In the early 2000s, Voltic Ghana’s leading bottled water bottler faced a common problem encountered by many beverage companies in emerging markets: how to sell water to low-income consumers with hundreds of informal vendors already selling sachets at cut-throat prices? The segment held significant potential, but with low margins and limited brand loyalty among consumers, it was viewed as a segment with high volume but with low value. At the time, Voltic’s focused on higher income Ghanaian consumers, serviced by the hotel, bar and restaurant channels.
Rethink the business strategy
The company had to rethink its business strategy to compete effectively. Voltic realised that high transportation cost from the centralised bottling facility to the bustling markets, was hurting their bottom-line. With smaller package sizes the transportation cost per liter would increase, as sachets or pouches have poor stowability and take up lots of space. Limited infrastructure and poor transport utilisation, likely compounded the problem. So, Voltic took a radical step to decentralise its bottling through more than a dozen franchisees — bringing water sachets closer to the end-consumer.
Selecting the right partners & sharing cost
Franchisees are local entrepreneurs with the ability to invest in bottling and distribution. Voltic pays for just over half the capital cost in the partnership, with the rest covered by the entrepreneur. Voltic and the franchisees split the operating margin.
Branding & Pricing
Voltic introduced a new brand called Cool Pac and priced it at a slight premium compared to other brands in the informal market. In the low-income segment where water functions more like a commodity, Voltic changed the market — focusing on brand and quality. Even though Voltic outsourced bottling and distribution, the company maintains close control over quality and merchandising activities.
The company distributes water sachets using a network of informal street hawkers. Traders sell 500ml sachets to consumers for $0.03 per unit. Today over 10,000 street hawkers sell nearly 480,000 Cool Pac sachets daily. Following Voltic’s success, SABMiller (now part of AB InBev) acquired Voltic in 2009.