Bottled water delivery grew again, and the water cooler market should study how
By Zenith Water Dispense Team ยท
Primo Brands reported on 5 August that its Direct Delivery business returned to growth, a quarter earlier than planned. The number is 0.4%. What produced it matters more than its size: fewer customer calls, fewer cancellations, and on-time delivery in the mid-90s. European bottled water operators have spent five years calling their decline structural. This quarter suggests part of it is service.
Primo Brands published its second-quarter results on 5 August. Net sales rose 3.8% to $1.8 billion. Adjusted EBITDA rose 5.0% to $385.0 million. The company raised its full-year sales growth outlook to 2% to 4%.
None of that is the interesting part.
The interesting part is Direct Delivery. That is the bottled water and cooler route business. It grew 0.4%, a full quarter earlier than the company expected. That business had been shrinking. It stopped.
What actually turned it
On the call, management named the causes. Customer call volumes came down. Quits came down. On-time in-full delivery reached the mid-90s.
OTIF is the grocery trade's measure of whether the right order arrived on the right day. Supermarkets have scored suppliers on it for twenty years.
The largest bottled water route business in North America stopped shrinking. It delivered on time and gave customers less to phone about. There was no new machine, no price move, no bolt-on deal behind the turn.
Why a 0.4% number matters in Europe
Bottled dispense is still around half of Europe's installed cooler fleet. In most of Western Europe it has been losing units for years. Germany, France and the UK have all shed bottled units since 2019. Spain has added them.
The standard explanation is structural. Offices convert to mains-fed point of use, meaning coolers plumbed into the water supply. Sustainability policy pushes against plastic. Buyers want fewer deliveries on site.
All of that is real. It is also incomplete.
If bottled decline were purely structural, cancellation rates would look broadly similar across similar economies. They do not. Zenith runs its own database across 30-plus markets. In Western Europe, the gap between the best and worst bottled cancellation rates is more than double. These are neighbouring economies with comparable office stock and the same suppliers competing in them.
Structural forces do not vary by that much between France and Germany. Service quality does. We get those figures the slow way. Direct interviews with operators, plus local data partnerships in each market. That is why the spread shows up at all.
The three numbers almost nobody publishes
Primo named three operating measures. Most European water dispense operators can produce one of them on demand.
Call volume per thousand customers is the cheapest complaint proxy in the business. Very few operators trend it.
Quit rate is tracked almost everywhere. It is rarely split by cause. A cancellation after a missed delivery looks identical to one caused by an office closing.
OTIF is nearly absent from European water dispense. It is the metric Primo put first. A bottled account is a promise to arrive. Break the promise twice and the customer starts taking calls from your competitor.
The road got more expensive in the same quarter
The results carry a warning next to the good news. Gross margin fell to 30.5% from 31.3%. The company pointed at transportation costs. Sales guidance went up. EBITDA guidance stayed where it was.
The route grew and the road got dearer in the same quarter. Growth in a delivery business does not automatically become profit.
That has a direct read-across. Winning back a bottled account only pays if it sits on a round that already passes the door. A recovered customer on a thin route can cost more to serve than the one before it. Retention economics in bottled dispense are a map question before they are a sales question.
What to do with this
Bottled dispense does work that nothing else does. Sites with no mains connection, construction, remote depots, cover when a plumbed system fails. The segment has been managed as if it were already over. It is simply under-managed.
The cheapest units a European operator can add this year are the ones they stop losing. A point off the quit rate costs less than a point of new business and arrives faster.
For buyers of these businesses, the read is sharper still. A bottled book with a falling quit rate and a measured OTIF beats a larger book with neither. One can be underwritten. The other is a guess. Ask any operator you are looking at for twelve months of delivery reliability data. The answer, or the silence, tells you what you are buying.
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