Demand For Pure Water Drives Growth For San Diegos Allstar

PHOTO:Roy Silver of Allstar Water Systems checks in with Adrian Brody, a client at a San Diego law firm.

His company, Allstar Water Systems, has grown exponentially ever since. He attributes this success to the steadily increasing demand for point-of-use water filtration as an alternative to 5-gallon bottles, San Diego's notoriously unpleasant-tasting and exceptionally "hard" water, and Allstar's well-established reputation as an expert in providing solutions for businesses and homes throughout the region.

Silver, a native of South Africa, had launched his first entrepreneurial venture at the young age of 22, when he purchased a burger franchise. He later owned and operated an electronics retail business before moving to the United States in search of an attractive business opportunity. He found the one-route water company in southern California through a newspaper ad.

"Every business I had been in required me to buy and sell products," he recalled. "I looked at the recurring revenue model where clients rent rather than buy systems, which from a business point of view is very appealing. I saw a lot of potential."

The small business that Silver acquired was focused exclusively on providing purified drinking water to homes and workplaces through under-the-sink water treatment systems and bottleless coolers that were finding mainstream acceptance. The company did not offer bulk bottled water as part of its services, and Silver saw no reason to add it.

He did, however, diversify to become a full-service water treatment company, serving the complete needs of the residential and commercial markets by offering not only water purifiers, but also softeners and conditioners, and representing a number of highly regarded equipment manufacturers.

A Matter Of Taste

"The market was just beginning to shift from 5-gallon bottles, so I was lucky to be onboard early," said Silver. "What I find about consumer demand for water in this market is that it's mostly about taste, not as much about safety concerns over contaminants, when you have a good, safe municipal water supply. If you can deliver great-tasting water, you win business."

Point-of-use water dispensers represent the majority of Allstar's business, with 70% of the equipment located in business and industry locations and the remainder in homes.

Allstar assesses potential clients' needs by conducting a thorough onsite analysis of their drinking-water supply. The company then explains how different water treatment systems work, and recommends the one that is best for the specific location and its particular water-use requirements.

Customers value Allstar's expertise, and their referrals have led to much of the company's steady growth. When Silver acquired his company, it had a staff of two. A big boost to the business came in 2006 when he bought local competitor Fresh Water Systems. Allstar now has 13 employees serving thousands of clients.

In 2010, Allstar became an authorized dealer for Newbury, OH-based Kinetico. That's when the operation expanded its services to include water softeners, which are in great demand in the southern California home market where hard water is common. That led to new workplace business from satisfied customers.

The Kinetico-branded point-of-use water coolers that Allstar rents to its clients are manufactured by Vertex Water Products (Montclair, CA). Silver reported that the coolers have proven dependable, hassle-free and visually appealing, and they've been well-received by customers. The majority of Allstar's installations are Kinetico's reverse osmosis systems, softeners and filters, which are made in Ohio, and he prizes them for their proven quality.

Professionalism Pays

"You have to put out a quality product or you won't survive in this business," Silver emphasized. "The last thing you want is to be back servicing an account multiple times a year."

Silver said Kinetico selected him as a distributor because he has a California C-55 water conditioner contractor's license, which many water companies do not have. That license allows the operator to install water conditioning equipment when the location requires plumbing to connect the point-of-use system to the building's water supply while bypassing the parts of the supply that do not need treated water.

There is no customer too small to serve with a point-of-use cooler, according to Silver, since the equipment is sealed and sanitary, requiring only a filter change and thorough cleaning and sterilization at intervals of six months to a year. The location's janitorial staff typically keeps the cooler surfaces and drip trays clean.

"That's the beauty of this business; it always pays to put out a rental because it's not labor-intensive," the operator pointed out. "We have thousands of single-cooler customers and many with multiple units, up into the hundreds. And you never know who will become bigger."

One Allstar client, for example, initially had 17 employees and one cooler. It has expanded its workforce to thousands of employees, now served by 500 pure-water dispensers.

Win-Win

While point-of-use coolers are appealing from the operator's point of view, Silver emphasized that they also are very attractive to customers. Clients recognize the value in paying an average $39 a month for a rental, including all service and maintenance, in an office with 20 or 30 people. That compares with upwards of $200 a month and the storage, lifting and environmental concerns associated with 5-gallon bottle delivery.

Allstar's goal is to find the best filtration solution for each of its clients' needs to reduce high concentrations of dissolved solids and remove impurities from their drinking water. Reverse osmosis is the most common and effective process for San Diego's water supply, according to Silver, who estimates that 98% of his customers opt for that treatment method.

The process removes dissolved inorganic solids by forcing tap water through a semipermeable membrane under pressure. The membrane allows only water molecules to pass through to the outlet; the separated minerals and other impurities are trapped on the inlet side and flushed down the drain.

"Most 5-gallon water you see is put through reverse osmosis and then bottled," Silver explained. "Plumbed-in RO systems deliver the same quality water. Our technicians have been in the business for years, and are very knowledgeable at installing and servicing RO systems -- these require more expertise than other treatment devices."

Less complex treatment options, which represent a very small portion of Allstar's business, include sediment filters that remove unwanted particles, and carbon filters that absorb chlorine, unpleasant tastes and odors. These systems are often installed under sinks and faucet mounts and in refrigerator water dispensers.

"We explain that the type that's right for each customer depends on the uses to which the water will be put, what they want to remove from it, the feasibility of installing the filter, the amount of treated water needed, their desire for convenience and their budget," Silver told VT.

He said his ideal prospect is one who currently is having bottled water delivered. "Their bills creep up as their enterprise grows, and they need to buy more and more 5-gallon water bottles," he said. "They may start off with two to three people, and it's not a big expense; but then they grow to 20 to 30 people. Now they're paying $200 to $300 a month and have to stack bottles in the corner and worry about running out."

Office Service Precision:The PWC-8900 from Vertex Water Products is a premium three-temperature, bottleless system. It has a built-in icemaker that can make up to 13 lbs. of ice a day, and boasts a water storage capacity of 2.7-gal., considered large for a bottleless cooler. It uses an existing water source to produce a continuous supply of clean water for offices of up to 50 people. -- vertexwater.com

"Point-of-use water treatment sells itself when we explain the convenience and our ability to provide the same or better quality water, while saving them money," said Silver. "That's why point-of-use has grown and grown, and bottled water has declined. We see steady growth all the time."

Allstar offers prospective customers a free one-month trial with no obligation.

The water expert has noticed that many competitive operations who had only provided bottled water delivery are diversifying into offering point-of-use as an option. "When we do a proposal, more of our competitors are saying they can do that, too -- but they don't lead with it, because they'd rather make $200 a month than $30 to $40 per cooler," said Silver. "We lead right in with what the majority of customers see as the best option."

OCS And Vending Partners

Silver said Allstar works hand in hand with several office coffee service and vending companies to win business, provide the best service and retain the loyalty of many of its accounts.

"OCS operators know coffee better than we do, and we know water better than they do," said Silver. "Of course we compete directly with many operators, but we work closely with others, referring business and subcontracting work to one another."

At many new accounts, Allstar installs its treatment systems alongside an OCS partner's brewer when they plumb in the equipment. Allstar also can bill a coffee service partner for its services to permit preparing a single invoice for the client, simplifying the payment process.

Allstar's alliances extend beyond its local market. If a client opens an East Coast office, for instance, Silver is able to refer the business to reliable, professional coffee service, pure water and vending providers that he is confident can serve their needs.

"When another company does the coffee and vending and we do the water, I think it's the best scenario because the client gets the best expert for each service," Silver explained. "We're very flexible and aim to please our customers; and many appreciate that having us all working together for a single solution makes their jobs easier."

Looking ahead, Silver said he anticipates more than enough new business to go around for providers of point-of-use water treatment in the workplace, based on the continual shift away from bottled water that has been the key driver growing his operation.