WATER-FILTRATION LINES FLOW TO BOTTLED WATER AT H-E-B

CHAPIN CLARK

SAN ANTONIO -- Following a successful limited test, H.E. Butt Grocery Co. here has moved water-filtration products from its seasonal/general-merchandise aisles to bottled-water sections in more than 40 stores. It is now considering the relocation on a chainwide basis.

After a 60-day test in a single store this past fall, H-E-B decided to move water-filtration products to the bottled-water shelves in four other locations, according to executives at Brita Products Co., Oakland, Calif., which is H-E-B's main water-filtration supplier. H-E-B devotes an average of 16 feet to bottled water in its stores, they said.

Since the transition, sales of Brita products in these stores have jumped from $100 to $400 a week per store, Brita executives said. Brita is a division of Clorox Co., also based in Oakland.

As a result, H-E-B has placed Brita pitchers and replacement filters on racks extending from water and bottled-drink shelves in 44 additional stores, Brita said.

An H-E-B buyer involved in the remerchandising effort declined to comment.

H-E-B has not yet set a timetable for a chainwide relocation of water filtration, which will depend ultimately on coordination between the grocery and nonfood departments at the corporate level, Jeffrey Brainard, Brita's national sales manager, told SN during the International Housewares Show in Chicago earlier this month.

Difficulty in getting the two departments to cooperate is common at many supermarket chains, Brainard said. Brita doesn't pay slotting fees to retailers, which can rankle grocery buyers who see the space given over to general-merchandise items as lost revenue. Issues can also arise over who should get credit for sales increases.

"It's mostly driven by the political machinations of the account," he said. "The general-merchandise guy has to talk to the grocery guy. It's a challenge; it's territorial."

Nonetheless, H-E-B's move to relocate water filtration is just one example of a national trend, according to Brita and other manufacturers. Other supermarkets doing the same include Albertson's, Boise, Idaho; Publix Super Markets, Lakeland, Fla.; and Tops Markets, Williamsville, N.Y. "Most of the accounts that are having good success are putting it in the bottled-water aisle," said Charles Couric, Brita's president. Supermarkets, he added, are the fastest-growing part of Brita's business.

Retail sales of water-filtration products constitute a $450 million to $500 million industry and are growing at a 15% clip, according to Home Furnishings News, New York. Mass-market outlets account for about 45% of the total.

For bottled-water departments to piggyback filtration products makes perfect sense, Couric said.

Bottled water is selling well in supermarkets -- a total of $1.1 billion for the year ended Dec. 6, 1998, which represents a 15.1% increase from the prior year, says Chicago-based Information Resources Inc. -- but it is a space-intensive, low-margin enterprise.

Filtration items, on the other hand, carry much more attractive margins, and the fact that millions of consumers have already bought pitchers and faucet-mounted units means the potential market for replacement filters, which take up relatively little shelf space, is huge.

"Supermarkets are finding they can really drive this business through filters," Couric said.

The minimum advertised price for a Brita pitcher filter is $6.90, and $18.90 for a three-pack, he said.

Brita plans to spend $30 million on TV advertising this year, Brainard said. For each retail partner, Brita converts 10% of its revenue into cooperative promotional funding.