Ever since one smart business man started packaging water in sachets in South West Nigeria in the mid 1990’s, the production and sales of pure water (as it is popularly called) has become a big industry with an annual turnover estimated to be in excess of NGN20 billion. In Lagos alone, it is estimated that there are more than 100 water production facilities with some of them grossing an average of NGN10 million in annual profit.
Thus, the business of pure water production and sales is very lucrative and will remain so for a very long time. The reason is simple: Nigeria is located within the tropical region and experiences sun for most part of the year. This means that people are always in need of water while on the road, at work and market places due to the effect of hot weather.
Nigeria is inhabited by over 180 million people and estimated to increase at the rate of 3 percent annually. This large number of human beings will continue to need clean drinking water which unfortunately is in short supply due to poor public water supply system. For most of the population, pure remains their major source of clean drinking water because, bottled water is relatively expensive and at one time was the exclusive preserve of the wealthy class. Private sector investment is therefore badly required to support the efforts of the public water works.
The demand for clean drinking water far exceeds supply. Currently, it is estimated that over 450 billion liters of water are consumed daily, excluding those for other domestic uses. Obviously government cannot sufficiently meet this need due to poor investment in water supply and the competing need for resources at her disposal. This is what has created a profitable opportunity for private sector initiative in water business.
A modest investment in a pure water production facility will yield you a good return within a short period of time. It is also a kind of investment that will qualify you to access development finance funds from institutions like the Bank of Industry and the Central Bank of Nigeria.
What You Will Need to Set Up a Sachet Water Production Plant.
Setting up a sachet water production and sale require a good amount of investment both in terms of money, time and management. But the good thing here is that it is scalable which means that you can still start small and grow big later. However, the following are the standard things you will need to put in place irrespective of the scale you want to operate.
- Factory Premises
An essential statutory requirement is that the building must not be residential; hence nobody is expected to live in the building or any other house within the same premises. The factory must be fenced round with good gate and must be designed to enhance work flow. The factory must be designed to have:
- Production Area – this is where your machines will be installed,
- Raw material store
- Finished Goods store
- Administrative Area
- Convenience Area (This will have the cloak room and rest rooms)
The factory must not be sited near a cemetery, abattoir, quarry, sewage treatment plant, saw mill, oil depot and any such activity that could be a source of contamination for the production of portable and safe water. It must also meet general safety standard as required by the Factory Act. In this regards, you must install fire extinguishers, fire blankets and sand buckets.
- Source of Water
The source of water can either be from the public mains or a borehole. However, we know the challenges of relying on public source for water, hence people who run pure water business depends on borehole.
It is very important to note that use of dug out well is not allowed as a source of water for your pure water factor. Depending on the topography, your borehole must have a minimum depth of between 100ft and 150ft and must be 30 – 50 meters away from the nearest septic tank which may or may not be within the premises.
This is required for the storage of water and it can either be an over head tank made of PVC or stainless steel or an underground reservoir made of concrete walls and completely tiled.
- Diesel Generator
You will need a good generator to power your machines. Installing a good generator is of utmost importance because of the epileptic nature of public power supply system in Nigeria. The capacity of the generator you will install will depend on the size of your factory and the number of equipment that need to be powered. For a small scale facility a 20 – 30 kva diesel generator will do.
- Register Your Business
You will need to register your business or incorporate it if you are using the limited liability model. There are many advantages that you get by registering your business and the regulatory authorities, particularly NAFDAC in the case of water production will not listen to you if you are operating without a legal cover for your business.
- Register your trade mark
You must register the name of your water under the trade mark laws. Trade marks registration can be obtained from the ministry of industry, trade and invest,ent. Registration the name of your water is essential to protect it from be used by a competitor. In addition to this, you must also register your logo. These trademarks are what gives you your brand identity and you must do all that is necessary to protect your identity. Consult your lawyer to help and guide you on this.
- Procure and Install Your Equipment
The essential equipment you will need to operate your pure water factory include: water treatment plant, water sterilizer or micro filters and automatic sealing machine. Other machine you will have to acquire will include submersible water pump, surface pump, plumbing dittings and aeration faucets. These machines can either be locally fabricated or imported. The choice is yours depending on your financial capacity. From experience, many entrepreneurs in this sector began with locally made machines, build capacity and thereafter upgrade to imported machines, mostly from China.
If you have the capital you could have a laboratory or quality control department as part of organic function in your business to test finished products for quality. Otherwise, use third party labs for this.
- Get NAFDAC Registration
This is very important. The law requires that any organization engaged in the production and sale of food and drugs must have the product registered by NAFDAC. NAFDAC will give you an approved number for your water on satisfactory inspection of your factory and payment of necessary fees. The number is a testimony that your water is good enough to drink. I must add here that NAFDAC is stepping up on its regulatory role because of the activities of dubious business people who take advantage of the boom in the water production business to push unclean, untreated water that is injurious to health. If you are to do this business, you must endeavour to play by the rule.
- Distribution System
You can get a delivery van and employ sales and marketing staff to distribute the water or use contract sales people. Acquiring a delivery van gives you control of sale process. I have also seen pure water producers who rent trucks to distribute their water. However the problem with renting is that it adds to your running cost.
Cost of setting a Sachet Water Factory
How much will you need to start sachet production and sales business? It all depends on the scale you are interested in. With about N5 million or less, you can start a small scale water production factory with a capacity of say 400 bags a day. The profit potential for this scale of production is huge. Our estimate is that a factory of this scale will give you a profit of about N2 million annually after taking care of all expenses.
If you are interested in pure water production and sale, the first thing you need to do is to embark on feasibility studies to understand all the intricacies as well as access the viability before you commence.
Investment in sachet water (pure water) factory is a lucrative one if you get act right. By getting your act right, you will ensure that you have all the necessary approvals, particularly, NAFDAC registration and implementing a strong marketing strategy because the market has become competitive in view of the many brands available today. Focus on quality to differentiate your brand from the crowd.
If you require help with the ground work including factory layout, sourcing of machinery and raw material as well as registration/incorporation of your business, patent and NAFDAC approvals, and/or with the development of a bankable business plan, feel free to contact us at kobotalk.