Innovating its way to success

In a crowded market, a focus on innovation clearly makes a difference.

Differentiating your brand and product is one of the most important factors to consider; more so if your company and your competitors are basically selling the same item.

This was the challenge that Carson Tan faced when he built up the Aquabest brand from a single bankrupt water station to one of the largest water refilling station chains in the country with over 700 stores nationwide.

The story of Aquabest begins in 1997, when Carson Tan and a group of friends decided to enter the fledgling water refilling industry with a single store called Bestlife in Diliman. At the time, the deteriorating water supply in Metro Manila caused bottled water to be popular among the well-off who could afford it.

Vigorous demand for clean potable water caused exponential growth in the number of water stations. Overnight, there was a water store in every corner leading to intense competition as everyone fought over the same customers. This growth continues to this day with the Department of Trade and Industry (DTI) estimating that there are around 20,000 water-refilling stations in the country.

The combination of increased competition and mismanagement soon drove the company to the brink of bankruptcy. While the other partners wanted to give up, Tan thought otherwise and worked to raise a million pesos to buy out the other partners in order to reorganize the company.

Turning around the company was easier said than done as most of the million pesos raised went to paying off creditors. “We had to immediately pay P850,000 to our creditors because if we didn’t we couldn’t get the needed supplies. So you can imagine the difficulty of running a company with only P150,000 in operating capital,” says Tan adding that he literally had to start with nothing in the office except two tables and a skeleton workforce.

In restructuring the company one of his main challenges was how to differentiate Aquabest from the mom and pop stores that flooded the market. For years the water refilling station industry was locked in a vicious cycle of price wars.  Everyone was slashing prices while at the same time adding more and more stages of filtration to the treatment process. This reduced profit margins while increasing costs.

Initially, the company followed suit in adding filtration stages and slashing prices. However, Tan soon realized the unsustainability of this approach and decided to differentiate the Aquabest brand by adopting the principle of Quality, Service, Value, and Technology (QSVT).

The company invested in the best water filtration and water treatment technologies by partnering with equipment manufacturers and securing exclusive rights for certain technologies.  These technologies include the company’s signature Grander technology and Tanwing Ozone. Investing in technology he says increased their costs initially but eventually created savings and increased revenue in the long term.

Grander technology serves as the cornerstone of the company’s water treatment technologies. It works by altering the molecular structure of water to facilitate easier absorption into the body. The Tanwing Ozone technology has both the capabilities of ultraviolet radiation and ozone due to its unique dual wavelength emissions to destroy bacterial and viral contaminants in water.

He also pioneered integrating laundromats with water refilling stations to utilize the water discarded by water stores as part of the treatment process. This innovative concept allowed his stores to offer more services and has since then been adopted by other industry players. He also worked to secure ISO 9001 certification from Bureau Veritas and to date they are the only water franchise in the country to receive this certification.

The company also developed several brands that cater to different market segments.  Its flagship brand Aquabest serves customers from the B and C classes, Aquaquest is for the C and D markets, and Aquaspree, for those from the D and E classes. This emphasis on niching and developing strong brands allowed the company to grow at a rate of 100 new stores a year.

Apart from innovation in its business processes, the company also, applies a slightly different approach to franchising. Unlike other franchises, they don’t collect franchise fees or royalty fees, but rather flat and minimal monthly dues which include free, marketing and tri-media exposure, uniforms, streamers; and filters.

Looking forward, Tan sees the industry of shifting to value and service oriented competition rather than the current price based competition. Despite this he is confident that by constantly innovating the company’s will be able to compete effectively no matter what shifts the industry may experience.