The faucet looks futuristic, like something straight out of the Starship Enterprise. When Markus Hankammer presses the blue buttons, refrigerated water comes out – either non-carbonated or sparkling.
And when Mr. Hankammer, the chief executive of water filter maker Brita GmbH, presses the red button, a light flashes and hot water (heated to 98 degrees Celsius, or 208 degrees Fahrenheit), already filtered and decalcified, pours into his teacup. Brita, a family-owned company based in Taunusstein near Frankfurt, has set out to revolutionize the art of drinking water.
“Everyone will design his or her own water in the future,” predicts Mr. Hankammer, the son of the company founder. In the future he envisions, individual consumers will be able to add vitamins and minerals to filtered tap water as they see fit.
BWT, a Brita competitor from Austria, already sells a filter that adds magnesium to water. Although Brita is considered the market leader for home water filtration products, it is far from the only company competing in the confusing market for various types of water filters.
“The technology per se isn’t rocket science, and others also have access to it,” says industry insider Hans-Martin Blüder, head of the Insight Out management consulting firm. Nevertheless, he adds, Brita is the only real brand in the business worldwide.
Every day, a quarter of a billion people drink water that’s passed through a Brita filter. Germans use filtered, decalcified water primarily for hot beverages, while Americans, whose tap water is often highly chlorinated, use it for cold drinks. Asians prefer clear water to cook rice.
Brita has carefully tailored its products to preferences in each country, says consultant Blüder, who worked at Brita for several years. The company has also figured out how to add emotion to the brand, he explains, by transforming filtered tap water into “wellness water.”
“The quality of German tap water is excellent, which is why drinking water filters are simply pointless.”
In taking this approach to marketing, the mid-sized company from the Taunus mountains near Frankfurt is competing directly with bottlers of high-end mineral water like Nestlé and Danone.
Brita’s chief executive describes it as “environmental lunacy to ship Perrier or Fiji water halfway around the globe.” By switching from bottled to filtered tap water, he says, consumers are protecting the environment and their pocket books. Liter for liter, water from a Brita water pitcher costs about a quarter as much as bottled water – not to mention luxury bottled water brands like “Rokko no mizu” and “Bling h20,” priced at €120 ($155) a liter.
But some experts feel that not only bottled water but also water filters are unnecessary in Germany. “The quality of German tap water is excellent, which is why drinking water filters are simply pointless,” says Volker Mersch-Sundermann, a professor of environmental medicine at the University of Freiburg Hospital. “Decalcified water is only protecting the health of washing machines and coffeemakers.”
Nevertheless, Brita has been able to create a market essentially out of thin air. “If my father had conducted market research, the product would have been dead on arrival,” says the founder’s 46-year-old son.
The path from a one-man operation to a global, mid-sized company with about 1,000 employees was difficult. In 1966, failed businessman Heinz Hankammer borrowed a million deutschmarks to found the Brita company, which he had named after his daughter. He initially sold water filters for car batteries, and he later developed a drinking water filter in his garden.
Mr. Hankammer managed to win over many skeptics with his “tea test,” which demonstrated that tea tasted better without excess dissolved minerals like calcium. Nowadays Brita capitalizes on the popularity of coffee and the desire for convenience. Who wants to lug around and store cases of water anymore? Brita also develops filters for industry, which are used in coffeemakers, bread machines and steam cookers, as well as water fountains.
Sales have more than tripled since 2000. In 2013, Brita reported revenues of €332 million, with more than 80 percent coming from overseas sales. “Half a billion euros in revenues by 2020 is certainly realistic,” says Mr. Hankammer. By then, Brita expects to see €100 million in sales in China alone.
But the family-owned company remains tight-lipped about profits, except to say: “Our equity ratio is significantly above 80 percent. We are sufficiently profitable to invest in the future with our cash flow.”
The company certainly has enough money left over to sponsor a third-division soccer team, SV Wehen Wiesbaden. Mr. Hankammer, a soccer fan, has followed in his father’s footsteps as president of the club. The local club once advanced into the Bundesliga’s second tier, but has since fallen back and continues to play in the third league.
Brita is strong enough financially today that the company doesn’t need to borrow from banks, but that wasn’t always the case. There were difficult conversations with lenders when Brita was forced to shed its American business and bottled water maker Soda Club. “At the time, I swore to myself that I would never go through that again,” says Mr. Hankammer.
Brita faced another dry period in the early 1990s. The business had tanked in Germany after Schreinemakers, a German TV talk show, reported that bacteria had been found in stale filtered water for babies. But the water had not been boiled, as advised. For many hygiene experts, water filters and fountains are problematic, because they provide a favorable environment for hydrophilic bacteria. Brita counters that unsafe bacterial contamination does not occur as long as filter cartridges are replaced regularly.
The market for water filters is growing, as more and more companies, like 3M and AEG, want a piece of the pie. Even Warren Buffett is one of Brita’s competitors, now that his investment firm has acquired filter makers like Nalco and Ecowater.
Procter & Gamble, on the other hand, spun off its water filter business after realizing what a difficult market it was. “P&G failed miserably with the ‘Pur’ brand outside its home market in the United States,” says market insider Blüder. No one, not even a consumer products giant, should underestimate Brita as some “backwoods company from the Taunus mountains.”
Thes article was translated by Christopher Sultan. The author writes about environmental issues at Handelsblatt and, through lengthy experience in Japan, is a connoisseur of water from around the world. To contact her: firstname.lastname@example.org