ENSO Bottles Customer, Texas Rain Already Pouring in Profit

David Schraub was planning to transition from the semiconductor industry to solar energy when he got what many could call a true brainstorm.

It was 2007 when he noticed a distant storm while driving to Corpus Christi and realized that he could make a business out of capturing rainwater. Last month, his idea evolved into his Smithville-based business, Texas Natural Rainwater Harvesting & Bottling LLC, reaching profitability by selling bottled rainwater. More specifically, 60,000 bottles of the product provided by Mother Nature have been sold at dozens of local businesses and organizations since April.

Now Schraub is looking to build three more bottling plants in Texas to expand his business and capitalize on the business model he’s refined.

“We need to broaden this,” he said. “We’ve done very little advertising, and it’s amazing how the sales have escalated very fast.”

Texas Rain is already sold at Central MarketWhole Foods Market Inc.’s (Nasdaq: WMSI) stores and local Walgreen Co. (NYSE: WAG) stores, among others.

Nationally, the bottled water business generated $11.1 billion in sales during 2008. From 1997 to 2007, the U.S. per-capita consumption of bottled water more than doubled from 13.5 gallons per year to 29 gallons, according to the Virginia-based International Bottled Water Association.

But the sharp increase has created millions of used bottles and a recycling problem, prompting municipalities to consider banning or taxing plastic water bottles. Texas Rain uses bottles that are biodegradable and recyclable. When placed in an environment with microbes, the bottles biodegrade within five years, Schraub said.

Before Texas Rain, Schraub was an engineer for a string of semiconductor companies, including Advanced Micro Devices Inc. (NYSE: AMD), Samsung Electronics Co. Ltd., Motorola Inc. (NYSE: MOT) and Austin-based Freescale Semiconductor Inc. In 2006, he founded Natural Renewable Energy with a plan to install solar energy farms. But the prices of solar panels weren’t low enough to make the installation of farms cost-effective.

When Schraub later saw that rainstorm during his drive to Corpus Christi, he realized that customers could subsidize the installation cost by selling the rainwater that runs off solar panels. He then enlisted 14 private investors to pitch in $450,000 to get the business going.

Raining money

In Smithville, Texas Rain’s enormous warehouse is — quite literally — generating business from top to bottom.

The roofs, which cover 50,000 square feet, are slanted to capture rainwater in 11 tanks totaling 140,000 gallons. One inch of rain generates 28,000 gallons, which means Schraub needs just 10 inches of rain annually to produce enough to operate his business.

The Smithville rain is filtered three times before it’s treated with ultraviolet light and ozonation. It is then bottled and labeled just beneath the roof that captured the rain. In September, the start of the bottled water industry’s slow season, Schraub plans to begin installing a bottle-making machine that would enable the Smithville plant to be entirely self-contained by early 2011.

Private-labeled bottles for business are also giving him an unexpected boost. Texas Rain can design and adhere its customers’ labels on site. As a result, area restaurants and other businesses can buy “their own” brand of water for about 58 cents ($14 per case) per half-liter bottle.

The Schlotzsky’s restaurant in Bastrop began carrying private-labeled Texas Rain water in April and now sell 10 cases per month compared with three cases per month of its previous supplier’s water, owner Laura Merritt said. The environmentally friendly bottles were a big attraction. Also, customers like the taste and it gives the restaurant a chance to support another Central Texas business.

“We like to keep things local whenever we can,” she said.

Last month, a company selling bottled water to raise money for University of Texas scholarships also announced plans to market a reusable metal bottle after students protested about the environmental effects of disposable bottles. H2Orange Purified Texas Water, a UT Tower-shaped bottled water company that would raise at least $1 million for student programs, plans to sell refillable, stainless steel bottles. The company is also considering a collapsible, BPA-free, dishwasher-safe version, as well as a biodegradable plastic bottle.

Tom Lauria, spokesman for the International Bottled Water Association, said he’s never heard of any water bottler that directly captures rainwater. Of course, the source of springwater is both rainwater and snowmelt. He also said the environmental concerns about water bottles is unwarranted.

“We shouldn’t penalize people for healthy habits,” Lauria said.

ccalnan@bizjournals.com | (512) 494-2524

by Christopher Calnan

Original Article:  http://www.abjentrepreneur.com/news/2010/08/texas_rain_already_pouring_in_profit.html