Pristine Springs Tennessees Ken Frohlich Meets Growing Demand For Pure Water

KINGSPORT, TN -- Ken Frohlich took his water business to a whole new level last year when he purchased a natural spring and bottling plant and began delivering his clients the purest of water straight from the source. Pristine Springs Water Co., provides water and coffee service to some 2,200 -- and counting -- businesses and homes throughout northeast Tennessee, southeastern Kentucky and southwest Virginia.

"We consider ourselves to be in the hydration business, and we take providing the very best water and premium coffee very seriously," Frohlich told Vending Times.

The company's spring is nestled in Tennessee's remote Appalachian Mountains. The mineral-rich pure water is free of pollutants and bottled in its plant at the source. The bottling plant, accessible by a small road, was constructed 25 years ago from timbers sourced on the land, with extra care taken not to disturb the environment in which it is situated. The protected spring is located a half-mile deep into the wilderness, connected only by underground plumbing to ensure the purity and integrity of the water supply.

The water is naturally filtered as it flows through the spring's underground rock formations, and then undergoes Pristine's rigorous multistage purification process. First it's filtered to 0.2 micron, leaving behind enough minerals to enhance its taste and provide other purported hydration and health benefits. The water is further purified through ozone and ultraviolet treatment before it is bottled. It is taste-tested and analyzed daily by Pristine's quality control team and outside third-party labs in accordance with U.S. Food and Drug Administration and Department of Agriculture standards.

AS A DUCK TAKES TO WATER: Ken Frohlich sold his 17-route vending operation to Canteen in 2010, but retained the water and coffee business, which has grown exponentially ever since.

"Some water sources are affected by external forces and contaminants. We don't have those issues," Frohlich said. "It's pure at the source, with natural minerals, which energize, create vibrancy in the body and replenish the organs. And we are in control of the entire supply chain."

Frohlich said he anticipates a growing demand from millennials and younger generations who prefer pure and natural spring water to other sources, since they are highly attuned to the contents and origin of everything they consume.

"Even though you can filter most contaminants out of water, today's younger generation is very focused on ingredients in everything they eat being natural and organic and pure from the start, and that's what our spring water offers them with total transparency and assurance of its purity right from the source," he said. "There's no worry about filtering out harmful pollutants because they were never there."

All Your Water Needs

In addition to its spring water, packaged in single-serve and 5-gal. bottles, Pristine offers bottled, distilled and purified water under its brand. The company can also custom-print the labels on its water bottles, which several area colleges and universities and businesses use as an advertising and marketing tool. Every size -- from 8-, 12-, 16.9- and 20-fl.oz. bottles of water to 5-gal. cooler bottles -- can be customized.

Pristine also specializes in point-of-use water treatment, delivering a continuous supply of purified drinking water from the water supplies of its customers -- eliminating the need for them to handle water bottles. Its standard 0.5-micron filtration process purifies municipal water to "bottled water quality," according to Frohlich, by removing bad taste and odor, lead, chlorine and cysts, among other harmful contaminants. The company manages filter changes, which vary in frequency depending on the water source and usage level.

"In general, our region has reasonable quality water, but we find that consumers by far prefer bottled water for their personal consumption. And, of course, we can provide every type of filtration desired to meet customers' needs and tastes, including reverse osmosis if that's what they want," Frohlich said. "We can expertly inform and guide them about what's best based on their water supply. Chances are, if they call us, they've identified an issue, and we then test the water. Or we know the building's water has an issue and bring it to their attention. Typically, in an aging building where the plumbing is [corroded], there will be rust streaks and brown water."

Another service Pristine provides is pure water in tanker trucks, in the event of an emergency that impacts an institution's municipal supply. "Hospitals and nursing homes can't risk not having pure water, so we pull up with 6,000 gallons on our tanker trucks and they can run off of it," Frohlich explained.

Coffee, Too

It's widely known that quality water is a vital component of the best tasting cup of coffee, and Pristine leverages its ability to provide both to its customers. "We go in with a package presenting our expertise in both water and coffee to businesses from the smallest to the largest, and many want us to provide both, while others opt for just one or the other," said Frohlich. "All of our coffee brewers have filtration or are supplied from 5-gal. jugs."

In its region, Pristine is the exclusive distributor of the Café Excellence premium line of coffees roasted by veteran office coffee service operator Anthony Valerio, whose facilities are based in Audubon, PA. The Café Excellence program includes single-cup pods with a branded brewer, which Frohlich said is increasingly preferred by many workplaces for its quality. It also is an economical, greener choice for the environment, since the pods are biodegradable.

COFFEE AND WATER: Pristine Springs customer service and technical support manager Randy Paul sees to it that coolers and brewers are in top form and that accounts are fully stocked with an increasingly diverse range of products and supplies to meet their hydration needs.

"The single-cup segment continues to grow in our market, so we provide all the equipment and brand options that we can," Frohlich said. "We also carry a wide assortment of allied products and are always adding by watching ideas and trends that engage customers and provide new revenue channels."

Beyond the workplace, Pristine provides coffee service to about 250 convenience stores and restaurants. The majority of the c-stores it serves are equipped with branded area treatments and equipment under its private-label Crown Roasting Co. banner.

Vending Roots

Pristine Springs Water Co. grew from the vending business Frohlich launched with a friend two decades ago. A native of Virginia, Frohlich moved to Los Angeles fresh out of college, where he founded National Freight Systems, a transportation and logistics services provider. In 1994, at 32 years old, he sold it to a publicly traded company. He, his wife and his young daughter spent a year touring the country before settling near his wife's hometown in Kingsport, TN.

Well-funded and eager to start his next business venture, Frohlich reconnected with a childhood friend. Dan Provenzano was a certified public accountant and had recently left his position as chief financial officer at a large real estate development firm.

"Neither of us wanted to go into business alone -- it can be lonely at the top," recalled Frohlich. So the pair researched possibilities in Tennessee's tri-cities area of Johnson City, Bristol and Kingsport, and decided to become regional franchisees for one of the nation's largest tax preparation firms. Provenzano relocated his family from Virginia, but at the eleventh hour, the deal fell through.

"So we created what we called a 'War Room' in Dan's basement," Frohlich remembered. "We'd meet every day about businesses we could start and did very thorough research. We did this for a couple of months and nothing was hitting us that was relevant to the region."

Business Opportunity?

During one of their War Room meetings, Provenzano proposed vending to Frohlich. He had a neighbor in Virginia Beach who, based on his lifestyle, seemed to have made a nice living as a vending operator. Coincidentally, Frohlich had just received a flyer in the mail for a "get rich quick in vending" presentation at a nearby hotel. Despite their skepticism, they decided to attend.

"It was so orchestrated; we saw people salivating and knew it was a scam," Frohlich said. "But four or five things they presented were factual, including stats on average sales from industry authorities."

So Provenzano modeled some spreadsheets and dug deeper, researching companies that manufacture vending machines and ordering catalogues and brochures. The partners studied established vending companies in the area and determined that the location base was 30% manufacturing and 30% healthcare, with the remainder consisting of education, government and other businesses.

They decided to "dip their toes" into vending by purchasing a business advertised for sale by a vending operator in the region who ran 18 countertop machines.

"He had been taken by a scam, and half the machines were still in his garage -- and he just wanted out," Frohlich recalled. "I told him I couldn't pay what he wanted because it was three times the prices in the brochures I had, but I offered him a few thousand dollars. We figured we'd try it and give them away or throw them away if we had to."

The soon-to-be operators stocked up on the supplies they needed at Sam's Club and were in business, establishing their vending company as GTS (Greater Tri Cities Services), later renamed GTS Refreshment Services.

"I had never done anything so easy," Frohlich said. "Every place I approached said 'yes' and that they want it now!" Provenzano and Frohlich made a five-year plan to grow the business. It wasn't long before they sold the countertop machines to a local retiree and taught him the basics to succeed in a part-time venture serving smaller accounts.

The entrepreneurial duo invested in bigger equipment and accounts, and aggressively grew their business, generating $1 million in revenue in the first year. Within a few years, the company became a dominant force in vending, with 50 employees. That swift rise was driven by sizable organic growth, coupled with a few acquisitions, including Chattanooga, TN-based Five Star Food Service's local vending operation, as well as the addition of manual cafeterias.

In fact, GTS Refreshment Services was recognized as a two-time Inc. 500 and one-time Inc. 5000 company, considered to be among America's fastest-growing private companies by Inc. Magazine.

Pure Luck

Water was not even on the operators' radar as a line of business worth pursuing. "I spent my young business career in Los Angeles where all homes and businesses had 5-gal. water coolers because the municipal water had a bad taste," Frohlich observed. "There wasn't demand in our Tennessee market, where conventional thinking was the taste of the water was acceptable."

CARRYING WATER: Pristine Springs' boldly branded trucks deliver water and coffee service to some 2,200 businesses and homes throughout northeast Tennessee, southeastern Kentucky and southwest Virginia. General manager Daniel Arnold (l.) and Ken Frohlich keep close tabs on daily operations via drivers' handheld computers, which will soon be replaced by smartphones that will transmit sales and service data from the field in real time.

But that changed one day when a sizable manufacturing plant that GTS served asked Frohlich if he could provide 5-gal. water because his competitor had dropped a cooler off for a trial.

"I said: 'Hasn't my salesman been there to present our water coolers? I will send him tomorrow,'" recalled Frohlich. He quickly called a friend in the water business who sold him a few of racks of 5-gal. bottled water, and he purchased a few coolers and cups at the local Sam's Club.

"The customer was tickled that we could provide it," Frohlich said. "I guessed on the pricing and said $5.75 for a bottle since it was around $7 in Los Angeles, and $9 for the cooler rental. I just didn't want to lose him. He wanted it, so we hauled it in on our vending trucks to keep him happy."

Provenzano, being a "numbers guy," was instantly impressed with the business model and profit margins offered by water coolers. In vending, GTS spent a considerable amount on assets and it took a long time to see a return on investments. By contrast, in the water business, the company made money on cooler rentals and water sales, while collecting a deposit on bottles to cover expenses.

So the operators created a brochure to pitch their water service and were met by an eager market of both existing and new customers.

Around the same time, GTS made its entry into office coffee service, establishing itself as one of the first refreshment service providers in its market to embrace the trend of higher-quality coffee and raise the bar in the workplace refreshment sector. "It had been a 'brown water' market and we presented a look, quality and improved image. We were well received and that business grew," Frohlich said.

New Direction

In 2010, with 17 routes, the partners sold GTS to Canteen, but retained the water and coffee business.

"We looked at vending very hard," Frohlich said. "The dynamics of the industry had changed. Obesity became a huge focus and we saw the blame on vending as a potential threat. We saw the movement toward everything being 'greener' and the need for a sizable investment in new technology. We were also concerned about forthcoming regulations and the costs associated with complying with them." At the same time, valuations for vending companies were peaking.

"We had a love for the business we built, our employees and our account base, but we were concerned," Frohlich noted. "So when Canteen approached us with an attractive offer, we ultimately accepted it."

Frohlich and Provenzano saw the water and coffee business that they retained -- Pristine Springs Water Co. -- as aligned with the "good for you" trend. They have since doubled in size, and now serve 2,200 locations in an 85-mile radius. The majority are businesses, ranging from small hair salons to large industrial and healthcare facilities; only 300 are residential customers. Provenzano returned to Virginia Beach and sold his share in the company to Frohlich in 2012.

Taught By The Best

Frohlich credits much of his success to his dedicated team of associates, and to the many industry veterans who have helped him along the way.

"I was a confident businessman, but our vending, coffee and water businesses would never would have been nearly as successful without the tools and information provided to us by industry members," the operator said. "From operators I met at trade shows, to sales reps on the street, so many people shared their wisdom. Some of the smartest operators were willing to accept phone calls and help and share information on how they ran their businesses. They didn't have to, but were just great, generous people."

He named CT Cromer, Cromer Food Service (Anderson, SC), Rob Jarrell, Automatic Vending Service (Asheboro, NC), and Aaron Spiegel, Piedmont Vending (Conover, NC), and several members of Better Vendors Association and Unified Strategies Group among the people who had an impact on his success.

Frohlich served on the boards of the BVA and USG purchasing cooperatives, which he says introduced him to some of the most successful operators in the country. "Some of them really paved way for guys like me by being open to share," he said. "They learned the hard way. Without them, I would have struggled more."

He emphasized the need for everyone in the industry to continue to work as an open, sharing team in order to attract and invigorate younger people to become involved.

"We need to find ways to bring the new generation in," Frohlich emphasized. "They may see health issues as a deterrent to being in a business that sells snacks and drinks. We need to reinvigorate and change that mindset, and paint a picture of the opportunity in new products and the high-tech evolution of machines for the good of the entire industry."

TO YOUR HYDRATION! Ken Frohlich (l.) and general manager Daniel Arnold display signature spring water, along with distilled and purified water, available in single-serve and 5-gal. cooler bottles that can be custom-labeled with a business or institution's name as an advertising and marketing tool.

A goal for Frohlich in 2016 is to expand distribution of Pristine Springs bottled water by partnering with industry members outside his territory. He also wants to be a resource to others in the industry by sharing what he's learned. "I welcome dialogue and sharing ideas to become more prosperous together," Frohlich said. He can be reached at ken@pristineh2o.com.