see it here too," said Finpro information head Eeva Artimo.

Nord Water is not the only Finnish firm trying to profit from the country's image of cleanliness and the global shortage of water. Privately owned Heinolan Viqua boasts that its Vellamo brand is "the purest natural mineral
water on Earth" and Finn Spring Oy says it lies "far from big cities as a part of the unspoiled Finnish nature."

Fierce Competition
Nord Water, whose most recent order came from Congo, is targeting markets other than Europe or North America, where brands like Evian and Nestle's Perrier reign supreme and a price war on the $9 billion U.S. bottled water
market has pitted Coca-Cola and Pepsico against each other. But even in the Arab countries, grabbing a foothold in the market may prove difficult, with fierce competition from local brands that sell less-pleasant tasting but lower-priced purified sea water. "We are facing a challenging moment. Now we are in the shops (in Saudia
Arabia) and have to succeed there," Raty said. "It's really tough to take market share.... In the Gulf area, there are 700 brands of bottled water." And Finpro has warned entrepreneurs that entering the drinks business may prove more difficult than it seems. "If you have a good water well in your backyard and look at the (high)
prices on the supermarket shelves it seems like a good idea, but it's actually quite complicated," Artimo said, pointing out the costs and difficulties of the bottling process. "Also, you need good contacts. If you're going to the Arab countries you need to know the sheikhs and the princes. And the competition is very hard."
Source: Reuters
http://www.enn.com/news/2004-04-13/s_22722.asp