BOTTLED WATER MACHINES SEEN LIFTING TOPS' SALES

RICHARD TURCSIK

BUFFALO, N.Y. -- Tops Markets here has increased water sales chainwide after installing a bottled water dispensing system in each of its units, according to a former Tops executive whose present company supplied the systems to the chain.

Officials at Tops declined to comment about the program, but the former Tops official and local market observers said the dispensing system is also attracting greater sales of sparkling water.

"Sparkling water ranges anywhere from 9% to 15% of the bottled water category. We are achieving well over that. In the majority of [Tops] stores we are achieving around a 20% ratio," said Steven Nanula, president of Aqua Purefect, the company based here that supplied Tops with the systems.

Nanula, whose family was one of the chain's founding families, was the director of bulk foods at Tops when Ahold acquired it more than two years ago. It was during his time at Tops that Nanula became interested in the bulk water category, he said.

"[At Tops] we took a look at the bulk water category and once we tested it on our shelves we found that it outsold all of the national brand product, plus the handling of the product was considerably less for a supermarket on a shelf management standpoint. There is no storage, handling, warehousing and so on, so it made a lot of sense," he said.

"We feel very strongly that with the condition of the municipal water systems right now, and the amount of education that is going to come out of the EPA within the next 10 years on municipal water, in-store water dispensing systems will become a whole emerging industry," he said.

Although they were unable to provide specific sales figures, local market sources said Tops has scored a hit with the Aqua-Purefect system.

"Tops has been relatively successful with Aqua-Purefect, and consumers like both the bottled water and the flavored seltzers. They expose enough space to it in the stores, and most of the stores have it," said one observer.

"Aqua-Purefect is a much better product than traditional bottled water, which is sometimes salty. Aqua-Purefect is not salty and has a nice, clear taste. The sparkling waters are also good, and the dispensing system is very popular with families with children," said another source.

Local observers said water dispensing machines are gaining in popularity in upstate New York.

"Wegmans also has a water dispensing system and they have done well with it," said one.

After Tops was sold, Nanula's family started a firm called Nanco, which counts Aqua Purefect among its holdings. Aqua Purefect markets a line of in-store machines that dispense chilled water and flavored seltzers. A unit that dispenses fruit drinks is also being tested.

At Tops, cashiers apply a color-coded return UPC sticker to the bottles, allowing for refills to be sold at a lower price than a first-time purchase. Other chains with Aqua Purefect apply the stickers at the customer service desk.

Tops is merchandising one-gallon bottles of Aqua-Purefect water for 79 cents the first fill, and 49 cents for subsequent refills. First-fill 1-liter bottles of seltzers are 79 cents, with refills costing 49 cents, while first-fill 1.5-liter bottles are 99 cents, and 69 cents for a refill.

But some local observers said returnable bottles are a drawback in this age of convenience.

"Aqua-Purefect has its pluses and minuses. It is very convenient, but many shoppers forget their bottles and end up buying more bottles," said one.

"It is inconvenient to have to wash the bottle out and remember to take it back to the store with you, so many shoppers simply buy a new bottle even though it is more expensive," said another market source.

Nanula said Aqua Purefect will be launching a fruit juice and juice drink option for the dispenser, enabling the dispensing system to compete with "the Snapples of the world" by offering such flavors as cherry, strawberry and peach.