Liquid Assets

By DON SHILLING
VINDICATOR BUSINESS EDITOR
Bursting forth from rocks underground, water from a Poland Township spring is clean, good-tasting and -- most important to some businessmen -- free.
The free part excited Frank Tombo and his partners when they leased the wooded New Castle Road lot with the spring. It allowed for a simple business plan -- buy a bottling machine, fill jugs with spring water and sell them to grocery stores.
They've done that and more. After 16 years, Pine Hollow Bottling Co. has become a successful venture that uses 13 employees to bottle and ship 3 million gallons of water a year to 28 distributors.
And yet, Tombo said he isn't sure he'd do it again if he had the choice.
Work and money
The problem? Bottling the water is far from free. And it brings a lot of headaches.
Spring water still has to be purified before it's sold to the public. Testing has to be done weekly, monthly, quarterly and annually. Then there is the cost of equipment, buildings and trucks.
For Pine Hollow, the cost of building a business around the free water has been more than $1 million.
The Pine Hollow partners, however, have made it work. And so have the owners of Alpine Natural Spring Water, who have been using a spring in southern Columbiana County to bottle water since 1995.
Three other longtime bottlers of spring water, however, have stopped using their springs. Free water just wasn't enough for them any more -- either the cost of the equipment was too high or the water source too meager.
They also found a better water source -- someone else's spring.
Switch to supplier
Gary Offerdahl, vice president of the family-owned Howland Springs Water Co., said he's enjoying the business more since the Howland company stopped using its spring and switched to a supplier who bottles water for it.
"It's taken the stress out of the business," he said.
The company traces the use of the spring back 200 years. In 1874, a resort hotel was built on the site to serve travelers who came to seek relief for various ailments.
Company officials stopped using the spring in 2000 and switched to receiving water from Distillata Co., a Cleveland-based company that bottles water from a spring in Brimfield.
"You know a company the size of Distillata will serve your every need. You know a truck will be here every morning," said Offerdahl, whose family bought the business in 1977.
Labor and equipment problems forced company owners to switch to a supplier, he said. The bottle washer broke, which meant spending either $75,000 for a new one or $40,000 to repair it. Also, three employees who were washing and filling bottles walked off their jobs in a wage dispute.
Switching to a supplier has saved $200 a week on testing, $300 a week or more on natural gas for heating the bottle washer and lowered liability insurance. The number of employees has been reduced from 11 full time and one part time to nine full time.
Howland Water relies on customer service to grow, Offerdahl said. For example, it provides customers with a calendar at the end of each year that shows their delivery dates for the coming year.
Also made the switch
Herrmann's Water in Sharpsville, Pa. also switched to Distillata 10 years ago. The water from its spring, which the company had used since 1958, now runs down into a creek.
"The business just passed up what the spring could put out," said Paul Herrmann, fifth-generation owner of the company.
The move made sense financially because it cut costs, he said. Testing the spring water cost between $12,000 and $15,000 a year. Also, the company is doing 50 percent more business while adding just one employee because the bottling operation has been eliminated.
The company has five employees. It started bottling spring water and pop in downtown Sharon in 1908 and moved to Sharpsville 50 years later.
Youngstown spring
Another spring no longer being used is on North Hine Street in Youngstown.
Wheeler Spring and Distilled Water sold water bottled on the site for decades, but owner Mary Ann Johnson shut down the operation in 2001 and merged her business with Alpine Natural Spring in Salineville.
Johnson, who now is a sales consultant for Alpine, said she decided to sell because her late husband, Mike, became ill and the equipment needed upgrading.
"As things get older, you have to put in a lot of money," she said.
The Johnsons operated Wheeler for 15 years after buying the business from an Akron attorney. Their timing was good because of the growing popularity of bottled water, and they enjoyed running a successful business, she said.
Alpine's beginnings
While some bottling companies were leaving the business, Alpine was just starting out. Mike Mercure and Paul Davis started the company after learning about the spring in 1995.
They started small, but the company has grown to employ 26 people as Alpine supplies water under its own name and those of distributors. Large customers include Giant Eagle and Culligan Water Conditioning.
Johnson said the investment in building up the Alpine business is working because the demand for bottled water continues to grow.
"For health reasons, people have a bottle of water in their hands no matter where you go," she said.
All of the distributors and bottlers said last year was a disappointing year because the wet, cool summer held back demand. In general, however, they see demand for bottled water increasing.
Testing gets tighter
Costs also are increasing, however, as the state makes testing more stringent, said Tombo of Pine Hollow.
Pine Hollow has a purification system for its water, even though it safely provided water for the village of Lowellville from 1916 to 1966. After the village switched to another source, the spring was unused until Tombo and William Olive Sr. and William Olive Jr. started Pine Hollow in 1988.
The purification system makes sure the water has the right mineral content and kills any potential bacteria.
Pine Hollow successfully switched from a retail company to a wholesale company in 1995. Delivering water to homes and businesses is now handled by separate Pine Hollow Springs outlets that were started by friends of the Pine Hollow Bottling owners.
Gordon Bros. Water
The bottling company provides water distributors in Ohio and Pennsylvania with about 15 percent of its water being sold under the Gordon Bros. Water name. The Salem-based company has a partnership with Pine Hollow in the bottling operation of water containers of one gallon or less.
"It gets our name out all over town," said Ned Jones III, Gordon Bros. president.
Pine Hollow just learned that its Gordon Bros. labeled water received 11th place out of 128 entries at the annual Berkeley Springs International Water Tasting Competition in Berkeley Springs, W.Va.
Tombo said he'd like to expand the business a bit with an addition to its production building, but he has been blocked by township zoning regulations. Still, there's no question in his mind that Pine Hollow will continue to thrive at its current location without having to switch to an outside supplier.
He said Pine Hollow has the right customer base for its size, troubling start-up costs have been paid for and the spring has plenty of life -- the company uses 12,000 gallons of the spring's 185,000 gallon-a-day capacity.
"We hit on the formula," Tombo said. "There is a formula for business, and we have it."
shilling@vindy.com