How to Start a Bottled Water Business

Starting a bottled water business can be a lucrative venture, but it requires both careful planning and a thorough understanding of the industry.

This guide will provide a brief industry overview of the costs and earning potential that can be involved, as well as walk you through all of the essential steps you’ll need to take to get started.

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Industry Overview

The bottled water industry is experiencing strong growth globally, with the market projected to reach a value of $350 billion by 2025.

The U.S. bottled water market generates around $19.4 billion in revenue annually, with a compound annual growth rate (CAGR) of 5.4% from 2017 to 2022.

One of the main reasons for this growth is increasing consumer concerns over water purity and health, coupled with a growing emphasis on environmentally friendly packaging, which has driven the industry’s expansion.

As of 2024, an estimated 1,200 enterprises are operating in the U.S. bottled water industry, including both large-scale companies and smaller, independent brands, collectively selling over 14 billion gallons of bottled water per year.

This competitive landscape presents opportunities for new entrants who can differentiate themselves through branding, quality, and innovation.

Startup Costs and Earning Potential

If you’re considering whether a bottled water business is right for you, the first thing you’ll need to know is whether it’s a) affordable, and b) worth the investment. I mean, how much can you actually make running your own bottled water business?

Initial Investment Costs

Starting a bottled water business requires a significant upfront investment, with costs varying depending on factors such as the location, equipment, and scale of operations.

Below is a breakdown of the major expenses you can expect to face:

• Water Source Acquisition: This could involve securing groundwater rights, purchasing or leasing access to natural springs, setting up a private well, or establishing contracts with municipal sources. Costs can range from $10,000 to $100,000, depending on the source and region.
• Bottling Equipment: The cost of purchasing or leasing bottling lines for production can range from $150,000 to $1,000,000, depending on factors such as equipment capacity, automation levels, and whether you opt for new or second-hand machinery.
• Facility Costs: Setting up a production facility, whether leased or purchased, involves significant costs. These can range from $50,000 to $500,000+, depending on the facility’s size, location, and the specific equipment required to meet your operational needs.
• Licenses and Permits:  Bottled water businesses must comply with federal, state, and local regulations, including FDA registration, state bottled water permits, environmental permits, and local business licenses. The total cost of obtaining these licenses and permits is typically in the range of $50,000+, depending on your location and the specific regulations that apply to your operation.
• Branding and Packaging: The cost of creating custom bottle designs and labels, as well as sourcing eco-friendly packaging materials, generally falls between $20,000 to $50,000. Keep in mind that ongoing packaging costs will scale with your production volume, so higher sales will increase your total packaging expenses.

Note: Keep in mind that, while opting for second-hand equipment may lower your initial investment, it will likely require more maintenance, potentially leading to higher long-term costs.

Operational Expenses

Running a bottled water business involves a range of ongoing costs, including employee wages, utilities, transportation, and facility maintenance. Below is a more detailed look at the key operational expenses you will need to plan for:

• Staffing Costs: The annual cost of hiring employees to operate machinery, manage distribution, and oversee quality control can range from $30,000 to $100,000 per employee, depending on their experience and specific roles within the business.
• Utilities and Maintenance: Depending on the size of your operation, you can expect to pay between $5,000 and $40,000 per month in utilities, maintenance, and quality assurance tests.
• Marketing and Advertising: For small-scale bottled water businesses, marketing expenses typically range from $10,000 to $50,000 annually. This budget generally covers local advertising, social media campaigns, and packaging design.

Note: If you’re planning to scale your business and target a broader market, be prepared for significantly higher marketing and branding costs, as larger-scale operations often require more extensive campaigns and promotional strategies.

Revenue Potential

Once established, a bottled water business can generate substantial revenue, depending on its scale and distribution. Wholesale prices typically range from $0.20 to $0.50 per gallon, while retail prices for individual bottles (16-20 oz) usually fall between $1 to $2.

On average, successful small- to mid-size bottled water businesses in this sector generate $500,000 to $5 million annually, with profit margins ranging between 10% and 35%.

Larger regional and national brands, on the other hand, can reach revenues in the $10 to $25+ million range.

8 Steps to Starting a Bottled Water Business

In order to start a bottled water business, you’ll need to complete the following steps:

1. Planning Your Bottled Water Business
2. Registering Your Business
3. Finding and Securing the Right Location
4. Developing Your Brand and Packaging
5. Getting a Business Bank Account and Credit Card
6. Setting up Business Accounting
7. Getting all Applicable Licenses and Permits
8. Obtaining Business Insurance

We’ve broken each one of these down in more detail below.

Exploring your options? Check out other small business ideas.

Step 1: Plan Your Bottled Water Business 

Before diving into your bottled water business, you’ll need to spend some time conducting thorough market research on important factors like target audience preferences, available water sources, and existing competition.

This will help you assess the demand for bottled water in your target market, identify competitors, and understand your audience’s preferences.

Your plan should include projections for startup costs, operating expenses, and revenue streams to understand how much capital you’ll need and when you can expect to reach profitability.

Additionally, you should outline how you’ll differentiate your brand; this can be through sustainable packaging, water source purity, or any other creative approach that will set you apart in the market.

Finding a Suitable Name

Choosing the right business name is both important and challenging.

This is because your name will need to be eye-catching, memorable, and (at least somewhat) related to your industry.

If you don’t already have a name in mind and need help, you can visit our How to Name a Business guide or use our Bottled Water Business Business Name Generator tool. 

If you do have a name in mind, we recommend researching the following:

• Your state’s business records
• Federal and state trademark records
• Social media platforms

You will also need to make sure that your business’s name is available as a domain — this is your website’s URL address.  

Note: If you’re planning to operate a sole proprietorship, you might want to operate under a business name other than your own name — known as a “Doing Business As” (DBA) name.  

Selecting a Water Source and Type

Choosing the right water source is a critical decision for your bottled water business, as it will significantly impact your costs, production processes, and brand positioning. Below, we have outlined the main options to consider:

• Municipal water (treated tap water): This is the most accessible and cost-effective option, but it requires extensive purification in order to meet quality standards. It’s often marketed as purified or distilled water.
• Natural spring water: Sourced from underground springs, this option is often marketed for its purity and natural mineral content, making it appealing to health-conscious consumers. However, it can be more expensive due to extraction and transportation costs.
• Artesian well water: Extracted from deep underground reservoirs, this water is naturally filtered through layers of rock, offering a unique selling point. It’s perceived as high-quality but requires specific drilling rights and can be costly to access.
• Mineral water: Sourced from mineral springs, mineral water contains naturally occurring minerals like calcium, magnesium, and potassium. It’s a premium product with strict regulations on mineral content, making it a popular choice for health and wellness brands.
• Purified water: This type of water typically starts as municipal tap water or well water and then undergoes a rigorous purification process, such as reverse osmosis or distillation, to remove impurities and contaminants. It’s cost-effective and widely available, appealing to a broad market, though it lacks the natural minerals some consumers prefer.

Each source comes with its own regulations, costs, and marketing implications, so make sure to weigh these factors carefully before making your decision.

Step 2: Register Your Business

One crucial aspect that cannot be overlooked when starting your bottled water business is the importance of establishing a solid business foundation. While sole proprietorships and partnerships are the most common entity types for small businesses, they’re a far less stable and advantageous option than LLCs.

This is because unincorporated business structures (i.e., sole proprietorships and partnerships) expose you as an owner to personal liability for your business’s debts and legal actions, while LLCs protect you by keeping your personal assets separate from your business’s liabilities.

In practice, this means that if your bottled water business were to face a lawsuit or incur any debts, your savings, home, and other personal assets could not be used to cover these costs. On top of this, forming your business as an LLC also helps it to appear more legitimate and trustworthy.

Note: If you’re interested in more information before getting started, we recommend having a look at our state-specific How to Start an LLC guide (DIY) or our in-depth Best LLC Services review (for those opting for a professional service).

Step 3: Find and Secure the Right Location

The next step you’ll want to take is to find (and secure) the right location for your bottled water business.

In the sections below, we’ve broken down a couple of the key factors that you’ll need to consider when doing so.

Renting vs Buying Property

Deciding whether to rent or buy property for your bottled water business will depend on your financial situation and long-term plans.

While renting may require lower upfront costs and provide flexibility, buying a property for your business can be a significant investment and offers long-term stability as well as potential appreciation in value.

Access to Water Supply

Your location should have a reliable and approved water source that meets local health and safety standards.

Whether you’re sourcing from municipal water or a natural spring, selecting a location that is as close to the water source as possible will minimize transportation costs and improve overall operational efficiency.

Proximity to Distribution Channels

In addition to being close to your water source, it’s essential to choose a location that offers easy access to major highways, transportation hubs, and distribution centers.

This will not only reduce shipping and delivery costs but also improve your ability to meet demand by allowing faster and more efficient transportation of your bottled water to retailers, wholesalers, and end customers.

Zoning Considerations

You will also need to make sure that your prospective property is zoned for commercial use and complies with all applicable local and state regulations (discussed in more detail in Step 7).

Step 4: Develop Your Brand and Packaging

Branding and packaging play a pivotal role in differentiating your product in this relatively crowded market.

A well-executed brand identity and attractive packaging can elevate your product, drive sales, and foster customer loyalty.

Below, we have outlined the key components you’ll need to focus on to develop a strong brand and appealing packaging:

• Design an Attractive and Distinctive Label: Create a label that grabs attention and communicates the purity and benefits of your product.
• Choose the Right Bottle Sizes and Shapes: Offer a range of sizes and choose a bottle design that reflects your brand’s identity and appeals to your target market.
• Develop a Compelling Brand Story: Consumers increasingly care about the story behind the product. Your brand story should highlight what makes your water unique, whether it’s the source, environmental benefits, and/or health advantages.

It’s also important to engage your audience on social media in order to build a loyal community around your brand. Regular interaction, such as sharing behind-the-scenes content, responding to comments, and leveraging influencers, can create stronger connections with your customers, increase brand awareness, and drive loyalty.

Step 5: Open a Business Bank Account and Credit Card

Using dedicated business banking and credit accounts is essential when operating as a business owner; this is because when your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) can be at risk in the event that your business is sued.

In business law, this is referred to as piercing your corporate veil and is a result of the fact that not having a separate business bank account can be interpreted by some courts as evidence that you are not treating your business as a separate financial entity.

As a result, you could lose your limited liability protections even if you’ve registered a separate business such as an LLC or C Corp.

There are also a variety of practical and economic benefits to this step, such as a larger access to business loans and a more legitimate look.

Getting a business credit card can also be a great idea as it can help you build your company’s credit history from the start.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Step 6: Set up Business Accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business.

You can categorize accounts specifically for bottled water business operations, including:

• Water sourcing costs
• Treatment and purification expenses
• Bottling and packaging materials
• Production equipment maintenance
• Distribution costs
• Marketing expenses
• Staff salaries

This should provide clear visibility into your business’s financial performance and aid in accurate cost analysis.

Note: You can have a look at our LLC Expenses Cheat Sheet for more information.

Step 7: Secure All Required Licenses And Permits

The applicable licenses and permits that you’ll need will largely depend on your location, the type of water source you’re using, and the scale of your operations.

Even so, we’ve compiled a list of some of the common licensing regulations that you’ll likely need to satisfy in order to operate legitimately.

FDA Registration

All bottled water facilities in the US must register with the Food and Drug Administration (FDA) in order to comply with federal regulations and ensure product safety.

Below we have outlined the key requirements for FDA registration and compliance:

• Registering your facility: You will need to submit your facility’s details, including location and contact information, through the FDA’s Food Facility Registration Module (FFRM).
• Filing a process for each type of bottled water: You will need to provide details on water sources, treatment methods, and bottling processes to ensure safety.
• Adhering to Good Manufacturing Practices (GMPs): You will need to ensure your facility meets FDA standards for plant design, equipment maintenance, and sanitary conditions to guarantee safe water processing and bottling.

Keep in mind that your bottled water products must consistently meet FDA standards, and your facility may be subject to periodic FDA inspections to verify ongoing adherence to safety and sanitation regulations.

State Bottled Water Permits

In addition to federal regulations, most states impose their own requirements for bottled water production.

These state permits often involve:

• Water source approval: You will need to have your water source inspected and approved to ensure it meets your state’s safety standards.
• Production facility inspections: Your facility may undergo regular state inspections to ensure compliance with local health and safety regulations.
• Product testing requirements: States frequently require ongoing testing for contaminants, with test records maintained to prove compliance.

Environmental Compliance Permits

Depending on your water source and production processes, you may need environmental permits related to water usage and wastewater disposal.

These ensure that your operations comply with state and federal environmental regulations and do not harm local ecosystems.

The Environmental Protection Agency (EPA) provides guidelines and oversees the issuance of these permits on a federal level, though it’s important to note that some states can also impose their own regulations.

Step 8: Secure Business Insurance

In addition to securing the necessary permits and licenses, you will need to obtain the right business insurance.

Note: Even if you form an LLC, purchasing business insurance is still a good idea. This is because an LLC structure protects your personal assets, not your business’s.

While specific coverage needs may vary based on factors such as location, size, and unique risks, there are several key types of insurance that most bottled water businesses should consider.

Product Liability Insurance

Product liability insurance is arguably the most important coverage for a bottled water business, as it protects against claims of illness, injury, or damages caused by the consumption of your products.

The cost for this usually ranges between 0.25% and 0.5% of your annual revenue, meaning that a business generating $1 million in revenue would expect to pay between $2,500 and $5,000 per year.

Given the risks associated with consumable goods — such as the potential for contamination — this coverage is vital for safeguarding the long-term security and stability of your business.

General Liability Insurance

General liability insurance is a foundational coverage that’s essential for a bottled water business because it protects against claims of bodily injury and property damage that may occur on your premises.

The average cost for this insurance starts at $500+ per annum depending on the size of your operation and its risk profile (i.e., if your facility is open to visitors, distributors, or third parties).

Property Insurance

Property insurance is essential for safeguarding your bottled water business physical assets, such as the facility, buildings, equipment, and inventory.

You should expect to pay between $5,000 and $25,000 annually for property insurance, with coverage amounts ranging from $500,000 to $5 million based on the size of your operation and the value of your equipment.

Having said that, rates can vary significantly based on factors such as your location, risk profile, and the value of the property in question.

Workers’ Compensation Insurance

Most states will require you to have workers’ compensation insurance in order to cover medical expenses and lost wages in the case of an employee injury on the job.

This protection not only helps your employees but also shields your business from potential legal claims and penalties.

The average cost of workers’ compensation insurance is around $45 per month, though this can vary based on factors like location, the number of employees and (once again) your business’s specific risk profile.

Ready to Get Started?

How to Start a Bottled Water Business FAQs

Do you need FDA approval to sell water?

No, you don’t need specific FDA approval to sell bottled water. However, you will need to register your facility with the FDA, follow Good Manufacturing Practices (GMPs), and meet FDA safety standards to legally produce and sell bottled water in the U.S.

How to start up a bottled water business?

To start a bottled water business, you will need to create a business plan, secure a reliable water source, and invest in bottling equipment.

You will also need to register your business, obtain the necessary licenses and permits, comply with FDA regulations, and establish a distribution network to get your product to retailers or directly to consumers.

How much does it cost to start a water bottle company?

The cost to start a bottled water company usually ranges between $150,000 and $1 million+.

This will vary based on factors like the size of your facility, the type of bottling equipment that you will use, and whether you’re sourcing water from a private well, spring, or municipal supply.

How profitable is bottled water?

Most bottled water businesses typically see profit margins that range between 10% and 35%, depending on factors such as production efficiency, distribution costs, and the strength of their branding.