■Company Overview
3. strengths
The root of the strength of Premium Water Holdings' ＜2588＞ is the “net increase in owned customers due to high customer acquisition capabilities,” and it is the 1.62 million customer base (end of 2024/3) that has been built up as a result. The large customer base makes it possible to decentralize water sources, improve logistics efficiency, and invest in waste-free factory equipment, etc., creating a virtuous cycle.
(1) High customer acquisition ability
The company has greatly increased its share in the water delivery market in recent years. If you trace the origin of cultivating high customer acquisition capabilities, it goes back to when FLC was top class in Japan in demonstration sales. There are various ways to acquire customers, but mainly booths dedicated to the company are exhibited for a limited time at large commercial facilities, major mass retailers, home centers, etc., and over 50% of customers have been acquired through demonstration sales. Also, in addition to cultivated sales know-how and education for employees, there is an employee evaluation system created in consideration of employee development and motivation, and there are plenty of systems to bring out abilities. Telemarketing and online sales are methods to acquire less than 50% of new customers. In particular, the effectiveness of these methods is increasing for consumers whose stay-at-home hours have increased due to the COVID-19 pandemic. It can be said that the company's strength is that it can respond flexibly to changes in the environment and acquire customers from various sales channels.
In the past, sales through in-house sales (direct sales) were the main ones, but in recent years sales by agents (proxy sales/brokerage) have increased, and that ratio has exceeded 50%. As the company's awareness has increased, requests for agency sales have increased. As an agency, we are expanding transactions with various business companies such as furniture, various mail order stores, electronics retailers, real estate, railways, and electric power. Also, product supply (OEM) to other companies that carry out home delivery water business is also increasing. A capital and business alliance was formed with INEST in the 2023/3 fiscal year, the last mile where sales power can be expected, and in the 2024/3 fiscal year, the use of external channels is accelerating.
(2) Decentralization of water sources (to a nationwide 8-water source system)
The company has adopted a policy of dispersing water sources with the aim of stabilizing water supply and local production for local consumption. Currently, construction of the second phase of new plants in Fujiyoshida (Yamanashi Prefecture), Fuji (Shizuoka Prefecture), Minami Aso (Kumamoto Prefecture), Kinjo (Shimane Prefecture), Asago (Hyogo Prefecture), Northern Alps (Nagano Prefecture), Yoshino (Nara Prefecture), and in 2024/4, has been completed, and a system capable of producing 2.5 million units per month at 8 locations nationwide is in place. Having as many as eight water sources seems unique in the industry. The difficulty of increasing water sources is that if more than a certain number of customers cannot be secured, the plant's operating rate will not increase, and manufacturing costs will increase. In that respect, since the company has been able to increase the number of customers it owns, it is possible to develop water sources without lowering the factory operation rate. Furthermore, the dispersion of water sources also leads to business continuity measures during disasters, etc. There was a situation where supply to South Aso stopped during the 2016 Kumamoto earthquake, but since delivery water to be delivered to the Kyushu region could be supplied from other water sources, it was proved that decentralization was strong even during disasters.
(3) Improving logistics efficiency through local production for local consumption and in-house logistics
The recent rise in logistics costs is a major management issue for the water delivery industry. Since the company performs 1WAY delivery (single-use containers), delivery is outsourced to major delivery companies, and the ratio of delivery costs to sales revenue exceeds 20%. Since there is constant pressure from the delivery industry to raise prices, it is important to control logistics costs. A major direction launched by the company is “shortening delivery distances by decentralizing water sources,” so-called “local production for local consumption.” If the place of manufacture and the place of consumption are close, delivery costs can also be suppressed. The area that the 8 factories are responsible for has been decided. For example, from the Minami Aso Plant to the Kyushu region, and from the Kinjo Plant to the Chugoku/Shikoku region. Since a consolidated volume of goods can be secured on a regular basis within the area, truck loading efficiency is also high, which is a factor that can avoid rising logistics costs.
Delivery has been outsourced to major delivery companies with logistics networks nationwide for a long time, but since the 2019/3 fiscal year, we have established regional partners that perform in-house exclusive deliveries, mainly in metropolitan areas, and are carrying out unique deliveries that use logistics infrastructure for local production for local consumption and major delivery companies. The reason for starting an in-house logistics network is that pressure to raise logistics unit prices has increased. Especially in metropolitan areas, there are more delivery destinations per route, and it is easy to increase the loading efficiency of dedicated delivery vehicles. For the fiscal year ending 2024/3, we will have our own logistics (delivery partners other than major delivery companies that have logistics nationwide. The ratio (which specializes in delivering the company's products) has increased to 51.5%, contributing to the suppression of logistics costs.
(4) Cost reduction through lean factory equipment investment
The company has also been working to reduce manufacturing costs. A preform injection molding machine was introduced in 2016, and containers were manufactured in-house, and costs were successfully reduced. This capital investment was approximately 0.4 billion yen. It was an investment that assumed a reduction of 20 yen per container, but even a large capital investment would be a wasteful investment if the number of products was small. The company shipped 10 million books in the first year and achieved a profit increase of approximately 0.16 billion yen. Investments were recovered in the 3rd year after investment, and profits have continued to be generated. Thus, the expansion of shipment scale due to a net increase in customers has created a virtuous cycle in various aspects.
(Written by FISCO Visiting Analyst Hideo Kakuta)