Mr. Larson: Our company was founded in 1983, when two of my friends and I bought the Eldorado Springs Resort, which had been family run since its founding in 1905. It was a summer-based resort built around the springs, had swimming pools and hotels, and stuff like that. Our intention was to use the spring water, which we had discovered was of unique quality to develop the bottled water business, which at that time in the 1980s was predominantly a home and office delivery business model in the United States. So that's where we entered, in the home and office business, and still operate that as the central core of our operations today.
The other method of bottled water sales in the United States at that time was one-gallon jug distribution through retail stores. Mostly at that time, people where using it for their steam irons and batteries, and things like that. Our one-gallon containers where introduced in the mid-1980s, and we're now the top-selling brand with the one-gallon jug in the Colorado market. The industry changed dramatically in late 1980s, early 1990s with the advent of the PET plastic, which is now regarded as the root of all evil in the world. But at that time it was seen as a God-send to the bottled water industry because it is lightweight, durable and it's lot easier to tote it around than glass. As that market developed, it started to attract the interest of Coke, Pepsi, actually some of the largest beverage businesses in the world. And their entry into the PET packaged market in the 1990s kind of changed the landscape forever. That started a price war and has the net effect of corporatizing the industry as opposed to having all the family-run and smaller business operations that had characterized the bottled water market in the United States before that. Functional waters emerged on the scene in the early years of this decade, most notably vitaminwater is the one everybody thinks of. And Propel was the artificially sweetened version with low calorie. So those functional-based waters kind of brought a little more value-added concept back to the marketplace that had been diminished through price wars. And that leads us to where we are today. Getting into the last year, of course, for a lot businesses it's been very difficult - the hard decisions you have to make in those types of economic climates and whether you are willing to make them.
Tickers included in this excerpt: ELDO.OB
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.